Beware of “market tug-of-war”: investment management CIO

Despite positive economic and earnings news, investors should be wary of a potential impending “market tug-of-war,” Bob Doll, chief investment officer at Crossmark Global Investments, told Yahoo Finance Live.

“There is a tug of war,” Doll said. “And on the one side, you’ve got this incredible economic and earnings news. And that’s not going to give up any time soon. We’re going to get an amazing print for second quarter GDP. And the earnings numbers will reflect that.”

On the other side of the rope, Doll cites concerns of higher inflation and interest rates as being potential stagnating factors for investment and market sentiment.

“Look, with all the liquidity out there, which was not mentioned the last couple of minutes, the path of least resistance for the stock market, I think, is still higher,” Doll said. “But I don’t think it’s going to be a straight line. I think it’ll be ‘to-ing and fro-ing’ that may disappoint and frustrate both the bulls and the bears over the next few months.”

In light of the Federal Reserve’s announcement that it will begin winding down its $13.8 billion corporate bond portfolio that it amassed throughout the COVID-19 pandemic, according to Doll, investors should expect bond yields to rise if growth remains as strong as Crossmark expects over the next 12-18 months.

As for long term investment strategy recommendations, when asked about whether investors should just buy SPYs and sit pat, Doll says he would not be against such a move.

“Look, with the power of the economy and earnings, it’s very unlikely we’re going to get a big downward move in the stock market. You have to talk about a recession to think about that sort of thing. And the probability of that is pretty low here in the next bunch of months. So I’m not going to fight you on that.”

However, he added that such a strategy may not make for smooth sailing going forward.

“All I’m trying to say is, going forward, it gets a little choppier,” Doll said. “So maybe you play it a little cute—wait for pullbacks to put that money in if you have that kind of discipline.”

Doll also touched upon Crossmark’s investment strategy, one that he describes as a multi-dimensional and holistic approach to determining both a company’s quantitative and qualitative value with respect to social impact.

“Are they promoting justice? Are they promoting family values and taking care of their employees, their community, their environment?” Doll asked investors about their potential investment opportunities. “And there’s now enough evidence in this realm that you don’t sacrifice anything. In fact, you can get a little more in terms of return if you focus on those issues in addition to the things that have been going on for decades, if you will.”

Close up and focused stock market business investment candlestick chart - Economy and trading concept. 3D illustration.

Close up and focused stock market business investment candlestick chart – Economy and trading concept. 3D illustration.

Thomas Hum is a writer at Yahoo Finance. Follow him on Twitter: @thomashumTV

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