Goldman Sachs executive Tony Pasquariello thinks the equities market is top-heavy, but he still isn’t bearish.
In a new Goldman podcast, Pasquariello says compounded earnings growth has brought the market to where it is today, and he notes that he’s “just not willing to pick a fight with that momentum.”
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“I tend to be a big student of market history. And the history book is very clear, which is when the Fed is cutting, again, into a cyclical upswing, typically the outcomes are favorable. When the [Fed’s] cutting with the market on the [highs], typically the markets fall through to the upside. And so, I mean, big ball, in the absence of recession, markets tend to go up. When the Fed is adding stimulus on top of that, again, typically the wind’s blowing in a favorable direction for the bulls.”
Pasquariello, Goldman’s global head of hedge fund coverage in the global banking & markets division, notes that he prefers the Magnificent Seven stocks, which include shares of the tech giants Tesla, Meta, Alphabet, Amazon, Apple, Microsoft and Nvidia.
“I tend to be more of a Mag 7 person as opposed to some being like a basket of non-profitable tech stocks. Now, by the way, that cohort’s performing better. It’s kind of like small-caps. So, some of the more disadvantaged parts of the market, the laggards, if you will, are catching up. But for me, it’s still sticking with the nine biggest and best, those with the deepest moats. Those are generating [returns] and reinvesting capital on a level that no other companies on the planet can come close to.”
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