Defensive Stocks Better Than Chasing Momentum, Lait Says

Even some of the big tech stocks are being whipped around by 7-8, nine, 10% as their earnings come through. You got some of these in your portfolio. What does that tell you about investor understanding of what is really going on? Tells you it’s low and there’s quite a lot of uncertainty. And I heard you guys talking a minute ago about this sort of mixed macro message. You know, consumer excess savings dwindled now, spending getting cut in certain areas but still going gangbusters in others. I think we’re at a point of intersection in the market where we see if we do finally follow through on a soft landing in the US Everywhere else, yeah, pretty mediocre. Or if actually we see that consumer slowdown and we have, as we always suspected, borrowed from the future. With all the spending and stimulus. So I think it’s a real telling six months, next couple of quarters are going to be very interesting. Some of the big moves though can be explained by other factors. You know in Europe particularly there’s a lot of lagging very good businesses. There’s a lot of awful ones too. So I wouldn’t buy Europe as a thing. But you know when you’re seeing these stocks delivering results, I can Finney and matching some of the numbers that are coming out of Texas or analogue, you will see that recovery trade coming through as people are finally broadening their horizons a little bit outside of the MAG 7 into the wider market. So I think there is a bit of market breadth which is healthy. There’s still a strong consumer in a reasonably strong economy, which is healthy, but you know, interest rates are high and that Spooks people in high growth, quality sort of expensive stocks, as it should. And I think we’re in for tumultuous or turbulent summer. So, So what do I do there? I, I don’t know. I see potentially kind of a tumultuous summer coming up. Do I do I batten down the hatches and sitting cash and what I’m going to get there, How do I, how do I navigate this period? If I it could go all one way, it could go all the other, what do I do? So some people will go into cash. I mean if you can get more than 5% in cash, that’s not a bad outcome. You know I’m an actually stock picker, so I’m not going to do that, but I think you know some people certainly will. Within the equity market, I truly believe you can find companies, you just named a few of the ones we own which are growing very nicely, trading inexpensively something like McKesson reported last night, it’s growing 1517% a year, it’s on 1516 times earnings. That is a traditionally high quality business. It’s one of two massive players in drug distribution in the states. Finding businesses like that or AutoZone which you also mentioned, you know it’s on 1718 times earnings, it’s growing at 20% a year for the last 15 years, continues to deliver those sorts of growth rates. It is in line with the growth delivered by the MAG 7 or other companies, not in video right now, but you know as a group they are defensive and you can find these businesses if you look. Some are in Europe. You have to dig around a bit, but I think that’s where you need to be sharpening your pencils rather than chasing the momentum.