It's a mistake for investors to move to cash when rates are declining: JPMorgan's Monica DiCenso

About this video

• Video Title: It's a mistake for investors to move to cash when rates are declining: JPMorgan's Monica DiCenso
• Channel: CNBC Television
• Speakers: Monica DiCenso
• Duration: 00:07:12

Overview

Monica DiCenso from J.P. Morgan Private Bank discusses investment strategies, particularly concerning market valuations, the impact of AI, and the potential pitfalls of moving to cash during declining interest rates. She emphasizes a forward-looking approach to investing and diversifying across various sectors, including those that may not be directly involved in AI but will benefit from its advancements.

Key takeaways

• Market Perspective: Investors are divided between those concerned about recent market rallies and those optimistic due to future technology like AI. DiCenso positions herself in the middle, focusing on future earnings rather than past performance.
• Valuation Concerns: While acknowledging that current P/E ratios, especially for tech, are high (over 20 times earnings), she warns against solely relying on trailing 12-month data. She suggests that forward-looking earnings estimates are crucial, even if difficult to predict accurately for disruptive technologies like AI.
• Mistake of Moving to Cash: DiCenso argues it's a mistake to move to cash when interest rates are declining, citing examples of investors who missed market upturns by exiting too early in 2022.
• AI's Transformative Potential: She believes AI will be as significant as the internet and will drive productivity gains, impacting various sectors like healthcare and biotech. However, she cautions that predicting the exact financial impact and timeline is challenging.
• Diversification Strategy: DiCenso advises against concentrating investments in a few companies and advocates for a diversified approach, including second and third-derivative plays in sectors like healthcare and biotech that are likely to benefit from AI. She also suggests considering both public and private markets.