Dan Niles named cash as his top pick for the first time since 2022, when the Fed’s aggressive rate hikes triggered a market selloff. This time, however, with inflation running at 2.5% to 3%, he expects cash may be a good place to hide. “The last time I chose cash was in 2022 when the market ended up down 19%,” Niles told CNBC’s “Squawk Box” on Monday. “So, we’ll see how this year plays out. But I think specifically “At the beginning of the year, if you had cash, you were getting a 4% yield on money market funds. I think that’s not a bad place to go,” said the founder of Niles Investment Management. Much will depend on inflation and said President-elect Trump’s immigration and trade policies could have more impact than any pro-growth policies. He believes that the market will have a variety of outcomes, saying that it is “likely” to fall by 10%-20% this year, while the potential upside is 10%. “Valuations don’t give you a lot of wiggle room,” he said. “That’s why this year, it’s like one of the broadest outcomes I can think of — and I think it really depends on the path of inflation, whether the multiple is able to sustain or contract 20% to 30%.” Although 12 After a monthly decline, the S&P 500 index still rose for the second consecutive year, rising by more than 20% in 2024. Entering the new year, the S&P 500 is trading at a forward price-to-earnings ratio of nearly 22 times, close to its highest multiple since 2021. , these stocks may benefit. “They were much more defensive. If you look back at what happened when the tech bubble burst or over the 22-year period, they performed much better than the market,” Niles said. “And because they are larger than small-cap stocks, they tend to have better profitability and better ability to respond if interest rates do go higher.” He also likes software company Cisco, fiber-optic networking company Adtran and banks stock.
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