Carillon Tower Advisers Inc. portfolio specialist Matt Orton is a rare critic when it comes to gold’s meteoric rise this year. He says excitement around the metal has made it a bigger bubble than tech stocks.Orton, who is “quite bullish” on tech stocks, thinks the price of gold has gotten disconnected from fundamentals. The flow of funds into gold “shows how much enthusiasm and/or speculation has been going into the gold complex,” Orton said in an interview. His firm has more than $63 billion under management and is based in St. Petersburg, Florida.
“Everyone talks about the bubble in technology stocks,” but the tech sector is “rising because a lot of these companies have been able to increase their market shares during Covid,” Orton said. The tech firms also had strong earnings, providing higher visibility to their growth profile, Orton said. Gold’s rally, on the other hand, could “completely derail” once risk factors driving investors to safe havens ease, including lower rates and the weaker U.S. dollar.
Here are other details from the interview:
• Orton recommends investors hedge their portfolio by diversifying, rather than allocating money into gold. He also thinks investors should keep some cash in “some form of low-duration assets,” which they can redeploy when needed.
• In terms of “tactical asset allocation,” Orton recommends overweighting equities with appropriate diversifications.
• Within equities, his preferred sectors are tech and health care. He thinks tech stocks with IT services look interesting as they have underperformed peers and have leverage to the U.S. economy.
• In health care, stocks in the equipment business are “particularly interesting” as they have exposure to “durable themes” such as chronic disease treatments.
• Orton’s least-favorite sector is mid- to small-cap financial stocks because they will struggle in the low interest rate environment. He also doesn’t recommend investor exposure to the energy sector.
By Aoyon Ashraf
Source: Bloomberg News
