So at some point interest rates rise that's going to knock out all this value. The valuations that we've seen to that point I
should point out that revision is indicate that open one hundred twenty five. So talk about valuations. What do you think.
I like the guy. Thank you for having me on the show. Of course you know this market has given us a surprise after
surprise after surprise and valuations absolutely matter. And as much as the retail investors and the markets tend to ignore the
issues that we're seeing such as higher material closed supply chain interruptions higher labor costs you know all of that
eventually is going to translate into the earnings revisions. Not to mention potential for higher taxes higher inflation. This
is the reality. And with that said we see the consumer strongly supporting this market. And we think that this spending strong
consumer spending is going to continue throughout the end of the holiday season. But the question is what comes after. And as
much as the retail investor is so worried about taking money off the table too soon in our opinion would be should be worried
about is the excessive risks to their portfolios. And this is the perfect time to gravitate towards defensive plays to take
profit into be in the sectors that are strategically positioned to boards this more volatile market that presents a lot of
challenges. Alex is gonna chuckle and laugh at me now because I've been asking this question a lot but I hear it a lot. Being
asked by other people are you suggesting that you should not be fully invested at this point.
Guy absolutely. This is precisely what we're suggesting.
But not to be fully invested. We are suggesting that we shouldn't be invested in exactly the same sectors that are
disproportionately up. And this is the perfect time to evaluate our investment portfolios see what sectors performed well take
some gains off the table in sectors like S&P 500 like Russell 2000 like certain parts of technology in PE the two sectors that
are positioned to do well in the following years like healthcare for example where there is a lot of pent up demand due to of it.
We're going to see this for years like financials that are positively correlated to the higher interest rate environment. I
mean this is going to be a reality that is about to start raising rates.
We really like consumer staples. What are you all up the hands of about consumer goods. But we still like consumer services. So
the point is there is still a way to make money in this market. People need to be fully invested which we should be doing it in
a very smart strategic way. Guy I knew I knew you were gonna ask that question next. I think the mindmeld today is complete. So
Catarina Finney had an interesting call out the other day saying that they're actually positioning for a decline in inflation.
They see the PPI coming in the next three to six months and they want a position for a decline in inflation. Is your thesis
encapsulate that or does it wrap in higher since more sustained inflation.
Alex it's an interesting time when it comes to inflation. The Federal Reserve for example you know views it as perhaps
transitory in nature. But in our opinion we should consider the fact that higher inflation is perhaps here to stay. Well it's
higher inflation and higher taxes. You know what we see right now is the increase in cost supported by higher demand. But we
can't ignore the fact that it is also fueled by stimulus checks by the Fed that people had more money to spend because of the
performance in the market and in cryptocurrency and going into the new year. Is this trend going to continue to come back to
inflation. We actually think that inflation levels are going to be higher and perhaps they're here to stay. Do you think wages
keep up with inflation. Your your comments on the consumer are being fairly healthy at the moment is certainly borne out by the
data. But there is a gap currently between wages and inflation. There is a squeeze on the consumer. Does that get.
Does that become a bigger problem next year and if so how does that work its way back into the market.
That certainly is a data to watch and the labor market is really challenging right now. We are on one side are seeing labor
shortages and then pressures on wages. But what we are also concerned about is the decreased saving rates in this country.
And we always say in almost every narrative that consumer is the driving force behind our economy is where it is. We're seeing
this rate of savings declining. This is something that would present a challenge. Absolutely. I'd want to point out we're
getting another renowned revision indicated open at 120. So really this flick were bouncing around this one twenty one
twenty five level remember. That's priced at around seventy eight dollars a share. Catarina where does this leave your view
on technology stocks like the big tech names where if you haven't owned them you've just gotten really beaten up and you
can't seem to beat your benchmark. Really. What do you do. Alex we're not ready to give up on technology yet we
know the most exciting part about the world of technology is research and innovation. And how much investment is being made
into this technological development. So we think that this is the time to be really selective about the technology place and
technology absolutely should remain within the investment portfolios. But competitive positioning of two select technology
companies or sectors that we have in our portfolios are more important than ever. We have to evaluate the portfolios and
again we're huge proponents of profit taking. This is the time where if you see the disproportional roles in certain sectors of
technology in our portfolios this is the time to not abandon that sector but to strategically take profit and reallocate to
the parts of technology that sector that are going to continue to grow. And there is tremendous amount of opportunity there.
And we think money is absolute needs to be made in technology. Where does that leave the headline index. I heard what you said
about the S&P I heard what you said about the rustlers. We get this rotation. Does the index level come down.
Guy there is a time for investing in indexes and then there is a time where the active management and very careful security
selection takes place. And this is the time for quality. This is the right time for a deal risky and strategic positioning. So
when we look at the positioning of the sectors within the portfolio we have to ask ourselves you know is there a
competitive advantage. Is there a price sensitivity. Right. You know that that these companies can
take advantage of. Or is it something that that is dis proportionally positions them to not make a lot of profit next
year. You know this is the time for all this question. So we believe that this is not ideal time for index investing but
instead rotate the quality and individual security selection would work much better in this market.