The stock market’s volatility may continue for some time, but ultimately it will rebound from this year’s slump, says Tim Ghriskey, portfolio manager for wealth management firm Ingalls & Snyder.
In his stock picking, he looks for companies that are making changes to unleash value, stocks he can buy in anticipation of holding them forever. Ghriskey also sees a place in portfolios now for short-term bonds and always looks at alternative investments.
TheStreet.com: What’s your outlook for the stock market?
Ghriskey: Over the long term, it has always gone up. We have great confidence that it will rise over time. That being said, we have been in a severe downturn this year. We still think there will be a lot of volatility.
The Federal Reserve has drawn a line. It won’t back off from fighting inflation by raising interest rates and shrinking its balance sheet.
We would like to think that the market is bottoming, but people have said that several times during the downturn. We aren’t jumping in with two feet. We have kept clients’ exposure to equities at the low end of their strategic goals.
TheStreet.com: What’s your philosophy in choosing stocks?
Ghriskey: We look for great companies and management, especially ones that are changing for the better. It’s change where value is unleashed. We want companies where you have the conviction that you can own them forever, even though you rarely do.
We’re investors, not traders. But sometimes companies surprise us and make changes. So we have to alter our exposure.
TheStreet.com: What are some stocks that you like?
Ghriskey: We have owned Cintas (CTAS) for a long time. They rent and sell uniforms. And it’s not just for blue-collar workers. It can be khaki pants and polo shirts for workers at a hotel.
They have expanded into fire extinguishers, which constantly need to be replaced, and medical kits, which constantly need to be refilled. They sell and rent defibrillators too.
They have a high level of cash and are always thinking of new ways of doing things. In the past, they made a lot of acquisitions. But a lot of competition went out of business during the pandemic, and Cintas picked up market share. It’s a cult stock with a loyal following.
TheStreet.com: What’s another of your favorite stocks?
Ghriskey: Thermo Fisher Scientific (TMO). It’s a primary supplier of equipment to the drug discovery industry and parts of healthcare in general. The demographics [an aging population] are strong for healthcare.
A lot of Thermo’s products are single-use and have to be replaced constantly. It’s a conservative way to play biotechnology because in drug discovery you never know which drugs will do well. The company has steady growth and is constantly reinventing its product line.
TheStreet.com: What are your thoughts about fixed income now?
Ghriskey: With short-term yields high, we’re heavily exposed to short maturities. That includes money-market funds, our biggest investment, and short-term Treasuries.
Preferred stocks are great holdings [given their high yields], but we like conservative ones. We also recommend variable-rate securities. We don’t think the rise in interest rates is over yet.
We think the Fed will pause interest-rate increases next year. We are getting near the point where there will be opportunities in long-term bonds. That’s true in investment-grade and high-yield bonds.
TheStreet.com: Do you think that alternative investments are useful for individuals?
Ghriskey: The publicly-traded vehicles for alternative investments are all part of our discussions with clients. That includes real estate investment trusts (REITs); master limited partnerships (MLPs), [which are largely oil and gas pipeline companies]; and commodities.
Private investments – private equity and venture capital – are reserved for extremely wealthy clients because of their high-risk level and lack of liquidity.
The author of this story owns shares of Cintas.
