For the moment, stocks have found some footing and look set to snap a 3-day slump, thanks to better than expected unemployment claims, manufacturing data, and earnings from FedEx (FDX). Even so, that has not changed the fact that the S&P 500 is still down for the week, the month, and the year; and advisors like Mark Lamkin on the sidelines.
"We're about 50% invested," says the founder & CEO of Lamkin Wealth Management. "I don't think there's a big trend to play here."
He describes the current climate as "death from 1,000 paper cuts" and concedes that fear is the overriding emotion of his clients and it's even causing him to stay on the sidelines.
Lamkin predicts a "monster Santa Claus rally" would happen if the European Central Bank were to adopt U.S. Fed-like policies to inject cash into the market. Until that happens his outlook is ''modest at best'' in a climate he calls "all headlines and trendless."
With the 50% he is investing, Lamkin says he is sticking with Tech (XLK), despite a 6% short-term drop in semiconductors (SOX) this week, calling it a "good entry point" and espousing the belief that businesses will continue to outspend consumers.
Speaking of consumers, Lamkin also is long the Discretionary sector (XLY) and likes things that "aren't impacted by Europe." On the defensive side (or at least the non-equity side of his picks) this Kentucky-based advisor is a fan of high yield, in particular, the 7.5% dividend of SPDR Barlcays High Yield Fund (JNK).
But as far as leveraged ETFs, Lamkin simply says he and his clients are staying away from them.
"Leverage is great in good times and horrible in bad times," he says. "It's a level of uncertainty I am not comfortable with."
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