BNY Mellon's Chief Investment Officer Leo Grohowski dropped by "Breakout" Monday to discuss how investors can put their money to work safely in a "see no evil, hear no evil market." Noting that the CBOE volatility index, or VIX, is well below 20 and its 5-year average, Grohowski sees long-term options straddles as one possibility for long-term investors.
Grohowski is somewhat skeptical regarding the recent torrid gains in gold, believing the favorite currency of 19th century cowboys and druids of old has gotten ahead of itself relative to commodity metals. Gold spikes tend to unwind in a hurry, leading the CIO to advise investors to use some caution in the yellow metal.
In terms of equities, Grohowski has a year-end target of 1400-1450 for the S&P 500, a level he feels is conservative given his firm's $94 earnings price target for the index. He says 1400 "assumes no increase in the earnings multiple" for the benchmark, implying that the relatively sanguine environment for equities could lead to investors paying more per dollar of earnings.
Grohowski is advising clients to overweight their portfolios in shares of technology companies, particularly those on the corporate, rather than consumer side of the business.
Watch the video to hear Grohowski respond to the Breakout boys' grilling. After you do, send an email with your comments to firstname.lastname@example.org.
- S&P 500
- CBOE volatility index
- BNY Mellon