Andrew Garthwaite is a stock and investment analyst who works for Credit Suisse. Mr. Garthwaite’s opinion is highly valued among those in the professional investment community. On Friday, Mr. Garthwaite provided his analysis of the current investment environment giving his opinion on whether or not stock investments are a good choice at this time.
The first point that Mr. Garthwaite made in a letter he wrote to investors on Friday is that he does not believe that there will be a recession in the United States until at least the third quarter of 2020. Garthwaite believes that most recessions occur approximately one year after wage growth hits 3.5 percent at the same time that the economy is at full employment. That hasn’t happened yet, and Mr. Garthwaite does not see that happening for at least one year. That would mean that in his estimation, a recession would not occur until at least one year after mid 2019.
Because he does not see a recession in the short-term, Mr. Garthwaite is recommending that his clients, and the clients of Credit Suisse, remain overweight in stocks. However, he is not recommending that his clients invest in just any equities in any sector.
Mr. Garthwaite is urging his clients to stay away from certain sectors in the market. He wants his clients to be underweight in the sectors of materials, industrials and consumer discretionary products. Right now, Garthwaite believes that the best performing stocks will be those in the software and the energy sectors. He also believes that consumer staples and utility stocks are good defensive stocks to own, and he believes that they will slightly underperform stocks in the software and energy sectors. Garthwaite also sees the telecom sector as a sector that might have good growth over the next several months. Mr. Garthwaite further warns that investors should stay away from any company in any sector that has a low free cash flow.
Regardless of the stock or the sector, Garthwaite gives a warning to investors. He believes that the market will be very volatile, and investors need to be prepared for market fluctuations. Read more on cnbc.com.