Mario Gabelli’s investment strategy
In a recent CNBC interview, Mario Gabelli discussed how to play the current market situation and what investment strategy will result in good returns during Trump’s presidency.
He said the companies that have pricing power can perform better in the current environment. According to him, the companies that are in the consumer products (XLP) area have better pricing power.
We discussed in the previous part of the series that Gabelli is expecting that inflation is going to be higher in future months. If food and fuel prices rise, it will help the consumer staple sector and the energy sector (XLE). Given that middle-class US growth is increasing in the United States (QQQ) (SPY) (VFINX), Gabelli is expecting that these companies will be profitable.
Since the US elections, there has been a significant rotation in various sectors. There has been an uptick in cyclical stocks. The cyclical sector has a sizable correlation with the different phases of the business cycle. The defensive sector has little correlation with the business cycle, so it is also known as a non-cyclical sector. As market participants are expecting that the business cycle will pick up, we are seeing funds flow into the cyclical sector.
In the next part of this series, we’ll analyze Mario Gabelli’s view on Viacom.