Victoria Greene, founding partner and chief investment officer at G Squared Private Wealth, talks about why she doesn’t think the selling is over, and her perspective on the outlook for oil and energy stocks.

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The stock market has staged a ferocious rebound in the past week after almost falling into a bear market. Don’t get too excited about that, says Victoria Greene, founding partner and chief investment officer at G Squared Private Wealth.

Greene joined this week’s “What Goes Up” podcast to talk about why she doesn’t think the selling is over, and to give her perspective on the outlook for oil and energy stocks. Below are lightly edited and condensed highlights of the conversation. Here’s an excerpt:

Q: Do you think we’ve bottomed yet?

A: I don’t think we found a bottom yet. I just think we’re not done yet. I think this is a little bit more the first leg because I always ask, what is our catalyst, how are we going to get growth? You really haven’t seen a lot of earnings revisions. And so we talk about, well, valuations have come down. Yeah, the P part of the P/E has come down. What happens when the E starts to go back down too? There’s two parts to that.

That being said, it has held — I just don’t think we’re done yet. I think this is more of a relief rally. If you look for the signs of capitulation — the 90% down days, the VIX spiking — we’re just not there yet. Yeah, cash balances have definitely increased and yes, we’ve seen some equity selling, but not a well and true panic. Not to sound like a snob, but I need a solid panic. We just haven’t seen that solid, absolute capitulation, everything selling off. We aren’t there yet. And then my concern also is, where is your growth. Margins are definitely being squeezed and we are going to have to wait until the Fed can send the economy into a recession to stop some of this.

Q: Your firm is based in Texas. Does the energy industry influence your clients?

A: It probably makes them a little more bullish on the energy industry. But some of our clients, actually we run ex-energy because it depends on what their exposures are. So if you have a privately held company or you’re on a board of a public company, you’ve already got that exposure. So we’re actually trying to diversify and mitigate the concentration because everybody in Texas is well aware that the oil market is cyclical. So you ride up the good times, but you know there’s a flip side to it at some point. And this last decade has been super hard on the energy industry. We had like five crashes within 10 years. And so there’s just this weariness about, OK, yes, we are bullish energy and the energy transition, while ESG is coming and electric’s coming, it’s going to take a little bit longer to adopt. And we are seeing that play out here in 2022.

So probably I would say, not to generalize, but the attitude of a lot of our clients is that the death of energy was over-exaggerated. So not to say that there aren’t concerns about ESG or climate change or things like that, but it tends to make them a little bit more willing to have a foothold in that segment. So I do think it’s a little bit of what you know does influence what you feel comfortable investing in. You have the same thing happen in California — if you’re in the San Francisco area, you probably are very, very comfortable with your tech exposures and a little bit more comfortable with the early-stage and the small-cap tech and the innovators.

Q: Which energy companies do you like?

A: This goes into the greater theme of what’s happening in the world right now and the deglobalization. And as you may see, Russia removed from the market, you’re seeing all of this rebalancing of supply and demand and it’s hitting commodities harder. It’s not just energy it’s hitting. It’s fertilizers, it’s all of the exports and some precious metals, palladium. They’re a huge, huge supplier of palladium. And so you’re seeing this rebalance and shift and all of these things take a lot of time to redistribute and build up supply chains. So our base case is oil is staying elevated for the next […]

source Why One CIO Is Waiting for ‘a Solid Panic’ in the Stock Market

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