The institutional investor hall of fame Rich Bernstein is a bull in the market whose books exclude some of Wall Street’s most famous groups.
He blamed a perceived risk-on dynamic in the market.
“On one side, we have what I call bubble assets: technology, disruptive innovation, crypto, “CEO Richard Bernstein Advisors and CIO told CNBC”Trading country“on Friday.” On the other side of this saw, you really have everything else in the world. I think if you’re looking at 2022 to 2023, you want to be in everything else in the world of that saw. “
Bernstein believes that capital scarcity creates opportunity.
“That’s where your profits are higher,” he said.
His number one pick is energy, a group he lists as the top play coming out in 2021. Earlier this year, Bernstein called oil The most overlooked bull market. And now, he believes that could be the growth group of 2022.
The SPDR Fund for the Energy Sector, which tracks the group, is up 51% so far this year.
In a special note to CNBC, Bernstein wrote “The last time FCF [free cash flow] The energy sector’s productivity is this high relative to the market or the Technology sector surrounding the Tech and Energy Bubble has outperformed for a decade. The sector’s dividend yield is more than three times that of the S&P 500.”
Bernstein, head of strategy at Merrill Lynch, Today’s “asset bubble” warning could be as damaging to investors as it was in the early 2000s.
“Valuations are very high and what you have to remember is that pricing is more important than story,” he said.
He admits the stories told about the internet and mobile communications during the tech bubble of 2000 have become reality over the next decade. But it takes years to make a profit.
“If you invest in Nasdaq 100Those were real companies at the time, says Bernstein, it took you 14 years to break even. years to break even. “
Cryptocurrency as a ‘monster’ bubble
Bernstein also sees cryptocurrencies as a big deal. Last June on “Trading Nation,” He warned that the rush to own bitcoin and other cryptocurrencies is becoming a dangerous parabolic path.
“Cryptos is the biggest financial bubble ever in history,” Bernstein said. “This is just a monster.”
Since the market is closed on Friday, bitcoin down about 30% in the past month. It is still up 63% so far this year.
Bernstein speculates bitcoin could drop as much as 90% like some tech stocks during the 2000 bubble.
“I think people want to wait to look at the real fundamentals, and look at the valuations before deciding that it’s all over,” Bernstein said.
