00:00 Speaker A
Let’s talk about that 8,000 target. That would be the level of the S&P 500. Uh it’s sitting at about 6800 and change right now. It hit 6900. I don’t think it quite hit 7,000, but what do you see uh so you see the S&P 500 at 8,000, but give me the mix. Give me the sector mix and where you see some of the hotspots.
00:23 Speaker B
And we did have 7,000 this year and it’s good to point out that, you know, targets are meant to be sold as well as bought. So like if we sold it. Yeah, yeah, you can fade it a little bit. And what I would say, why I brought that 7,000 up, is that the Mag 8, we we include Broadcom, but the Mag 8 when we did hit 6940, in our models was fully valued. Not like crazily bubble valued, but fully valued. So we think that the Mag 8 or tech in general is going to do fine this year, but probably not outperform its risk. So in other words, Nasdaq has twice the risk of the S&P. So it’s a good time to go look for bargains that nobody really cared about this year.
01:21 Speaker A
And which are?
01:22 Speaker B
Let’s get to that. Right, so we correctly predicted that investment banks would do well this year. We thought it was obvious, but it wasn’t reflected in the market because of uh M&A, deregulation, IPOs, and also fixed.
01:46 Speaker A
We were just looking at Goldman up 55%.
01:47 Speaker B
Right, exactly. So we had been that was one of our biggest positions in ICap and we recommended it publicly. But now, if you look at models because we care about valuation, a lot of people don’t, but we do, and I’d recommend everybody does. But it’s pretty fully valued, not that it’s going to do terribly. But why not rotate into cheaper financials? So they’re risky because you want to be up the risk curve if we’re anywhere close to correct. So why not be in regional banks? They haven’t really done much. We’re going to get lower rates according to our bullish view on rates. And uh bonds are rolling down so all the cheap bond or low uh low income bonds are starting to roll off. So you’re going to get upward sloping yield curve more net interest margin, which is boring. It’s not as exciting as investment banking fees, but so you’re going to get better net interest margin. Those companies are way cheaper than the investment banks. And then we also on a related note like or love really the alternative asset managers. Everybody sold them off.
03:13 Speaker A
KKR, right?
03:13 Speaker B
Yeah, KKR, the big names, Paulo, they sold them off because of credit fears. We think they’re totally irrational. They’ve been rallying a little bit off the lows, but we think there’s a ton of upside there.