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Alexis Christoforous of Yahoo Finance and Scott Ladner, chief investment officer of Horizon Investments, discusses the outlook for Bitcoin and what the stumulus might mean for the markets.
Video transcript
ALEXIS CHRISTOFOROUS: I want to talk more about the markets now with Scott Ladner, he is the investment manager at Horizon Investments. Scott, good to have you here. Before we dive into stocks, we just like your take on what you see in the cryptocurrency space, especially with Bitcoin. Is this now a legitimate place to turn for investors, perhaps even for cover?
SCOTT LADNER: You know, I think it’s a little difficult at the moment to know if Bitcoin is going to be a good hedge either for the stock markets or for something like inflation. He’s just too volatile right now to really be considered a cover for a lot of things. Bitcoin and crypto is, in general, that we don’t really have a position in them at Horizon Investments. It is not really our responsibility. But we believe they can be challenged in the longer term. It is really in no government’s interest to let these things flourish. So we think we’re going to have to get formal government adoption before these things, before the crypto space really gets, really takes place. But, but in the meantime, it gives rise to wild walks.
ALEXIS CHRISTOFOROUS: Yes of course. So from what I’m hearing, you think regulation is imminent. If and when this happens, would you give Bitcoin a second look?
SCOTT LADNER: Certainly. I mean, if it became something that had a bit longer price history, that it was easier to trade, if the futures markets really took off. There are other instruments you can use to gain exposure to these and the retail accounts or some of our fund accounts. This is something we would certainly consider. We cannot ignore it. It’s just at the moment that we think the space is a little too new and not really in tune with what our investors need from our products.
ALEXIS CHRISTOFOROUS: Alright, now let’s get down to business. And what’s your outlook for the next three to six months and will it all be driven by the stimulus and the virus, Scott?
SCOTT LADNER: You know, we think it is. I mean, you know, when you think about the last nine months, it’s been a stimulating market against viruses. And the stimulus frankly kicked the viruses off. We think it’s probably going to continue, especially given the dynamics, the political momentum around the new stimulus deal that’s sort of, coming up. It’s not really a question of whether it’s going to happen or even really when it’s going to happen. We’re just – now we’re arguing over whether it’s going to be 1.5 trillion or 1.9 trillion. That kind of stimulus, in the face of a waning virus, a virus that’s going to recede over the next few months, is something that is really fueling the mortgage right now and will probably be at least the first half of that. year.
ALEXIS CHRISTOFOROUS: Let’s talk about what you like right now. I know small caps were spending their time in the sun. In fact, you called them in your note, you said they’re the Lehman Brothers in the market today. It doesn’t sound too good. What is your take on small caps? [LAUGHING]
SCOTT LADNER: Yeah. I guess I said it affectionately because, because small caps are very heavily leveraged entities. They are therefore currently the most indebted on the market. And so when I was talking about the Lehman Brothers in the stock market, I was really talking about the leverage you can get in small caps. And so, obviously, in February and March, the reason that small caps were hit so badly is that if you are a highly leveraged entity, the most dangerous thing you can have, in terms of the characteristics of the company. business, is leverage. If income drops to zero, debt is a really dangerous thing on a balance sheet.
However, when you were going to get nominal GDP growth of 7-9% in this country this year, you actually want to go to companies with leverage, because they can fall further to the bottom line. Operating margins are improving and with it, with an economy that is really going to be booming in the first half of the year based on the stimulus, the second half of the year based on the consumer. Simply put, you want as much exposure as you can get from the high growth business types.
ALEXIS CHRISTOFOROUS: And we’re still in the middle of the results season and the profits are pretty good. What is your outlook for this quarter and will earnings be the next big catalyst in this market?
SCOTT LADNER: You know, I think we probably will be, Alexis. When we think of profits we are for the most part, we are almost throughout the earnings season at least this quarter and the results have been nothing short of spectacular. Very, very strong high level numbers. Very solid results figures. Like 80% of S&P 500 companies that beat the top line. That kind of thing, that kind of dynamic, is what we expect in the future. But what has yet to catch up are analyst estimates. So analysts have been a little late in upgrading their year-end forecast for S&P 500 earnings. We think these things – we think these could go over $ 180, $ 185 and that will give more room on the rise.
ALEXIS CHRISTOFOROUS: And what are you saying right now to customers who might be very concerned about the virus, the slow rollout of the vaccine? What do you tell them?
SCOTT LADNER: I tell them to really stay the course right now. When it comes to their finances, consumers in the United States are in truly exceptional shape. So we know the headlines are going to be scary. They probably won’t be good. The numbers are, when it comes to viruses in the United States, are not particularly good, although they are pointing in the right direction. But over the next few months, with all the stimulus packages to come, it’s really going to support the markets. This will support the economy in general. And so really, we have to go through these next few months until the weather warms up, until the vaccines take a little more vigor, and not only are we going to have very, very strong markets, but we’re going to have a strong economy to support it.
ALEXIS CHRISTOFOROUS: Okay. We can hope so. Scott Ladner, Chief Investment Officer of Horizon Investments, delighted to have you here today.
SCOTT LADNER: Thanks, Alexis.
ALEXIS CHRISTOFOROUS: And
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