Investors need to come to terms with a ‘sloppy’ market: Jack Ablin

Investor Jack Ablin believes it’ll be a “sloppy” year for stocks, but he has a strategy to make money anyway: Embrace the pullbacks.

“Most of the 2019 rally has already occurred,” the Cresset Wealth Advisors chief investment officer said Tuesday on CNBC’s “Futures Now.” “We started the year expecting roughly a 9 or so percent return for 2019. We’ve gotten most of it already thanks to a pretty dour outlook among investors going into the new year.”

The S&P 500 is up 11 percent in 2019 and is about 6 percent short of its all-time high of 2,940 hit on Sept. 21.

Ablin doesn’t think there’s anything fundamentally wrong with the markets or economy. He’s basing a key portion of his forecast on the relationship between financials and the S&P 500.

“In general, the stock market likes it when financials do well. And right now, over the last six months, financials have underperformed. That would suggest that equities could struggle over the next six months,” he said. “The fact is that the financial markets and liquidity in general is really the lifeblood of the equity market.”

Ablin, whose firm has $3.5 billion in assets under management, doesn’t expect this year’s pullbacks to match 2018’s corrections. But he contends it’ll still be enough to make profits — as long as investors are buying on them.

On the next downturn, he plans to add positions to industrials, health care and, perhaps, energy. Ablin also likes homebuilders on softness because sentiment in the space is positive, but the stocks are still negative.

The big money question is what could spark the next buying opportunity. The answer is unclear.

“I think it’s more related to the trade policy,” Ablin said. “There could be tariffs especially with China that are persistent that actually never go away. … That’s something I think investors aren’t banking on, and I don’t think they’ve calculated it into the current pricing.”