BlackRock CIO Rick Rieder says he’s eyeing one stock sector that he believes offers big upside potential, despite market uncertainty.
In a new Bloomberg interview, Rieder says current market activity is defined by unusually high uncertainty and limited liquidity, particularly in equities.
According to Rieder, investors are staying on the sidelines for now, even though market fundamentals are solid.
“First of all, in markets, the level of uncertainty is extraordinary. Being active in the markets and trading in the markets today, particularly more so in the equity market today, the depth of the markets is incredibly shallow. When you go to execute something, you see how the market moves. There is not a lot of certainty…
The technicals in the equity market are phenomenal. The earnings growth dynamics are still very good. And so if you had good news, the market would rally significantly. The problem is you just don’t know how or when.”
Within that environment, Rieder highlights one segment where he sees a more favorable risk-reward opportunity.
“I will say this for my whole career. I actually think investing in technology is better in equities. The upside is greater… But I would say, generally, I tend to prefer technology to be in the equity side, because the upside is much greater.”
Morgan Stanley CIO Mike Wilson shares Rieder’s view on technology stocks. Wilson recently said that hyperscalers are now offering a very good risk-reward opportunity following the market correction, noting that the stock group is trading at the same multiple as defensive names but has 3x the earnings growth.
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