CIO Scott Martin on Fox Business Making Money with Charles Payne 12.23.22
Scott Martin, Chief Investment Officer at Kingsview Wealth Management discusses earnings for the upcoming quarter.
Program: Making Money with Charles Payne
Station: Fox News Channel
CHARLES PAYNE: Joining me to discuss PAC Private wealth management. They’re managing principal David Dietz. Sure. Vest CEO Rob Luna and Kingsview Wealth Management CIO Scott Martin and the Crypto Bros. I did not get the memo. I’m wearing the wrong shade right now. I should’ve had my heat. You guys didn’t tell me. All right, let’s talk about. Let’s start with this, guys. I’m going to talk about steadfast rules for buying stocks that are down and down markets because people obviously, this is what you want to do. We want to go into next year and take advantage of the carnage. But this year, any attempt to do that mostly has been a mistake. Rob, what are your steadfast rules?
ROB LUNA: Well, look, I mean, at the end of the day, Charles, you’ve got to buy quality over the long run. And if you look at stocks over the long run, you get 9 to 10% returns. Why is it not two or 3% like CD’s is? Because you have to endure years like this and that’s the volatility. Stick with quality. You just talked about retail Wayfair, that’s a stock hasn’t been doing well. A company like Restoration Hardware, though, they are dominating great products, great service, great company. When you get a chance like this to buy those names down 50 or 60%, that’s when you step up and do it. Don’t start digging through the rubble, trying to find the heavily most shorted, hoping you’re going to get some lottery ticket stick with high quality, stick with themes that you can have conviction in during these hard times.
SCOTT MARTIN: Yeah, I agree on the buy the dips sentiment. Charles. The problem is in a market like this, you have to sell the pop. And so to Rob’s point, staying active and not hoping for that lottery ticket, but being happy with saying, hey, I’m going to get 20, 25, 30% out of a name after it’s been downtrodden like a lot of these names have, is still a win and something you can build on going forward when the market does recover and operate more normally.
PAYNE: David, your approach to this, I mean, you have been you’ve been buying here and there, I know, throughout the year. What are some of your rules that people should should understand if they’re going to do this? Because I think I think obviously if you buy the right names going into 2023 or early 2023, you’re going to make a lot of money.
DAVID DIETZE: Yeah, absolutely. So here’s three things that we’re looking for here. Companies that have the guts and the willingness to cut costs. So, for example, we heard from FedEx earlier this week that basically they’ve had a tough year. They had mixed results, but they outlined 1 billion in cost cuts. The stock is up nothing. We’re looking for each company to have an opportunity for financial engineering. An example that I’m looking for going forward here is Disney. They may want to spin out the ESPN that would allow ESPN to get a tie in with gaming, which image conscious Disney doesn’t really want that I think is going to boost the stock. And the other thing, of course, that we’re looking for is companies to have lower debt. We saw some weakness in the reach because they’ve got to roll over some big debt. We’ve got a higher interest rate regime. So watch your debt levels and your company.
PAYNE: Right. And by the way, folks, financial engineering, this week we saw FedEx say they were going to cut $3.7 Billion out, a euphemism for mostly firing people. But if companies have to find ways of lowering costs and that’s one to David’s point, that might work out. I want to talk about the market overall. Obviously, all eyes are on the Fed, right. So let’s put that aside, because I actually think it’s going to be earnings surprises that create the big moves. In fact, since the end of the official earnings season, since earnings never stop, 248 names have posted results, 72% have been on revenue, 74% have been earnings. So the kicker, the average gain for that day, 2.26%. Scott, I think this is the template going into next year. I’m curious as to what you think will be one of the movers from the market other than the Fed that can maybe spark a turnaround.
MARTIN: Yeah, I agree, Charles. I think the boats getting loaded to the other side on the earnings picture with respect to folks expecting negative numbers obviously misses not beats. And therefore stocks are already correcting because of that. But those that deliver well obviously do well as far as the next day or two that they trade. So look, for us, I think it still is the Fed first and foremost. But look at some of the consumer numbers, Charles, that are coming
out as far as confidence retail sales. Those are numbers that can start to support earnings going forward. If we’re worried about earnings coming down, as many folks are talking about.
DIETZE: Yeah, so we’re really looking at inflation and interest rates. You know, at the end of the day, the Fed doesn’t call the economy. The economy’s ultimately going to call the Fed, and they admit that. They say they’re data dependent. So we’re looking at these inflation numbers continuing to come down. We’re looking at the interest rate. If if inflation is going to be such a big problem, why is the ten year well below 4% after cresting over 4%? I think ultimately the Fed realizes that we get more stabilization in that bond market and stocks will follow.
LUNA: Yeah. I mean, I actually agree with both David and Scott. I think they made some great points. And look, it is all about the Fed right now. But if you look at oil prices, if you look at housing starts, it’s hard to believe that we haven’t we don’t have peak inflation right now. I think we actually put the bottom in the market already. We’re really just chopping around right here. If we can get anything constructive out of the Fed at all, watch out. I think this market’s getting poised to rally.
PAYNE: Hey, guys, real quick, I started this segment off talking. There are two names I think, that are going to be imperative with the broader growth area, Apple and Tesla. Anyone buying any of those names right now? David. David did say, okay.
DEITZE: Charles, I mean, I’m going with Apple here. You see this little thing? I can’t get rid of it. This is the stickiest device on the planet, and they’ve got this walled garden of all these various apps and services and watches and so forth that just keeps you stuck there. So they’ve got this long a lot of revenues from people like me upgrading the emerging world. And I think ultimately China’s going to settle down, which is going to solve some of the supply disruption. Apple’s pulled back about 25% this year is worse than the S&P 500. Here’s your opportunity, Rob.
PAYNE: What are you buying?
LUNA: Yeah, I’m not sticking I’m not going with either of those two. Not that they’re not going to have good years next year. I think they have a good chance, but they haven’t been beaten up enough. Amazon, Google have been down over 50% names I like though, Disney. Great comeback story right here. The name I’ve talked about here for the last month, a victim of tax loss selling. If you’re looking for one name, I think you can easily double next year. Farfetch, FTC under four bucks. That stock could actually be bought out by Amazon. A lot of opportunity, a lot of overhead. If you’re willing to take on a little bit of risk, I think that could be your biggest mover next year.
PAYNE: Scott We got a 100% mover there, my man. Can you beat that?
MARTIN: I think so. Man. Cleveland-Cliffs great valuation, good top line growth and a lot of demand coming back for them in 2023. This stock has been forgotten. You got to own it.
PAYNE: All right, David Scott, Rob, you are three of the best. I appreciate you. Have a fantastic Christmas. And let’s rock and roll again next time we see each other, maybe in 2023. Thanks a lot.