The crisis in Greece is rattling U.S. markets, which are still trading at all-time highs without a 'real' 10% correction in four years. As some investors cautiously wait for the big move to the downside, Paul Schatz, chief investment officer at Heritage Capital, isn’t holding his breath.
“Bull markets don’t die of old age; they die because of mistakes. This bull may be old and wrinkly, but not dead,” claimed Schatz. The “mistakes” the money manager is referring to are “usually in Washington or the Federal Reserve.”
He said investors are also to be blamed for getting in the way of returns, “when people get complacent, they usually make mistakes.”
For the second half of the year, Schatz sees opportunity in the bank and biotech sectors.
“You need to buy the large banks (^BKX) in any kind of weakness.… As they pullback anywhere from 3-8% I think the big banks are buying opportunities,” advised Schatz. Deal making in the sector has him bullish on the entire sector, “regional banks (KRE) certainly on some kind of M&A plan later on in the year. And let’s not even ignore the mom and pop banks which could get gobbled up pretty quickly if this M&A storm begins.”
Despite the biotech sector (IBB) tearing it up this year and questions about its high valuations, “what we see now is not ‘bubblesqe’…I still think biotech’s got more run as it continues higher,” said Schatz.
Schatz does warn a lot of his outlook, “is dependent on the fed rate hike or the anticipation of some kind of significant tightening.” Sectors he is avoiding include consumer staples (XLP), telecom (IYZ) along with REITs (^REIT) and utilites (XLU) except for short term plays.
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