MU, SNDK, PANW: Buying the Tech Selloff as Volatility Builds

Sam (0:00)

Today, let's talk about the macro and the markets. Joining us now to do that is Scott Martin, partner at Kingsview Partners. Scott, thanks so much for joining us. Let's talk about your SMP target. Pretty much where we are right now, so you don't expect a whole lot for the rest of the year. We're both looking up.

Scott Martin (0:15)

And it may be a good thing, Sam. I think we've got a lot to talk about so far this year, so let's take our mixins when we can. And I'm gonna throw the number out, it's 7995 Now, that means that by the end of the year, we're gonna be a little bit higher, like you said, Sam. We're gonna be through a lot of trouble, like you and KG just talked about, where we have this kind of fits and starts in technology, fits and starts in memory and all the chip stuff. And we have this small little teeny weeny issue in November 3rd of the elections coming up here. And a couple of Fed meetings too, Sam, that I think if the market gets to those things and finishes, say, just sub 8,000, I think the market basically is on sale there and you could buy it for next year.

Sam (0:52)

Okay, interesting. What about this sell-off we're seeing across technology? I mean, particularly semiconductor chip stocks right now. Does it make sense to you?

Scott Martin (1:00)

Well, I don't like sell-offs, but they do make sense. They're part of the going up, I guess, right, Sam? And it's a good day if red is your favorite color. And I'll tell you what, I think the chip market is one of these situations where you're going to have a lot of buyers come in and you're going to have a lot of sellers come in after them. And what happens is when you get to these high levels, whether it is in Micron, whether it is in SanDisk, even if it's in, say, security, like, say, Palo Alto Networks, all names that we kind of own here, we like them. You have to take your lumps. You have to realize that if you're long-term on these names, these are good days for you because you'll be picking up at lower prices. But remember, some of these late-stage buyers and some of these names, Sam, as we've seen all year long, as you and Kevin talked about, these guys come in late and buy up and they sell fast. So once the sellers are out, those weak hands are out, those are times to wait in these markets and I think we'll be there soon.

Sam (1:47)

Okay. So perhaps a buying opportunity, I mean, particularly because a lot of these stocks perhaps are on discount. I mean, they've come well off the summer highs. What else are you snapping up in this market? Do you like the consumer?

Scott Martin (1:58)

I always like the consumer because I am one. So I have to like myself, I guess. I'm trying to do my best to keep the economy going. So I think the consumer is not too bad. I'll tell you what I've been watching lately though is financials. Financials trading really ugly lately, not so much in the last couple of weeks, but my goodness over the last, say, end of the summer, had a really rough end of the summer, brought back to school season for the financials. And so looking at companies like JPMorgan, Bank of America, some of those names, Sam, as we come up to earnings season two, seeing how these financials had to perform maybe a little better in this upward rising interest rate environment, whether to see the Fed raises again or not this year, who knows? But the markets seem to say, hey, we want rates higher, at least the bond market does. And so I think the financials have a chance here to start to outperform a little bit as we get into the fall season.

Sam (2:39)

Yeah. I mean, Goldman shares have turned negative this morning. We were up 4 percent. In fact, financials and technology have both reversed from their opening levels. So obviously, a very volatile market we're dealing with right now, pretty much on edge. I'm just wondering if what we heard from the banks give you any indication as to what we're likely to hear for the rest of the earnings season. Did they give you any clues?

Scott Martin (3:02)

Not a ton. I think the banks have to play it really carefully. Again, based on what the Fed is doing, based on what loan demand is doing, based on this new interest rate environment. Sam, and also based on the fact, hey, we've got November 3rd coming up and we could have a little bit of a shift, say, in the legislation that comes out of Congress here come January. So I think the banks have to play it tight to the best. They've had a good run here. Banks have had a pretty good environment in which to operate. Their performance has been so-so. I'm not a bank hater yet, but I'm one that's looking for the banks to prove themselves here. They've got some good dividends attached to them, great balance sheets, pretty solid loan demand, and that higher interest rate environment should give them that very coveted net interest margin that we always like back in, say, the mid-teens and the mid-early 2000s.