Yahoo Finance’s Alexis Christoforous and Scott Ladner, chief investment officer at Horizon Investments, discusses bitcoin prospects and what stumulus could mean for the markets.
Video transcription
ALEXIS CHRISTOFOROUS: I now want to talk more with Scott Ladner about the markets. He is chief investment officer at Horizon Investments. Scott, good to have you here. Before we deepen stocks, we just like what you see in the cryptocurrency space, specifically with Bitcoin. Is it now a legitimate place for investors to turn to, perhaps even as a hedge?
SCOTT LADNER: You know, that’s it, I think it’s a little unclear at the moment whether Bitcoin would be a good hedge for stock markets or for something like inflation. It’s just too volatile right now to really be a fence for much of everything. Bitcoin and the crypto are, by and large, we do not really have a position in it at Horizon Investments. It’s not really within our scope. But we do think that they can be challenged in the long run. It is really not in the best interest of any government to make these things really flourish. So we think we’ll have to take the official government undertaking before these things get, before the crypto-space really works. But, in the meantime, it makes for some wild rides.
ALEXIS CHRISTOFOROUS: Yes, for sure. So you think, from what I hear, you think regulation is in the offing. If and when that happens, would you give Bitcoin a second look?
SCOTT LADNER: Definitely. I mean, if it became something that had a slightly longer price history, it would have been easier to trade, if Futures Markets really really started. There are other tools you can use to gain exposure to them and retail accounts or in some of our fund accounts. This is something we will definitely look into. We could not ignore it. At the moment, we think the space is a little too new and not really in line with what our investors need from our products.
ALEXIS CHRISTOFOROUS: Okay, let’s go to stocks now. And what’s your prospect for the next three to six months and is it all going to be driven by stimulus and the virus, Scott?
SCOTT LADNER: You know, we think it is. I mean, you know, when you think about the last nine months, it’s been some kind of stimulus to a virus. And a stimulus honestly said that the viruses dominate. We think this is likely to continue, especially given the dynamics of the political dynamics surrounding the new stimulus agreement that is similar to the coming one. It’s not really obvious if this is going to happen, or even when it’s going to happen. We are just now – now we are arguing whether it will be 1.5 billion or 1.9 billion. The kind of stimulation, in the face of a declining virus, a virus that will be on the decline in the next few months, is something that is currently spurring the connection and will probably be at least the first half of this. year.
ALEXIS CHRISTOFOROUS: Let’s discuss now what you like. I know little caps had their moment in the sun. You actually mentioned them in your note, saying that today they are the Lehman Brothers. It does not sound too good. What do you take from small capitalization? [LAUGHING]
SCOTT LADNER: Yes. I think I said it in a loving way because these are very small businesses because they have small businesses. They are therefore currently the strongest on the market. And when I talk about the Lehman Brothers of the stock market, that’s what I’re referring to is just the leverage you can get in small print. And it’s clear that the reason small capitalization was so badly hurt is in February and March because leverage if you are a strong leverage unit. If the income goes to zero, debt is a very dangerous thing on a balance sheet.
However, when you are going to get the nominal GDP growth of 7% to 9% in this country this year, you actually want to be focused on companies with leveraged financing because they can drop more to the bottom line. Operating margins are getting better and with an economy that will really grow in the first half of the year based on stimulus, and the second half of the year based on the consumer. That is, you want as much exposure as you can get to types of companies with big growth.
ALEXIS CHRISTOFOROUS: And we are still in the middle of the earnings season and the earnings have come pretty well. What are your prospects for this quarter and are earnings going to be the next big catalyst for this market?
SCOTT LADNER: You know, I think we probably will too, Alexis. When we think of earnings, we are mostly, we are mostly through the earnings season at least this quarter and the results were nothing short of spectacular. Very, very strong topline numbers. Very strong bottom numbers. Like 80% of the S&P 500 companies beating the top line. That kind of thing, that kind of dynamic is what we’re going to expect going forward. But what has not yet caught up is the estimation of analysts. Analysts were therefore a bit late to upgrade the game to upgrade their annual forecast for the S&P 500 earnings. We think the thing – we think it can fetch $ 180, $ 185, and it will provide more room for the upside.
ALEXIS CHRISTOFOROUS: And what are you telling customers now who may be very concerned about the virus, about the slow deployment of the vaccine? What are you telling them?
SCOTT LADNER: I tell them to really stay now. In terms of their finances, the consumers in the United States are really excellent. So we know that the headlines are going to be narrow. They’re probably not going to be good. The numbers, according to the viruses of the United States, are not very good, although they are heading in the right direction. But over the next few months, with all the stimulus packages coming, it’s really going to captivate markets. This is going to do the economy in general. And so we just have to get through the next few months until the weather gets warmer, until the vaccines take a little stronger post, and we will not only have very, very strong markets, but that we have a strong economy to go along with it. .
ALEXIS CHRISTOFOROUS: Well. We can hope so. Scott Ladner, chief investment officer of Horizon Investments, good to have you with us today.
SCOTT LADNER: Thanks, Alexis.
ALEXIS CHRISTOFOROUS: En