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In this episode of Stocks In Translation, Yahoo Finance’s markets and data editor Jared Blikre and producer Sydnee Fried sit down with Kevin Mahn, president and chief investment officer of Hennion & Walsh. The discussion delves into topics including dot plots, bull markets, and backdoor AI investment plays.
Blikre and crew first explore dot plots or charts that summarize the Federal Open Market Committee’s outlook for federal funds rates and economist data, which Mahn cautions us to “take with a grain of salt.”
Mahn emphasizes the importance of understanding the chart’s complexity: “The one thing to remember about this dot plot chart though [is] each dot represents a different view of that voting member for where they believe interest rates are [going to] be in the next two years. But if you look at the dot plot chart, there’s no unanimity there,” says Mahn. “In fact, the dispersion between those thoughts and those forecasts are quite different. It’s a good tool, but you shouldn’t be making investment decisions on that basis alone.”
When asked how he advises clients in the current market, Mahn explains, “I would start by saying the short-term outlook, at least for me, is cloudy. But the longer-term outlook becomes much clearer.” His reasoning? Since 1946, the average bull market has lasted “5.3 years with an average cumulative return of 180%,” and, as Mahn notes, “the current bull market is only two years old with a… new return of about 64 and a half percent. So if history serves as a guide… we have at least two more years of this bull market to hit historic averages.”
Finally, they dive into the seven top-performing industry groups this year, including utilities, which have returned more than 20%.
“The one area that I like right now, we know that these data centers run hot, they draw a lot of electricity, right? So they need tremendous amount of cooling HVAC solutions. We found a company called Vertiv not so long ago… who would think an industrials company has anything to do with AI? But what do they do? They supply the electricity, the infrastructure, and the cooling solutions to data centers…. These are companies that align with the data centers, nothing to do with AI, but the data centers need them to run. It’s an interesting investment opportunity. You have to peel back the onion. And you’ll find a lot more areas to invest in,” adds Mahn.