Where to Invest $100,000 Right Now
Experts highlight promising investment areas in today’s turbulent market.
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It’s a great time to focus on the big picture.
As the stock market reacts to each twist and turn in President Donald Trump’s trade talks, the short-term noise in the market is dialed way up. Fears of rising inflation and an economic slowdown in the US have consumers and businesses nervous, and new geopolitical tensions flare up all too regularly. To help cut through the noise, Bloomberg asked wealth managers and market strategists where investors could seek long-term gains with a $100,000 stake.
The ideas that emerged range from technology — yes, the Magnificent 7 is in there — to insurance and health-care stocks, high-quality fixed income and publicly traded private equity stocks. When the experts were asked how they’d alternatively spend $100,000 on something fun, travel dominated. A Winnebago factored into two fantasy trips across the US, while another expert longed to watch the sunrise from an outcrop in New Zealand.
For investors who want to use exchange-traded funds to invest along the expert’s themes, Bloomberg Intelligence ETF research associate Andre Yapp suggests rough proxies that should do the trick.
Read more: Are you Rich?
Victoria Fernandez, chief market strategist, Crossmark Global Investments
Tiptoe Into Growth
The idea: We started moving clients into more defensive sectors like consumer staples about 12 to 18 months ago, and the recent run-up in staples stocks and value-oriented names has us trimming some of those positions. Now we’re starting to find some of the areas that participated in the broad pullback still have the fundamentals we want to see, such as being in an uptrend with good earnings growth and cash flow numbers. We’ve been looking at some health-care names, at financials — which continues to be one of our favorite sectors — and we’re trying to find tech names that are priced appropriately, including some Mag 7 names.
The strategy:
In tech, we really like Cisco Systems. It’s trading at around 17 times earnings and it’s one of the few tech companies with a dividend so you get some buffer to the market. Software has become a much, much more important part of their business over time and has a higher margin and recurring revenues. We’ve also been adding to Microsoft, but the stock is up so you may want to wait for a little pullback there to get in.
In financials, we’ve focused on the insurance side, and Progressive Corp. is one of our favorites lately. Both the property and auto lines increased policies at a rate of 18% year over year in the last quarter, and the return on equity is 80%. The stock is less volatile than the market as a whole, it’s trading at about six times book value, and it has a really good balance sheet.
In health care, you have to be careful in looking at names with a lot of exposure to Medicare or Medicaid, because you could see changes there. We like Gilead Sciences. It’s a leader in the HIV franchise, is doing acquisitions yet expanding its lines of business for oncology and liver disease and it has had consistent strong earnings compared to expectations. Its last earnings report wasn’t as good as former ones, but it’s a company that has good longstanding earnings potential, growth potential going forward with new lines of business, and a roughly 3% dividend.
The big picture: The market has made up about three-quarters of the drop we’ve had, but we are still looking at it through a bit of a cautious lens. We think there is a lot of underlying weakness in the labor market. A lot of the consumption and inventory numbers for the first quarter are pull-forward demand, so in May and June we will probably see some reversal of that. The soft data, which typically leads the hard data, is still looking pretty stretched.
Michael Rosen, chief investment officer, Angeles Investments
Benefit From Volatility
The idea: My message to investors is to diversify, diversify, diversify. That is in contrast to the past 15 years when investors should have owned only one asset class — large US tech stocks. But that era is done, and a new era of fragmentation and volatility is upon us. Investors should spread their capital across geographies, currencies, sectors and strategies across all asset classes in order to capture, and benefit from, the increased volatility in markets.
The strategy:
The US represents more than 60% of the world’s equities, but that is likely to fall, so have half of your equities outside the US, including Europe, Japan, China and emerging markets. We think the US dollar will continue to weaken, favoring non-US dollar assets, and a small (5%) allocation to gold should benefit as well.
Given the extreme levels of volatility in equities and the very, very high valuations, having a higher quality portfolio is appropriate. That could mean not just higher-quality bonds but higher quality in holding more fixed income and less in equities. High-quality bonds such as agency mortgages, high-rated structured bonds such as asset-backed securities and high-rated loans (collateralized loan obligations) should all perform well.
For a 25-year-old investor, with a time horizon of 40 years, their 401(k) should be entirely in equities as over decades equities will absolutely compound at a higher rate. For those with a more modest time frame, the answer is certainly for a more balanced portfolio than we would have been advocating for even just a couple years ago.
The big picture: Over the past 15 years or so the US economy has massively outperformed the rest of the world. Ironically, part of the reason for that has been globalization. For a variety of reasons, the US has decided to abandon unilaterally our dominance of the global economy and politics. This means a more fragmented world politically and economically and a less productive, less efficient world economy. That translates into a period where, if wealth is not destroyed, it certainly doesn’t grow at the pace it might have been able to otherwise. The unitary bet for investors, which has been to own US equities, and in particular our most innovative companies, is over.
Jose Rasco, Americas chief investment officer, HSBC Global Private Banking and Wealth
Go International
The idea: We are short-term neutral on the US but long-term positive. We have become more positive on emerging markets Asia, where we see the ASEAN countries and India looking good. If you look at Asia in general, the economic growth is better than anywhere else, and we have a paradigm shift from globalization to regionalization. As China has moved a lot of low-end manufacturing abroad, to Vietnam, the Philippines, Sri Lanka, Mexico, that has benefited some of these other countries. We also have a modest overweight in Europe, focused on Germany, and see opportunities in industrial stocks and, to a degree, materials and aerospace.
The strategy:
In Southeast Asian countries, there is a lot of intra-regional trade and a lot of wealth creation in Singapore sort of taking over from Hong Kong to some degree. We think China’s moving of production facilities abroad will continue with the fallout from tariffs. We love India — it is a highly diversified economy with a very young population and a lot of productivity to come. We need them to open up their markets, and the upside over the next five to 10 years is significant.
Europe has lacked a unified industrial or defense policy, so in that regard Trump has served as a great unifier for the Europeans. Now they want their own industrial policy, and Christine Lagarde, president of the European Central Bank, has said Europe needs to prioritize greater self-sufficiency, especially when it comes to semiconductors and food. And now they need to spend on defense. That presents opportunities in terms of European equities in industrials, aerospace and materials. The paradox is that increased European spending on defense and cutting-edge weapons benefits the US to a degree, because aerospace and defense are big exports of ours. Aerospace has a limited list of companies but you have suppliers and manufacturers of component pieces, and some car companies create aircraft engines.
The big picture: We are at the beginning of a paradigm shift politically, economically and financially. Clearly, this is a very new world and we’ll see a lot more change in a lot of areas. We’re going to go into an environment of hopefully some measure of fiscal contraction in the US that the market is looking for while the Federal Reserve is easing. So you’ve got a shift in the gears of the machine that needs to be accounted for. The market has done that, to a degree, and we’ll see how deregulation and the budget process in the US bears out.
Matt Maley, chief market strategist, Miller Tabak + Co.
Buy Big PE Players
The idea: We are at a key inflection point and I’m worried that all of the uncertainties out there will make it tough for us to push a lot higher immediately. So I would definitely put 10% or even 15% of the $100,000 in cash, because you want some dry powder if we get another leg lower. The one area I really like is some of these firms like Blackstone and KKR, whose stocks were down 40% at their lows. They’ve bounced back but have not bounced back as much as the others. And for the long run, I like Boeing, simply because it’s too big to fail.
The strategy:
While the market has retraced about three-quarters of its losses, Blackstone and KKR haven’t retraced anything near two-thirds of their losses. I understand that if things get worse these stocks will have a tough time, but they have already priced in a lot more than is in the broader market. Can they go down more? Sure. But are they going to break a lot more after a 40% decline? More importantly, these are the companies that will be able to take advantage of tough times when they do come out of this, and can come in when the blood is in the streets and pick up distressed assets — that is their expertise. I like nibbling at these stocks and dollar-cost-averaging into them over the next six months.
With Boeing, it’s one of only two commercial airline manufacturers in the world and is very important to the defense industry. It’s too big to fail. Europe will have to build up defense, so a lot of American contractors will do well with that. The stock has been going down since 2018 and it’s finally stabilizing. It’s down and it can’t stay down and out. It’s definitely a longer-term play, so buy a little bit once a month, every month of the year, and sit on it for five years.
The big picture: I’m not convinced that the agreement with China has removed as many headwinds as the market is pricing in right now. We’ve been seeing a good move in the markets, but it’s nothing more than we usually see in a bear market rally. That doesn’t mean this is definitely a bear market rally and the market is going to roll back over. But we’ve even seen the stock market retest old highs when the market is as expensive as it is today, only to have them roll back over in a significant way. The market is still expensive, earnings estimates are coming down and I worry that even though we are getting some better news on the trade front I don’t know if that will be good enough to turn around the earnings picture as quickly as people would like.