The key theme that will drive U.S. investors: Donald Trump. Stock strategists and advisers say invest in banks, energy, and midcap stocks. Fred Katayama reports.
The big investment theme this year: Donald Trump. The President-elect is pushing for deregulation, lower taxes, infrastructure spending, and import tariffs. Another factor: the Federal Reserve plans to keep hiking interest rates. That could further strengthen the dollar. Some financial advisers say the best bets in equities are banks, energy and mid-sized domestic companies. Deregulation will benefit financial and energy companies. Plus, the rise in rates will boost banks' bottom lines. Ross Gerber of Gerber Kawasaki: SOUNDBITE: ROSS GERBER, CEO, GERBER KAWASAKI, (ENGLISH) SAYING: "These two sectors of the market should really benefit with the new administration. They've practically put in the absolute dream team of greed when it comes to making money in banking and energy." Mid-cap stocks could rise because they're less exposed than multinationals to overseas markets - a potential flashpoint given Trump's heated rhetoric on trade - and they would be less affected by a rising dollar. In the wake of inflation and a stronger greenback, strategists like Wunderlich's Art Hogan are raising their allocations to stocks. He says the Great Rotation out of bonds and into stocks has already begun. SOUNDBITE: ART HOGAN, CHIEF MARKET STRATEGIST, WUNDERLICH SECURITIES, (ENGLISH) SAYING: "I think we've had about a 32 year bull market in bonds, and that's probably at the very least starting to flatten out and roll over a bit, and I think that's evident." He and others say that with rates rising, investors should cut back on bond surrogates, those stocks sporting fat dividends. Keep some cash on hand, they say, to buy growth stocks on the dips in what could be a volatile market ahead.