Money manager John Davi, CEO of Astoria Portfolio Advisors, is strategically positioning his investments in anticipation of challenges posed by President-elect Donald Trump’s tariff agenda. Davi expresses concern that the new administration’s policies could lead to significant inflationary pressures, making careful investment selection crucial.
Focus on Small-Cap Industrials
In a recent interview on CNBC’s “ETF Edge,” Davi emphasized a preference for small-cap industrial stocks over their large-cap counterparts. He believes that small-cap companies are better positioned to benefit from the pro-growth, pro-domestic policies that he expects will emerge from a Republican-controlled government. Since the presidential election, the Russell 2000 index, which tracks small-cap stocks, has seen a notable increase of around 4%, suggesting that investors may share Davi’s outlook.
Domestic Investment Strategy
Davi has also highlighted a strong commitment to U.S. investments, indicating that his firm is overweight in domestic equities. He believes this strategy is prudent for the next few years, particularly until the midterm elections, as Trump will have significant influence over policy narratives during this period.
Caution with Fixed Income
Despite his bullish stance on equities, Davi advises caution regarding fixed-income investments. He points to the challenges posed by a growing budget deficit, which he believes could negatively impact bond markets. Since the election, the benchmark 10-year Treasury yield has risen by 3%, reinforcing his view that bond investments may carry increased risk in the current economic climate.
Conclusion
John Davi’s investment strategy reflects a cautious yet optimistic approach in the face of potential economic changes under the Trump administration. By favoring small-cap industrials and prioritizing domestic investments, he aims to navigate the challenges posed by tariffs and inflation while steering clear of the risks associated with fixed-income securities. As the political landscape evolves, Davi’s insights may serve as a valuable guide for investors looking to adapt to changing market conditions.
Related Topics:
