Tech stocks should thrive despite rotation into value, market bull John Stoltzfus says


A major market shift is forming as the economy begins to reopen: Value stocks are gaining popularity over growth names, including technology.

But according to Oppenheimer Asset Management’s John Stoltzfus, that doesn’t mean the winners will automatically become losers.

The market bull sees technology as a vital part of the economic fight to function amid the coronavirus shutdowns.

“It’s so central to the secular movement that’s taking place,” the firm’s chief investment strategist told CNBC’s “Trading Nation” on Wednesday. “Technology is very much what the automobile industry was in the early 20th century.”

However, Stoltzfus isn’t ruling out near-term haircuts.

“There’s a very modest trim occurring,” he said. “The sector has gotten perhaps a little ahead of itself.”

Since the March 23 low, the tech-heavy Nasdaq has rallied 42%. The S&P 500 isn’t far behind with a 39% gain.

Despite profit-taking risks, Stoltzfus believes the market is in the early phase of a historic recovery.

“We are certainly from all appearances transitioning towards a post-Covid-19 environment in which we will move towards a recovery process,” Stoltzfus said. “We expect to get back to a sustainable recovery over a relatively short period of time compared to what many might think.”

Stoltzfus came into 2020 as the market’s biggest bull. But that was before the coronavirus struck the world.

In late February as infections began spreading beyond China, he warned investors there was nowhere to run.

But Stoltzfus didn’t plan to stay on the sidelines indefinitely. By early spring, he started slowly putting money back to work in stocks and hasn’t stopped.

Now he is looking to take advantage of the rotation and rebalancing that’s starting to grip the market. Stoltzfus speculates it’s a signal the market’s performance will broaden going forward.

“Since fixed income doesn’t have much to offer, taking a look at what might be next for equities and that’s [the] more value oriented space of the equity market,” Stoltzfus said.


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