The market veteran reveals how he is positioning himself for the upcoming bull market
The stock market has experienced a number of bear market rallies this year. And while such short-lived returns can be hard to distinguish from a true market bottom, one investment pro believes a turnaround is on the horizon. “I think investors at this point should look forward to the new bull market, the new business cycle, when the tires are cleared, and we’re not far off,”[ads1]; James Demmert, chief investment officer at Main Street Research, told CNBC’s. “Street signs Asia” Monday. Demmert said the bear market is now in its “third and final phase.” It is now in its 11th month of a typical 12-15 month cycle, according to Demmert – indicating a bottom may be near. But investors should be aware of macro challenges, he added, warning that the US central bank’s job of tightening policy is “not done”. Focus on ‘recession-proof’ businesses Demmert said investors should focus on ‘recession-proof’ stocks and “prepare for the new and upcoming bull market by making a list of good companies to buy that will lead the market higher in the new business cycle.” He said there are opportunities in healthcare, consumer goods, utilities and energy – sectors that are often seen as safe havens during periods of volatility. He is also starting to look for opportunities in technology, given further declines in the sector recently. Demmert’s top picks include: Procter & Gamble. The company has been successful in maintaining its profit margins because of its ability to pass on higher costs to consumers, Demmert said. The Danish pharmaceutical company Novo Nordisk, the world’s largest producer of insulin. He likes the company for its “consistent earnings” and “excellent” recent quarterly results. T-Mobile. “It’s kind of an all-weather company at this point because they have the dominant exposure in that market globally. It’s well funded and has a great balance sheet,” he said. Demmert also likes some Big Tech names. “You want to position yourself in … what’s doing well when the economy recovers. And that certainly means better quality technology. Bull markets when they start, they’re led by quality,” he said. “It’s where people go where they think it’s safe, like Google [parent Alphabet ] and Microsoft in the technology area. Certainly Amazon, it’s already discounted the worst.”
