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The best way to invest during the trade dispute: Annandale's George Seay

The trade war between the U.S. and China seems to be far from over as the latest round of talks ended without a deal this week. The recent developments come after President Donald Trump’s new tariff rate of 25% on $200 billion of imports from China took effect, putting investors on edge and leaving many questioning how to play the markets.

Goldman Sachs (GS) was out with a note earlier this week suggesting investors favor services firms over goods-producing companies. The bank noted services stocks “are less exposed to trade policy and have better corporate fundamentals than Goods companies and should outperform even if the trade tensions are ultimately resolved.”

But not all on Wall Street agree. George Seay, Annandale Capital founder, told Yahoo Finance’s “The Ticker” that the best way to play the dispute is to be more conservative, and thinks Goldman’s call on favoring services stocks is “absurd.”

“The best way to play the dispute is to be more conservative. I think it’s kind of absurd for Goldman to come out and try and split hairs and say which stocks you should purchase during a trade dispute situation where tariffs may be put on for an extended period of time ... I think that’s just trying to drive trading revenue and profits for Goldman.”

Treasury Secretary Steve Mnuchin, center, and United States Trade Representative Robert Lighthizer, third from left, and Chinese Vice Premier Liu He, left, speak together as Liu He departs the Office of the United States Trade Representative in Washington, Friday, May 10, 2019. (AP Photo/Andrew Harnik)

In terms of what Seay thinks investors should do with their money, he says investors should be looking to “reduce exposure” until the dispute is resolved.

“We’ve had such a great run this year that any investor that’s had heavy stock exposure throughout the year has some really awesome gains. I would be protecting those [gains] right now.”

Trump may have helped ease Wall Street’s jitters on Friday, tweeting “the relationship between President Xi and myself remains a very strong one” and “conversations” will continue.