Strategist not worried about market shock to Big Tech from 'well-known' Fed moves

Paul Meeks, Independent Solutions Wealth Management portfolio manager and professor at The Citadel, provides insights for investing in Big Tech companies and Tesla during the current market bounce back.

Video transcript

- For that, let's bring in our guests Paul Meeks. He's Independent Wealth Solutions-- with Independent Wealth Solutions Management. Paul, good to talk to you today. You know, we were talking about this rotation out of tech. I'm looking at the sector right now, not completely falling out of favor. It is still up on the day.

But as we start to see these fears of rate hikes seep in through the markets, how do you think investors should be looking? Especially at high growth tech names.

PAUL MEEKS: Well, I do like anybody else. Know that tech and growth stocks are the longest duration assets, which means they're going to be the most negatively impacted in valuation by any bump up inflation, which would take interest rates up. But on the other hand, what the Fed is doing, and is even talking about doing-- which is going from accommodative to more restrictive monetary policy-- is unknown.

It's well broadcasted. We talk about it on air and in the print all the time. So I don't think if it is so well known, it's going to have such a nasty impact. Some actually despite that, and even despite Omicron-- which I actually think is starting to look more transitory and a lot less of a threat that we had with COVID back in the spring of 2020. I'm starting to feel, again, particularly after last week gave us some opportunity on my favorite tech stocks, to be more sanguine about the tech sector.

- What does that mean? Would you sell some of your positions? Or you just kind of stay put and not necessarily add, especially around tech?

PAUL MEEKS: I'd stay put. And I'd actually even add some, you know? I'm pretty interested right now in the semiconductor complex. Today, for example, we have some really high quality companies like Nvidia and AMD, which because their growth-- because they are expensive, no doubt about that-- they're down 4% or 5% today. I think it's actually a buying opportunity in varied names like that.

Also, the semiconductor capital equipment guys, we know there is a voracious appetite for more capacity. And everybody from Applied Materials to ASM Lithography to LAM Research to KLA-Tencor, I think you could probably throw a dart at the shares of semiconductor capital equipment and do quite well. So it is-- within the tech sector, I actually think there's some cool opportunities right now.

- You talk about the semiconductors being under pressure. Another stock that is heavily under pressure today is Tesla, on track here to close in bear market territory. This time, around the SEC launching an investigation into this whistleblower complaint that came about back in 2019. You know, this specific case is about the company allegedly ignoring the safety concerns around their solar panels. But how are you positioned on Tesla right now? I mean, is this-- you know, given the pullback that we've seen-- is this maybe a good time to get in?

PAUL MEEKS: I actually think it is. And this is the first time that I've said this on air or in print since the company went public. So I actually agree there's some litigation risk. I think it was egregious what they did, forcing the solar company into the car company years ago. That was all Elon Musk and bad corporate governance. But I do know what the fans want. And when you see that this stock is below $1,000 per share, I think it is a decent opportunity to buy it at least for a trade.

- And why is now the right time to get in? I mean, the investigation seems to suggest that there could be further downside if anything materializes from this SEC probe.

PAUL MEEKS: You know, the fact that we've discussed it, we've highlighted it. So I don't know if I would agree with you that there's that much downside based on this. You know, I think what's probably more worrisome is what happens with production in China, because that's their all-important geography. And also, like any of these stocks that is very expensive, it could technically drop.

Just given like you discussed at the beginning of the broadcast here, that if we have rates back up, then you know you cannot make a valuation call that this thing is cheap at all. But I actually think, as a trading buy despite all that, this might be a decent opportunity. Because we know this is a cold stock. And folks will come back. And I think what's been reported recently is actually not that scary, at least not that scary to me.

- Paul Meeks, some good insight there. It's good to talk to you today. Independent Wealth Solutions Management Portfolio Manager and the Citadel Professor of Practice in the Baker School of Business.