- Citi Private Bank’s David Bailin told CNBC that now is a time when investors can rotate out of technology stocks and into sectors that hinge on an economic reopening.
- The stock market will have a “relief moment” in 2021 when a vaccine is announced, a second fiscal stimulus is released, and the outcome of the presidential election is clear, Bailin said.
- The chief investment officer is recommending investors seek out value stocks, financials, emerging markets, and healthcare stocks.
David Bailin, Citi Private Bank chief investment officer, told CNBC that investors should rotate away from just mega-cap technology stocks as the market outlook in 2021 is positive.
While the economy may slow down in the fourth quarter of 2020 because the US hasn’t released a stimulus yet, and investors may grow weary as coronavirus cases rise, next year will be the “exact opposite,” Bailin said on Tuesday.
“We’re going to have a relief moment in the market when they realize that the pandemic will be abated by the release of several vaccines,” said Bailin, adding that there will be a fiscal stimulus by 2021, and the question over who the next president is will be resolved.
Right now there is a lot of uncertainty, but “there’s a lot to look forward to,” he added.
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Bailin said that given this outlook, investors should begin rotating away from companies that have boomed during the pandemic like mega-cap tech, and rotate into sectors that hinge on the economic reopening.
The four sectors Bailin named were: value, financials, emerging markets, and healthcare.
“Think about changing your portfolio to reflect now what might be taking place in 2021, but do not start to sell and try to market time, because I think that’s just a fool’s game, especially when markets are moving this quickly,” he added.
“We want our clients to stay invested but we want them to rotate into these areas of the market that could be very valuable over the next 18 to 24 months,” Bailin said.
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