Nvidia and the ‘Grand Seven’ dominate the stock market

Eric Bailey, executive managing director of The Bailey Crew at Steward Companions, spoke with Quartz for an exclusive installment of our “Smart Investing” video line.

Take a look at the interview above and check out the transcript below. The transcript of this conversation has been lightly edited for length and readability.

Andy Mills (AM): The The presidential debate was a later age And Democrats are struggling broadly. Biden says he will stay. Do you think this is affecting the progress of the market?

Eric Bailey (EB): Reaction in the markets was slow. This is clearly a batch of presses gaining momentum. I believe we will see as the momentum continues. As we get closer to the election, I believe we’re going to see bigger impacts once each side is considering what their insurance policies will be fiscally and financial coverage, What could be the impact on fiscal coverage, interest rates, everything. Some of the major problems that affect the markets.

AM: If Trump got the advantage, would that adjust the image for the allegations or for everything else?

Eb: Yes, Trump has clearly indicated that he will announce an unelected Fed chair and reducing rates could be a concern for his management. And so low rates are certain for a lot of financial assets. I believe this will be really useful in trim time period. I believe you will see that property prices are stable, equity is excellent for a fixed source of income, possibly real property, although long term it is really dependent on comprehensive insurance policies. And to be enthusiastic about it. He is unknown.

AM: So there was an op-ed in The Times that said a second Trump term could be catastrophic for the economy. Do you believe so?

Eb: I don’t like to change any approach or option, but what I can say is that some of Trump’s policies are concerning, right? Especially his price list where he is a big supporter of imposing heavy price list on goods imported from China. And this is a sign of inflation, right? If you’re going to impose a 10% tariff, the price of that product will obviously go higher and that will have an impact on American consumers. And so at the same pace, it wants to release interest rates, but on the other hand, wants to impose price lists, which are inflationary. This is creating some problems. And that’s the priority, right? I believe the market will no longer react favorably to this. So I believe we would like to see an additional concrete fiscal plan from Trump that does not exist now. And so once again, to get excited, we’ll see, as we get closer, if they reveal additional specifics and the market will certainly react favorably or negatively accordingly,

AM: It’s a very carefully comfortable landing that they’re trying to engineer. And after some unexpected thing comes out, which is not very subtle, can really impact the market.

Eb: Yes, markets just don’t like the unknown, they don’t like uncertainty. Markets are an important indicator, right? So that they can anticipate what it’s going to look like six months or a year from now. And hence there is relaxation in the markets at this time. They like what they see, they like what Powell has accomplished. They give priority to the economic system. At the moment we understand that stocks are being rewarded, traders are being rewarded for investing in stocks. And if unused management is available they usually implement a batch of sweeping adjustments, which creates uncertainty. And I believe the market will probably react negatively to this.

Read more: Tesla Retain Could Possibly Earn Back His Place in the ‘Magnificent Seven’

AM: This presence so far, grand sevenhas achieved an astonishing feat in reducing the burden on the market and shifting issues to the upper level. Do you believe this will continue?

Eb: At a glance, it’s great, right? Those handful of stocks have delivered massive returns. Nvidia is obviously the only one that everyone talks about doubling more than a hundred percent at the present time. And the returns in the subsequent 3, 5 years are staggering. It’s the biggest market cap company, but returns are very low based, right? If you look at the markets, these handful of stocks, Nvidia, Meta, Alphabet, Amazon, Apple, have produced most of the return in the index. And it’s concerning because if we see a recession or we see some disease, and we’re going to get some signals over the next few weeks, second quarter profits are coming out, and it’s going to be very impressive. Those companies want to generate strong revenues, profits to continue this momentum.

AM: It seems alarming that so much work is being done through so few corporations.

Eb: Clearly traders are moving to invest in those names, right? If you look at the returns, any dip or sickening in those names is met with a batch of buying, buying on those dips. And we proceed to see it. Nvidia offers 10-for-1 crack. The markets love it. Broadcom, Sevens, another big magazine curious about semiconductors, just offered a crack. It always feels like his talent is touching untapped heights. And so investors are being rewarded, although on the other hand, the valuations for these companies are extremely high and so are the risks. You have to be prudent when you invest money in those corporations.

AM: So what are the areas you are emphasizing in the second part?

Eb: Obviously, ERA is where the returns were, so you should invest there because it has been such an incredible creator of impact and returns. I like health care more than speed. Under a Trump administration, there will obviously be (much less) regulation and that’s a big deal for the healthcare sector. You look at the demographics of our country, the aging population, health care desires, Medicare, all the issues, sure. So if interest rates go down I will like that sector a lot, right? So pastime rate-sensitive areas I really like smartly. Financials, utilities, they will do well in a low-tariff environment.

AM: Tech, Healthcare, Financials, Utilities. Eric, thanks so much for joining us.

Eb: Positive, thanks for having me.