3 sectors to target from SVB’s chief investment officer

  • Stock markets have been volatile in 2022, with investors concerned about the war in Ukraine and the aggressive stance of the Fed.
  • But shares may rebound in the coming months due to the release of post-pandemic pent-up demand, according to the CIO of SVB Private Bank.
  • Shannon Saccocia also shared the three sectors she’s most bullish on in a recent interview with Insider.

It’s been a tough year so far for the stock market.

the S&P 500 and nasdaq they are down 5% and 10%, respectively, in 2022 as investors grapple with the impact of the ongoing conflict in Ukraine and the prospect of sharp interest rate hikes by investors.


Federal Reserve

. Investors appear to be bracing for considerably lower returns than last year, when the S&P 500 achieved a record 69 closings and won 30%.

And millionaires tend to share the gloomy outlook of the broader market, according to the chief investment officer of a private bank that caters to high-net-worth individuals.

“Our clients have, for the most part, accepted that the returns of the last three years will not persist,” Shannon Saccocia of SVB Private Bank told Insider in a recent interview. “Yields will be subdued and there could be significant pullbacks as global monetary policy becomes less accommodative.”

Saccocia specializes in advising high net worth individuals looking to invest more than $5 million and ultra high net worth individuals looking to invest more than $50 million. Unlike some of his clients, he is confident that investors can still generate returns in certain sectors of the market.

Saccocia explained his more bullish view of the stock market and shared the three sectors he is telling his clients to focus on in the current environment.

bullish outlook

Bearish analysts have warned that a stock market bubble could be developing – and some have predicted that America is about to experience a recession.

Saccocia is considerably more optimistic. He said that he is not worried about a prolonged recession for three main reasons.

First, there is currently a lack of alternatives to invest. Real bond yields remain negative with runaway inflation hovering around 8%, making fixed income unattractive. Cryptocurrencies have also struggled this year, with bitcoin 4% less and ethereal 10% less

“As weak as equity returns may be, bonds could suffer even more in the coming years,” Saccocia said.

Second, the number of investors in the market increased significantly during the pandemic, which could support stocks. Saccocia expects retail and institutional investors to “buy the dip” even in a prolonged recession.

“People in their 25s to 40s will have a lot of their net worth invested, which creates a floor for the stock market,” he said. “This means there will continue to be strong demand even if there is a significant pullback.”

Third, Saccocia believes pent-up demand from the pandemic may support markets in the short term.

“There is still significant consumer demand that has not been released yet,” he said. “I cannot foresee a depth significantly


recession

In the next two years, we may have a shallow recession, but investing in stocks still makes sense.”

Sectors to target

Saccocia expects three stock market sectors to outperform in the coming years.

Large Cap Tech Stocks They have not been immune to this year’s growth sell-off, but Saccocia believes they can still deliver solid returns. Market leaders like Amazon and Alphabet it slumped slightly in the latest quarter, but was buoyed by strong earnings performance in the fourth quarter of 2021.

“Tech stocks are getting a lot of heat right now, but it’s important to be selective,” Saccocia told Insider. “We think large cap tech companies make a lot of sense, because they are world leaders in their field.”

Saccocia also bets industrial stocks to get over. He said that many of these actions are becoming more efficient due to technological advancement and will benefit from a shift towards localization with Russia excluded from global markets.

“Increasing the productivity of industrial stocks will be important as we move toward a hybrid model that combines globalization and localized production,” Saccocia said. “That should help them steadily increase their margins over time.”

Finally, Saccocia sees health actions as a solid investment. While these are traditionally used as a hedge in times of


volatility

believes the pandemic has improved its long-term growth prospects.

“The mindset that health care stocks only offer slower growth is wrong,” Saccocia told Insider. “The rapid response to deploy vaccines during the pandemic shows that there is a significant amount of innovation and disruption.”

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