• All right, so talking about this bounce back. How are you viewing this bounce back in the sell-off on Friday? What's Friday proof that the market was priced to perfection and that it was priced to have no more issues, even though there are a lot of things on the quote unquote wall of worry overhangs. And obviously the US China trade tensions will want to.
    Frank
  • Mark
    Yeah, what China is doing right now is showing investors that they're still around and they're not. haven't really decided what they're gonna do right now so when I talk to my clients over the weekend they're really concerned with are we going back to March in April on the doldrums of the market after liberation day and that's what's really concerning everyone especially when you got smart guys like Andrew Ross Sorkin on 60 Minutes last night talking about there could possibly be one of the biggest bubbles in American history that's forming with AI and the tech trade. If you're a client or wondering, where is this black swan event going to come from, it could be China?
  • Do you see opportunities in China as well with the pullback? Chinese companies, they pullback even sharply or sharper than the US equities did.
    Frank
  • Mark
    But China is one of our major trading partners, and you've got to be invested in that country to have a diversified portfolio. So for those who don't have any exposure to China, I'd highly recommend looking at and start dollar cost averaging in the country because of the growth, the sheer population and the demand that they've shown.
  • So you used that client's call you would ask if it was a black swan event. It seems like you're answering with your pick. Your pick for us today is gold. So it seems like you're concerned about the global economy or concerned about inflation. You're concerned about a stock pullback. And you seem to be very bullish on the safe haven and off fairness you've been bullish on for quite a while.
    Frank
  • Mark
    I'm a risk manager and we've taken a tremendous amount of risk going into the AI trading tech over the last three years. You've seen unprecedented returns. And so gold over last year, up 50%, is a great place to go to hedge against anything that might happen not only internationally, but what's going on here domestically with our deficits and the government being shut down for over a week now.
  • So when you're investing in gold, are you reducing your exposure to other sectors or other areas, you're still investing in the AI trade? It's your pick, but I don't think you're saying that's the only thing that people should be investing.
    Frank
  • Mark
    Typically if we didn't have the China backdrop and deficits I would say fixed income is a great place to hang out. Clients aren't making any money there right now they haven't made any money in fixed income for over the last four years so gold is I think one of those diversifiers that clients are looking for to de-risk portfolios and they've had a tremendous amount of upside over last four years.
  • Speaking of risk we were just hitting on our pick earlier from Jeff Kilburg it was IBM on the idea of quantum computing being a big tailwind for that stock when you look at some the quantum stocks month to date they're up double digits pretty much across the board even the ETF the Qtum something that we've seen as a pick here on Worldwide Exchange Alpha form in the market.
    Frank
  • If you're looking at an environment where maybe investors should take some risk off the table, why are these stocks surging so much?
    Frank
  • Mark
    Everyone is looking for doubling their returns. Quantum is a great place to see potential growth to that degree. But if you go back to March and April from the doldrums quantum stocks weren't doing all that well and not a lot was. You saw the communication services, gold and utilities did really well. If this China fiasco goes on any longer past November 1st.
  • All right, what about the AI trade? Even Dan Ives from Wedbush, one of the biggest bulls out there saying that if we see an escalation that could at least put a speed bump in front of the train that is what he calls the fourth industrial AI revolution.
    Frank
  • Mark
    Listen, China really is going to determine what happens also with AI because AI works with chips, right? And we see companies in all the sectors like SMH strongly dependent on these minerals that are coming out of China. So if we don't get this right, you're going to see the AI trade, quantum, everything else, like we saw back in March, possibly revisit those lows. So we really have to be concerned and mitigate risk when you're looking at these portfolios make sure you diversify.
  • So one thing you haven't mentioned is those rare earth companies like Albemarle. Are you seeing opportunities there? I've never really heard you talk about the material sector before, but at this time, with the government investing in those companies and some of the battle between US and China over those rare earths and some of those critical minerals, is this the time to invest in those?
    Frank
  • Mark
    If you can get a rare earth company that is going outside of China, specifically with all this rhetoric going up, I think it makes a lot of sense to diversify and be in that space.
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