Eddie Ghabour, KeyAdvisors Group, Author of “Common Sense Bull“, joins Yahoo Finance’s Kristin Myers and Alexis Christoforous to discuss cryptocurrency and market outlook.
KRISTIN MYERS: I want to keep this market conversation going and bring in Eddie Ghabour from KeyAdvisors Group and author of “Common Sense Bull.” Eddie, always great to have you join us. So Jared just finished on crypto. And I want to pick up there with you. I was reading your notes, and you had quite a bit to say on it. Wondering how folks should be approaching cryptocurrencies right now. We saw Bitcoin under pressure as we just saw from that chart that Jared showed, many of the cryptocurrencies under pressure right now. And I, of course, have to ask you what is your thoughts on Dogecoin right now.
EDDIE GHABOUR: So I look at Dogecoin as more of a speculative play that when this bubble bursts, it will probably cease to exist. That’s my opinion. In regards to crypto, Ethereum and Bitcoin are the two that I think will last even through the bubble. I look at crypto the same way I look at the technology bubble that we saw in the ’90s. And then ultimately, that busted in March of 2000. That will happen again. We are absolutely in a bubble. That’s why you’re seeing asset prices inflate the way they are. And crypto is the most speculative of all these risk assets.
So I personally believe there’s still a lot of room of upside over the next few months in crypto. Again, I’m mainly referring to Bitcoin and Ethereum because I do believe that they will continue to be here many, many years down the road. And they are going to become more and more of an asset class that institutional managers will continue to add to. So, Dogecoins and the other ones, again, I– they’re great to talk about because of the moves they’re having, but I don’t look at them as a real asset.
ALEXIS CHRISTOFOROUS: So then, what would you say to investors who maybe have been sitting on the sidelines, watching this bubble get bigger and having FOMO? I mean, when is the opportunity, or has that ship already sailed to jump in here? And if so, I mean, you said you like Bitcoin and Ethereum. Is that where you would be guiding investors right now?
EDDIE GHABOUR: Absolutely. Look, now you have to have the right risk tolerance for crypto because these 20%, 30% moves in corrections, it’s very normal. So Saturday, fortunately, I was awake when the crash happened. And I added a little bit more for my own personal portfolio. Those are the times that you want to be adding to those positions, is when they have these big corrections. Many times, it’s a tough thing to do to buy while everything seems to be crashing.
But putting it in perspective, it still has had a heck of a run over the last 12 months. And, again, as long as we’re in this reflationary trade that we believe is going to stay intact at least for the next quarter, possibly two, Bitcoin and Ethereum will probably be one of the higher returning asset classes because it is a truly risk-on trade. And they will not completely collapse until we do have that bubble burst.
ALEXIS CHRISTOFOROUS: Eddie, what advice would you give though regular investors who are invested in crypto right now? I mean, you say you bought on the dip on Saturday, people might be looking to day trade this stuff, right, which we know could be dangerous on lots of different levels. But also, there is a tax implication there. In fact, we’re going to talk a little bit later on about IRS guidelines regarding crypto. So what would you say to investors who maybe aren’t very versed on tax implications, especially as it pertains to crypto? What should they be thinking about?
EDDIE GHABOUR: Well, number one, I don’t think day trading, you know, day trading is not something that’s going to work in the long run for most investors, in my opinion. I think you have to look at it the same way you would look at your fixed income position, your large caps position, is figure out, based on your risk tolerance, what percentage you would want to go into that speculative asset class. And let’s say, for example, it’s 10%. Put that in your portfolio and then just keep it there. Don’t day trade it. And then when you’re rebalancing your portfolio, it will force you to buy more when it goes below that 10% position. And that’s how you rebalance your portfolio for the long haul. But if you’re going to try to day trade and time this, it’s too difficult of a task for the average investor to be able to do that, in my opinion.
KRISTIN MYERS: Eddie, let’s say you’re an investor that has had a bit of FOMO, but does not have the appetite or the risk levels that you’re going to need to get involved in cryptocurrency. But you’re looking out at the market, and you really want to put your money to work where there’s going to be some opportunity. Where should you look?
EDDIE GHABOUR: Right now, we think the best place for upside here in the near term is in the energy space, mainly oil. Oil is one of the recovery trades that has had a really bad month. It’s– when we had that March sell-off, you had the NASDAQ drop double digits, small caps and all the areas.
But oil is the one that has not bounced back. And because of the pent-up demand and travel that we’re going to see over the upcoming months, we think oil has tremendous upside. And it’s also one of the only sectors that’s not to the pre-pandemic levels. A lot of these other stocks have hit pre-pandemic highs. Oil has not. So we think oil is going to continue to go up. And these oil stocks have a lot of catching up to do to get to where they need to be. So, for the right investor, we think that’s the best place to be adding if you have not had a position in energy plays.
KRISTIN MYERS: All right, Eddie Ghabour, author of “Common Sense Bull,” thank you so much for joining us today.