Katz: Markets Historically Bounce Back from Conflict, Time to Buy Dips

0:00And David Katz is with us matrix asset advisors president chief investment officer David I'm glad you're here because now we saw the market go higher today sell off again on the headlines back and forth with Iran. Look it may be longer than what people thought I know the president's trying to wrap it up. For the very short term the market is obsessed with what's going on overseas and we'd say to investors don't try to trade up on that. What you saw on Monday morning is futures were down 400 points the president said they're closer to getting the situation resolved and then all of a sudden it opened up 12 hundred points. So if you try to buy after there's a resolution you're going to be paying a lot more for stocks. Are you watching that volatility? You're trying to time the market at all and you can't really do that right? We think you absolutely don't want to do that. If you look since 1950 there have been 25 wars or confrontations usually the market goes down in the first month of the confrontation about seven to ten percent and then it recovers as quickly in about one to two months. So we think you're closer to the bottom here

1:02you want to be thinking about buying the overall market and you definitely can buy individual stocks there. Lots of opportunities out there. And I want to talk about some of the individual stocks that you have. I know you have the map FETF and some of the top buildings there you're looking for value overall but your buying dips is basically the story. I mean really Monday morning before we were open we were almost 10 percent off the highs on the S&P and the Nasick. We were like 9.8 percent and as you noted we had that huge reversal and we were looking at an up week up till a few minutes ago really. The dip buying you just go for it I mean you just how do you know when it's time to buy a dip? Well you have to have a six to 12-month time horizon if you're looking at that basis buying the dip is going to make sense. We think the year is going to end the year up like in the high single digits and right now it's down in the mid to higher single digits so from here you probably have 10 to 15 to 18 percent upside and there are lots of stocks that are down a lot more so they've got a lot more upside. Aren't you bullish? I mean that's a pretty good outlook. I mean

2:06I know for example Barkley's had 70s, 650 and other guests who came on had 70s, 700 I mean Goldman Sachs had 76 hundred for a year and are you sort of in that camp well above the 7000 mark? We think it's going to be a lot higher than it is today but from the start of the year we think you could have 8, 9, 9 and a half percent returns you just have three great years after three great years stocks generally slow down but you can make money. One of the things you're seeing this year is a lot of rotations we think those rotations continue. Tell me about some of the map FETF top holdings you have Apple. By the way Apple intends to open up Siri to outside AI assistance according to Bloomberg and that just came out moments ago so you keep an eye on Apple news there. You have Apple and Generac and Goldman Sachs and Metta. Tell me about some of those names. So basically the fund has done very nicely over time and part of the reason that it's done well is we're a go anywhere value shop. We are willing to buy technology if it's at the right price and in the last few years there have been a lot of technology companies that have been washed out to prices that made sense.

3:09We bought them there. We would be buying some of them again. We think things like Microsoft and Metta are a very attractive prices if you have a 12 month time horizon. The Mag 7 did great in the last three years it's having a very poor start to the year so we do think there are opportunities within that. Generac you just mentioned they had an investor day yesterday we thought the investor day was really good but they didn't say that they won certain contracts the market was disappointed the stock sold off significantly. We would buy that aggressively on the dip we think if you have a 12 month time horizon the stock would be meaningfully higher. They're an AI play because they provide backup generators to all of these hyper centers that are being built out. Yeah I mean and so often when there was natural disasters people were looking to Generac and now it's a whole new world with AI data centers. You mentioned some of the Mag 7 I mean I was looking at Microsoft was having its worst quarter in 17 years. Metta I think was having the worst month or worst year to date of the Mag 7. They've been beaten down makes them more value instead of growth right is that we're

4:11looking at. Well their world businesses had value prices so Microsoft is selling under 20 times next year's earnings it hasn't sold that in the last decade. We think they are an AI winner period. We think they have tremendous resources, tremendous balance sheet, tremendous cash flow. This is a great price to buy a really good business. People were chasing it a year and a half ago at 5.50 you're now getting at 35% off. Metta the same thing today it's at 17 and a half times earnings. We think that's a very good price for a company that has most of the globe's eyeballs. So how heavily invested are you I mean do you keep the lot of cash on the sidelines have you been lightning up a bit or safely invested because in the longer term after this happens it's going to be noise. We think the latter we're 99 plus percent invested we believe to you want to be for your equity accounts fully invested on a long-term basis stocks go up over the long-term in terms of what's happening right now we think it will be a ugly blip but 12 months out you're going to have made good money now. We were asked the same questions a year ago after the tariff announcement

5:15and stock sold off 20% very quickly you thought it was a very good time to buy stocks we thought they'd end the year a lot higher they subsequently did sometimes you have to buy when there's uncertainty and when you're uncomfortable this is one of those times. When we think about some of the other names I mean a name like Pepsi where does that fit into the story. Well Pepsi is a good long-term business but the stock really hasn't done anything in the last year so it's selling at the cheapest valuation that hasn't sometime the yield is over 4% so we think it's going to do very well as an investment and it balances out some of our technology exposure so we have things that should do really well and then we have things that balance the portfolio but also should be pretty well we think finally consumer products are selling evaluations that are okay. There's a lot of frustration with the Qualcomm investors they saw this stock down almost 20% in one year it went up high to 205 it's at 131 today is this a name that you like? We think Qualcomm over the next 18 months could be 40 50% higher in the short term they're getting hurt because cell phone sales are

6:17going to be lighter and part of that is because chip expenses are very high. Once that comes down and we do think that DRAM chip prices are going to come down over the next 12 months phones are going to sell a lot more and you're getting Qualcomm at 11 times earnings the other thing about Qualcomm they're AI play on a second derivative basis when you talk about factories Qualcomm is in the factories when you talk about robots they're going to be one of the biggest plays in robots for their chips so lots of ways to win with Qualcomm and at this price you're getting it at a great valuation they're buying a lot of stock back they just increase the dividend so all the things if you can look beyond a very poor upcoming quarter. Listen you're fully invested I mean what's your final thought sounds like you're still pretty passionate about the market the US market and see some upside ahead I mean you talked about this year with the up arrows and I guess the years ahead is that how you're feeling is it you know buy America type of thing? We think the great opportunities in America there are also opportunities internationally but we think the

7:20key to success this year is to take a longer-term view try not to trade around the war we think it's too complicated things can change on a dime right if you're looking at 12 months stocks are going to be higher. All right David A. Katz Matrix asset advisor Steve I'm glad you were here thank you so much appreciate it.