Fitz-Gerald Group Chief Investment Officer Keith Fitz-Gerald joins Yahoo Finance to discuss how investors should approach volatility and the outlook for the economy and stock market in 2022.
Video Transcript
KARINA MITCHELL: We are going to stay on the markets now and bring in our good friend Keith Fitz-Gerald, Fitz-Gerald Group chief investment officer. Keith, thanks so much for coming on the show again. It’s good to see you.
Want to just first get your reaction. What do you make of the price action that we’ve seen yesterday and today and, you know, this buy-the-dip mentality and also the notion that Build Back Better may not be dead?
KEITH FITZ-GERALD: You know, there’s a lot to take in in a very short period of time. Dips are historically a gift that most investors don’t recognize until it’s too late. The key right now is to focus on the best companies because these are very technical sell-offs. These are not fundamentally destroying the business case for owning these companies. Apple, Microsoft, many of the big names in here get sold off hard, and those are the names you want to focus on because they fall less, bounce back faster, and will continue to grow almost no matter what happens to a short-term speed bump like we’ve seen in the last 24 hours.
JARED BLIKRE: And, Keith, always great to see you here. Got to talk about seasonality because we are in that time of year when stocks usually go up, and fortunately they are today, but we’ve seen some volatility this month. That is a bit uncharacteristic for December.
So I’m wondering if it’s much ado about nothing. Well, it has to do with something. There are legitimate concerns about omicron, of course. But is the market able to discount this now?
KEITH FITZ-GERALD: You know, again, the slowdowns and sell-offs are funny things. People want to deal with them in the moment. But again, history shows over time that the better perspective is to take a deep breath. Concentrate on the best. Ignore the rest.
So omicron, the really cool thing about that, as terrifying and scary as the concept of a pandemic is, is that we are learning to live with it. People are wanting to get out. They’re wanting to reopen their lives, stay out, and do things like travel, for example. So that is a good sign. It’s a great development. The fact that people are beginning to understand that they want to live as opposed to hunker down is an important change in psychology.
So to me, yes, this is normally a Santa Claus rally scenario, but the fact that we have made a buy back like today– there’s still going to be more volatility, but it’s an incredibly good sign that resiliency is here.
KARINA MITCHELL: And, Keith, I want to ask you, so where do equities head from here compared to the last couple of years, and what sectors are you particularly looking at? I know that you are bullish on EV.
KEITH FITZ-GERALD: Yes, we are bullish on EV because, again, you know, I think that the path is generally higher. I think people are underestimating the ferocity of the bull market that potentially is with us in 2022. We are going to learn to live with omicron, with COVID, with all of the other Greek letters in the alphabet. And when we do, the world is going to just leap forward because that’s the future that everybody wants and deserves. It’s brighter. It’s an optimistic look on things. So I think it’s important to understand that as you select your investments.
If you want to hunker down, that’s yesterday. If you want to go forward, that’s tomorrow’s profits. EV is a great example of that. There is no question.
I mean, I’m a V8. I like my– I like my gasoline, my petrol, all that other kind of stuff, but it doesn’t change the fact that EVs are where the world is going. Rivian in particular is getting a lot of news, as it should. Canoo is another one that I think is totally off the radar for most people. Tesla, of course, is at the front-runner. The world is going that direction. How we feel about it, what we choose to drive, those are all important considerations.
JARED BLIKRE: And, Keith, just reading your notes from today, I noticed that you like the financials too, and that’s a trade that’s working out today. I have the YFi Interactive up here, and we’re looking at our banks heat map. See Wells Fargo, Morgan Stanley, Goldman Sachs, Bank of America all up more than 2% here, and I would say the yield curve is expanding today, so that’s kind of in line with it. How far do you see this continuing given that the Fed is thinking about tightening right now?
KEITH FITZ-GERALD: I think that the tightening is overrated, and that’s a pun on words really very deliberately on my part. I think that world needs money to go around. The financials are a no-brainer in here because think about all the loans that have to take place. Think about all the mortgage payments. Think about the way the world works. If people want to buy a car, they finance it. They want to buy a house, they finance it. They want to buy something on credit, they finance it. So good, bad, or ugly, I don’t really care about that.
What I notice though from an investing perspective is that’s going to fuel an entire generation of profits. The move to digital currencies is going to accelerate that. Banks will be involved within the next 12 to 24 months.
So I think you’re seeing, again, a great move here. It’s a good chance to get ahead of some of the big names. Quality matters, and these big banks are going to reflect that.
KARINA MITCHELL: Keith, you have such an upbeat outlook. I hate to be the Debbie Downer on this, but I need to ask you the question, what happens to the consumer next year? Because with prices being driven up, price pressures– gas prices are up. Rents will rise next year. Mortgage rates expected to go up as well. How much before the consumer literally puts up their hands and says I can’t deal with this anymore?
KEITH FITZ-GERALD: Well, I tell you, you know, all joshing aside, that is the one thorn in my side. It makes me boiling mad because this is a political situation. This is directly a result of the Fed, which has already caused the next three crisis. Millions of American consumers are being hurt, and they needn’t have been hurt.
So if I look at this as an optimist, I say the world is going to improve. We’re going to move forward. Investors will find a way to deal with it because they have to. We have a lot of brilliant, resilient, clever people out there. They’re going to find a way to make ends meet.
But I can’t vouch for the– and I want to be respectful here– for the lack of correct decision making inside the Beltway that has led to this. And I’m not digging into politics. I’m digging purely at the numbers.
KARINA MITCHELL: Yeah, and, Keith, not everyone believes the Fed will do what they say we will do. We’ll have to leave it there.
KEITH FITZ-GERALD: Exactly.
KARINA MITCHELL: –but thank you. Keith Fitz-Gerald, the Fitz-Gerald Group chief investment officer, thank you so much for your time today, and a very happy holiday to you.