Fund manager gives his tips for young investors and explains one major risk on the horizon (via CNBCMakeIt)
Hedge fund manager David Neuhauser, who has made a name for himself by betting against some of the market's most popular stocks, shared with CNBC his tips for young investors., Neuhauser suggested that investors should be wary of big-name technology stocks that have seen "explosive growth" over the past couple of years amid the coronavirus pandemic.
The Livermore Partners founder and chief investment officer said he preferred smaller technology companies "because the potential for those companies to grow is actually there." Neuhauser said it was "much more difficult" to find long-term growth opportunities among the "mammoth" companies that are already valued in the trillions of dollars, or even upward of $800 billion.In addition to factoring in company valuations, Neuhauser said it was important for young investors to focus on the effect that rising interest rates could have on stocks.
Neuhauser said that he didn't think younger investors were paying enough attention to this as both a headwind for markets and as a potential buying opportunity.He said that the youngest cohort of investors have "never seen a bear market, they've never seen a recession, they've never seen a contraction, even in earnings, where a company is still growing, but their earnings have contracted for a while, and those are usually typically the times to be buying those stocks.
In the more-than 25 years that he's been investing, Neuhauser said that he'd often made money after identifying a stock that was out of favor as the economic cycle was "just about to turn."
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