Here's what smart investors are buying on the dip

Gene Goldman, Chief Investment Officer at Cetera reveals what to buy if the market pulls back.

Transcript

00:00So if there is a pullback, which you're expecting, what are you buying on the dip?

00:05We're buying, I mean, that's a good point.

00:07So that sellout that we had and the V-shaped bounce back, that was a high beta-driven market.

00:13High beta, IPOs, penny stocks.

00:17It was almost like just a poor market rally.

00:21If markets do pullback though, especially if, say, the Fed has to cut rates faster, they make a policy error,

00:26generally speaking, when the Fed comes in and cuts rates, market breadth tends to widen.

00:31Small caps, mid caps look attractive, value looks attractive over growth.

00:34From a sector perspective, our favorite areas are technology.

00:38I think technology, you have to look at the fact that you want to focus on fundamental opportunities,

00:44secular fundamental opportunities, artificial intelligence, cybersecurity, and even infrastructure as a long-term opportunity.

00:50We also love industrials.

00:52You look at the opportunities, industrials, I know they're the top-performing sector this year,

00:56but the good news is that, look at NATO.

00:58NATO increased their spending, their estimated spending of GDP on defense spending from 2% to 5%.

01:04That's a huge, huge boom for defense spending and domestic defense spending.

01:09We're seeing wars are changing a bit.

01:11More drones, more technology.

01:13There's going to be a revamp of some of our military defense spending.

01:17And the third area is financials.

01:18Second half of the year, a lot more IPOs, a lot more debt issuance, and a lot less deregulation.

01:24All that taken together are our three big sectors.

01:27But to your point, industrials and even tech, now the tech sector is at or near record highs.

01:33So you think those rallies have room to run?

01:36We do.

01:37I think if you think about the AI continuum, generally speaking, people buy semiconductors first.

01:43We saw the same thing in the tech bubble in 99.

01:45Buying semiconductors is the first step.

01:47Then it's applications.

01:48Then it's storage.

01:50So we think that semiconductors have been the bigger driver of artificial intelligence.

01:56But that's going to start to slow down.

01:57Other parts of the continuum will be opportunistic.

02:00That's where we're looking at.