Kingsview CIO Scott Martin On Fox Business News – Making Money with Charles Payne 11.15.24
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CHARLES PAYNE: Alright, folks. Equities are struggling today. You can see that the S&P sectors, particularly technology, are taking the biggest hit, along with communication services. This comes after Applied Materials laid an egg. Remember, I’ve been telling you about these semiconductors repeatedly missing earnings—and this was a big one. On the other hand, utilities are leading the way as we see a rotation away from growth and cyclical names.
Now, my next guest believes the market was ahead of itself—that we experienced a euphoric moment, and a pullback was inevitable. This was sort of in the script. I want to bring in now Kingsview Wealth Management’s Chief Investment Officer and Fox Business contributor, Scott Martin.
Scott, it’s not just retail fund managers, right? The script has flipped post-election. If you look at what fund managers are saying globally, everyone is shifting focus. For example, the Russell had been up 35% before the election but is now at 23%. The Nasdaq went from 28% to 25%, and enthusiasm for emerging markets has dropped from 21% to 15%. How does your overall view align with this as we head into 2025?
SCOTT MARTIN: Well, it’s funny, Charles. It’s a classic case of expectations versus reality. What’s even funnier—or maybe ironic—is how quickly reality shifted after the election. By Wednesday, Thursday, and Friday, we were in this “new brave world” of a golden age, which may still happen, but it was a complete stretch at the time. It felt like stocks and companies were just soaring without basis. So, a pullback was inevitable.
One thing that struck me, Charles, was the VIX. It had been falling to year-to-date and multi-year lows, signaling no fear in the market. When the sentiment becomes, “What, me worry?” that’s precisely when investors should worry. For our portfolios, we’ve been gradually reducing excessive risk because the rally had people lining up to buy more, which tells you it’s a good time to take some profits.
CHARLES PAYNE: So today, the VIX is up 17%, but it’s coming off a very low level. I know you’re concerned about over-optimism or overconfidence. How fearful should investors be before you start feeling comfortable?
SCOTT MARTIN: Just a tidbit, maybe a smidgen, of caution—this is when investors really need to check themselves. The other thing going on behind the scenes, which we probably didn’t fully realize, is the impact of interest rates.
Since the Fed started cutting rates in September—50 basis points in September and another 25, with maybe another 25 coming in December—interest rates in the open market, like the 10-year, have actually gone up. This is completely contrary to what the Fed is doing, what I think they should be doing, and what the economy needs.
Add to that inflation fundamentals potentially reigniting, and you have storm clouds forming. As professional investors, we need to acknowledge that it’s not all peaches and cream—or puppies and ice cream, whichever phrase you prefer. These indicators tell us it’s time to reduce risk slightly.
CHARLES PAYNE: Alright, I’ve got less than a minute left. With these storm clouds on the horizon, I know you’re looking at alternatives. What alternatives are you focused on?
SCOTT MARTIN: Gold and Bitcoin, frankly. People might say Bitcoin has gone crazy, but we’ve been adding Bitcoin along the way, as well as Gold throughout the year. These are alternative asset classes that behave differently from stocks and bonds.
Even though Bitcoin isn’t a widely accepted currency in the U.S. or most places globally, it’s a valuable alternative. These assets help diversify portfolios in times like these, and they’re worth adding incrementally.
CHARLES PAYNE: Alright, Scott, thank you so much. Always great seeing you. And buckle up—it’s going to be a fun ride.
SCOTT MARTIN: Always great to see you too, Charles.
