Joseph Safina is interviewed by Yahoo Finance’s Alexis Christoforous | Published by: Yahoo Finance
Yahoo Finance’s Alexis Christoforous and Joseph Safina, founder and CEO of Safina Asset Management, discuss the latest market moves.
ALEXIS CHRISTOFOROUS: But I want to get more now on the markets and bring in Joseph Safina, founder and CEO of Safina Asset Management. Joseph, good to see you. I don’t know about you, but I think we’re in a bit of a information vacuum right now for the markets. I mean, earnings season is over. We’re now watching and waiting for vaccine news, for stimulus news. What do you see as the next big catalyst for this market?
JOSEPH SAFINA: Well, as time goes on, we’re going to see what happens with the vaccine. I mean, that’s the deal breaker at the end of the day. The vaccine hits and everything moves quickly, of course, stimulus package kicks in, now we have a market that we can really predict what’s going on. As it stands now, I think we’re still in a bull market. And we’ll continue in a bull market for the next 18 to 20 months or so.
But I do think that the economy on a whole, we have to focus on small businesses and bringing up the job numbers and focus on really developing the economy underneath the market. Because there is such a separation between the economy and the stock market right now. I mean, some valuations are absolutely in the clouds, but they’re still moving. And if you could just trade properly and buy on pullbacks, there’s a great opportunity for the next 12 to 18 months.
ALEXIS CHRISTOFOROUS: All right, well speaking of in the clouds, you’ve got a, you’re looking at the Dow about two years from now or I guess 21 to 24 months from now, and you believe we can hit Dow 45,000. Talk to me about that and what would get us there.
JOSEPH SAFINA: Yeah. Well, every time the market has recovered from a crash we reached new highs. And we usually go on a about a 24 or 22 to 24-month run. I think August 2022 we’ll see a 40,00 we could see a 45,000 Dow. That’s what we’re projecting, and we’re very excited about it. I think that there’ll be some laggards in the market and I think there’ll be a lot of opportunity as well.
ALEXIS CHRISTOFOROUS: So do you see value getting us to Dow 45,000? Growth getting us to Dow 45,000? And I would have to imagine this means that we get this virus under control relatively soon for the Dow to climb as much as you think it will within the next two years.
JOSEPH SAFINA: Absolutely. We’re going under the assumption that the vaccine does work and it does get distributed properly and we don’t have a second wave of another type of virus. Because that could certainly slow things down quite a bit. But I think the market is performing well based on the success of the vaccine and the distribution plan that’s in place. And I think we’re going to continue on. But yes, there will be, if there’s another macro incident or another pandemic that happens, of course, that’ll slow it down quite a bit.
From a value standpoint, very difficult to call this market. We look at it, there’s tremendous valuations out there that don’t make sense and continue to climb. We got 400, 500, 300 PE multiples, which doesn’t make sense. So we’re real careful when we’re investing in those types of stocks. But for the most part, I think we’re going to have a very good run over the next, like I said, 24 months is going to be good.
ALEXIS CHRISTOFOROUS: What does make sense for you right now in terms of valuation? I know you called out Palantir Technologies in your note. That stock taking a beating today. It’s down about 16%. Is that a buying opportunity in your eyes?
JOSEPH SAFINA: We’re nibbling in on pullbacks, yes. I think it’s a $50 stock long-term. I like it, but we certainly didn’t want, we’re buyers on pullbacks.
ALEXIS CHRISTOFOROUS: What about Tesla? Talk about over valuations. Lots of folks on the street now saying that this stock is in the stratosphere, trading at 1,180 price to earnings ratio. Do you touch Tesla at this point?
JOSEPH SAFINA: Ugh, and I’m a car fanatic. But I must say, you can’t, I wouldn’t go long the stock, but I can’t bet against them either. So I’m just staying away. Valuation way too high. There’s a lot of unanswered questions there. But I would not, certainly wouldn’t go short.
ALEXIS CHRISTOFOROUS: All right, let’s talk a little tech when it comes to some of the blue chip tech stocks, like an Apple. What if you’re looking at getting in there at this level. Does it make sense?
JOSEPH SAFINA: I like Apple here. I’m a buyer here. I think it’s going to continue on. I think you got 37, 38 analysts that are bullish on it. I think you’ll continue on. You’re going to have a great run over the next year or so on Apple. When it does get top heavy, we intend on liquidating the position. I’m thinking $160 is the number on it. That’s where it becomes a bit overvalued. But we’ve got a great trade here.
ALEXIS CHRISTOFOROUS: Is there anything that you are just staying away from here as we enter the final weeks of the year 2020? Maybe something that you held a position in and are getting out of or just something you’re staying away from completely?
JOSEPH SAFINA: You know, I love the question, but every day it’s different. You know, you wake up, this world is a very different place now. You wake up and something could change very drastically. There are so many sectors that we love. But I do stay away from very high multiple stocks. When you start getting into the 300 plus multiples, I generally stay away. I may play an option on it here and there, but I just don’t, I just don’t like investing in those types of stocks.
I do like transportation, trucking. I think trucking is, as you can see from FedEx and UPS, there’s so much demand, they just can’t even fill it. I think the trucking industry is going to truly perform. Its sort of recession-resistant, or I should say pandemic-resistant. And I think that we’re going to have a great run and transportation. People think I’m crazy, but I like the Salesforce Slack deal as well. So every morning we get up and we look at everything and then pick our targets and go.
ALEXIS CHRISTOFOROUS: All right, sounds like a pretty decent way to have to look at the market. Joseph Safina of Safina Asset Management, thanks so much for being with us.
ABOUT JOSEPH SAFINA:
Joseph Safina is CEO of Safina Capital, specializing in large-scale funding,
M&A, business development and marketing.