How to navigate an ‘unusual’ market

Mason King

Courtesy: Mason King

More than a year of recessionary forecasts have created “a highly unusual market,” said Mason King, a principal of Luther King Capital Management in Fort Worth, Texas, which ranked No. 1 on CNBC’s list of the top 100 financial advisors in the U.S. for 2023.

As a whole, the current climate has created as diverse an outlook as we’ve ever seen, he noted, even according to his father —  J. Luther King Jr. —  who has been in the business for 60 years.

Although some experts have more recently backed off those earlier predictions of an impending recession and embraced the idea of soft landing, “that’s been the most consensus we’ve seen,” he added.

More from FA 100:

Here’s a look at more coverage of CNBC’s FA 100 list of top financial advisory firms for 2022:

Recent data is still painting a mixed picture of where the economy is headed, with overall growth holding steady as consumers continue to spend, but the labor market beginning to loosen from historically tight conditions.

At the same time, inflation has shown signs of cooling even though it remains well above the level where Federal Reserve policymakers feel comfortable, which has reignited fears that the central bank may have more work ahead.

“What we would like to see is more confidence in the economic outlook,” he said. “That would give us more peace of mind that we’re in more of a bull-market scenario longer term.”

“The counterweight is if the lag effects of monetary restriction start to take a larger bite out of economic activity, you could see a more challenging market,” he added.

What the Fed does is highly important for the future of the market: Defiance ETFs CEO Jablonski

For now, King said he remains cautious about predicting where the economy will ultimately settle.

“It takes 12-18 months for a single rate increase to flow through the marketplace, and we are only 15 months into the first rate increase,” he said.

Altogether, Fed officials have raised rates 11 times, pushing the key interest rate to a target range of 5.25% to 5.5%, the highest level in more than 22 years. 

“Exactly how much market activity has already been drained and how much is still ahead of us, nobody knows,” King said.

Still, there is plenty of upside potential for investors, particularly in technology and energy stocks, he added.

But rather than pile on to the “Magnificent Seven” — referring to Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia and Tesla, which accounted for a disproportionate amount of the returns year to date — small- and mid-cap growth companies, which tend to be more cyclical, have attractive valuations and remain at a discount, he said.

“There are some great names to be found with great opportunities ahead.”

King’s top stock picks

As a general rule, Luther King Capital Management commits to a three- to five-year holding period. “We’re not trying to get a lot of short-term gains,” King said. “That’s our discipline and our philosophy.”

King also credits the firm’s success to practicing what they preach. “We are our largest client,” he said. “We invest our balance sheet the way we invest for our clients.”

Luther King Capital Management has $25 billion under management and more than 3,000 clients.

Tune in to CNBC’s “The Exchange at 1pm ET today to see Mason King of Luther King Capital Management, which earned the top spot on the CNBC FA 100 list for the first time this year.


Read original article here

Denial of responsibility! Yours Headline is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – [email protected]. The content will be deleted within 24 hours.

Leave a Comment