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Transcript:<\/strong><\/p>\n Caroline Woods: Tiffany McGhee: Caroline Woods: Tiffany McGhee: Tiffany McGhee: Caroline Woods: Tiffany McGhee: Tiffany McGhee: Tiffany McGhee: Tiffany McGhee: Tiffany McGhee: Tiffany McGhee: Caroline Woods: Tiffany McGhee: Caroline Woods: Tiffany McGhee: Caroline Woods: Tiffany McGhee: Tiffany McGhee: Tiffany McGhee: Caroline Woods: Tiffany McGhee: Tiffany McGhee: Caroline Woods: Tiffany McGhee: Tiffany McGhee: Tiffany McGhee: Caroline Woods: Tiffany McGhee: Tiffany McGhee: Tiffany McGhee: Tiffany McGhee: Caroline Woods: Tiffany McGhee: Tiffany McGhee: Caroline Woods: Tiffany McGhee: Tiffany McGhee: Tiffany McGhee: Tiffany McGhee: Caroline Woods: Tiffany McGhee: Tiffany McGhee: Tiffany McGhee: Tiffany McGhee: Caroline Woods: Tiffany McGhee: Tiffany McGhee: Caroline Woods: Tiffany McGhee: Tiffany McGhee: Tiffany McGhee: Caroline Woods: Caroline Woods: Tiffany McGhee: Caroline Woods: Tiffany McGhee: Tiffany McGhee: Tiffany McGhee: Caroline Woods: Tiffany McGhee: Tiffany McGhee: Caroline Woods: Tiffany McGhee: Caroline Woods: Tiffany McGhee: Caroline Woods: Tiffany McGhee: Caroline Woods: Tiffany McGhee: Caroline Woods: Tiffany McGhee: Caroline Woods: Tiffany McGhee: Caroline Woods: Tiffany McGhee: Caroline Woods: Tiffany McGhee: Caroline Woods: Tiffany McGhee: Caroline Woods: Tiffany McGhee: Caroline Woods: Tiffany McGhee: Caroline Woods: Tiffany McGhee: Caroline Woods: Tiffany McGhee: Caroline Woods: Tiffany McGhee: Caroline Woods: Tiffany McGhee: Caroline Woods: Tiffany McGhee: Caroline Woods: Tiffany McGhee: Caroline Woods: Tiffany McGhee: Caroline Woods: Tiffany McGhee: Caroline Woods: Tiffany McGhee: Caroline Woods: #Nvidia #isnt #heres #build #diversified #portfolio<\/p>\n","protected":false},"excerpt":{"rendered":" Transcript: Caroline Woods:Joining us now with her second half playbook is Tiffany McGhee, CEO and chief investment officer at Pivotal Advisors. Tiffany, great to have you back. Tiffany McGhee:Great to… <\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[246],"tags":[82,4190,540,868,330,859],"class_list":["post-9335","post","type-post","status-publish","format-standard","hentry","category-popular","tag-build","tag-diversified","tag-heres","tag-isnt","tag-nvidia","tag-portfolio"],"_links":{"self":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/posts\/9335","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=9335"}],"version-history":[{"count":0,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/posts\/9335\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=9335"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=9335"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=9335"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
Joining us now with her second half playbook is Tiffany McGhee, CEO and chief investment officer at Pivotal Advisors. Tiffany, great to have you back.<\/p>\n
Great to be here, Caroline.<\/p>\n
Second time this month. You were on at the start of June. And back then you were arguing that market leadership was broadening. That concentration risk was becoming a bigger concern. Is that what we’re seeing play out right now?<\/p>\n
Yeah, absolutely. So we think about how market leadership is broadening. And it’s it’s a continuation of the same theme I was talking about when we look at emerging markets highest performing asset class, up 29% year to date. Even in addition to asset classes also size and style. So when we think about value versus growth, you know, with all of this talk about Max seven and, and I think, you know, investors tend to think growth, but value is up 16% year to date versus growth, which is up about 4.5%.<\/p>\n
Right. So that’s a really big difference. And also small cap stocks. Stocks are leading up almost 21% year to date. So it’s this transition away from these mega cap, tech companies and really just broadening overall.<\/p>\n
So the Dow and the Russell are the only major indices higher on the week. We’re seeing pretty significant weakness in the Nasdaq this week. The S&P 500 is also lower. Should investors be preparing for more weakness in tech then. Or is this just sort of, a healthy digestion period?<\/p>\n
I think it’s a little bit of both. And so again, I think that we are conditioned to think that, with a major positive theme, like I everything’s going to go up in a straight line. And, you know, you and I both know that’s not how it works. It’s not how the market works. So I always expect some volatility.<\/p>\n
And we’re definitely seeing that like in like the past week. So you know, if I was, you know, an investor sitting home thinking about how I should, you know, be positioning portfolios, diversification, I always preach the gospel of diversification is really, really key. And I look at the fact that, you know, U.S. equities, represent 60% of the market.<\/p>\n
That’s a global market cap right now. Right. So I think investors are really if you’re invested in a, in a S&P 500 fund or if you’re in that kind of traditional 60, 40 or 60, we’re like 10 or 20% of that. 60 is is investing globally. You’re making really big bets on a handful of companies and, one country.<\/p>\n
Right. So just thinking about how you can diversify that portfolio. You know, there are a couple of things that we do, to kind of be the portfolio, you know, one is having like a satellite approach where you’re using ETFs, passive strategies to get broad market, exposure. But then you’re also kind of peppering that with like active management to really go where the index can’t go.<\/p>\n
Emerging markets, small caps. Also we use this there’s an asset class called defensive equities. Sorry, called yes. Defensive equities. So we some people call it like liquid gold. Think of it as like a hedge fund strategy, but, liquid. Right. Traded on an exchange, accessible by everyone. But it really kind of helps to bui those, those, really, strict moments of, like, volatility.<\/p>\n
And. Yeah, and then just making sure like when you’re rebalancing, which you should be having all investors should have like a disciplined rebalancing strategy that you’re doing. So being mindful of region and country.<\/p>\n
Okay. So I want to break all of that down, especially the core and satellite. What should be at the core of what should be in the satellite. Yeah. But before we even get to that, you mentioned that portfolio concentration is really the biggest risk right now. So if someone owns an S&P 500 fund, if they’re doing the whole Warren Buffett video, you know, sitting in that, are they actually diversified or are they just making a bet on a few specific companies?<\/p>\n
They are they are they are not as, diversified as, as they think that they are. Right. And they are making, big bet on, on a handful of companies. And also just again, like region and country wise, one country, which is the U.S.. So again, I think it just really, requires a little bit more thought and a little bit more, you know, vigilance with.<\/p>\n
So if I’m sitting in VLO or VTI, do I trim those positions? Do I stop adding to them, or do I just simply diversify around them?<\/p>\n
Yeah. So it really depends on what your entire portfolio looks like. If your entire portfolio is below, you definitely need to, trim a little bit in order to diversify that that position.<\/p>\n
Okay. So talk to us about what the core positions should be.<\/p>\n
Yeah. So again we think about core and satellite in two ways. Asset class. But then also we would be at our firm. We say we’ve got a budget for risk and we have a budget for fees. Right. So we always want to be fee conscious. So one of the things that ETFs or passive strategies allow you to do is get that broad market exposure, but also save on fees.<\/p>\n
So yes, I’m a big believer in things like below. Right. You want to buy the broad market. But there are certain areas where the index is not efficient. Right. So I would never index emerging markets. Right. So we think about why we would invest in emerging markets. Well the big one is China. We want access to those billions and billions of Chinese consumers.<\/p>\n
The index is not necessarily going to get you there. Right. We want access to China and China shares. So thinking about how you can get that.<\/p>\n
How do you get that.<\/p>\n
In? First of all, I’m a big believer in active management and to do so in a fund, right. So we’re sitting here in the US probably don’t have boots in the ground. Right. As a as a regular investor just sitting home. We you definitely want an active manager who has, experience investing those in those countries who has boots on the ground.<\/p>\n
I’ve talked about, JP Morgan emerging markets last time I was here. Goldman Sachs also has a emerging market.<\/p>\n
Just give us those tickers really quickly.<\/p>\n
GM X is the Goldman Sachs one, and JP Morgan is GM. Yeah. So, yeah. And and these companies, especially Goldman Sachs, they were investing in mainland China before most U.S. companies couldn’t invest there. Right. And so and that required a lot of money. It used to be that if you wanted to invest in mainland China, you had to pay.<\/p>\n
And Goldman Sachs just happened to be the type of company who, who had, you know, the, the means to do so. And we also want boots on the ground. We don’t want a manager who’s sitting in New York City, love New York City, who is just making bets on places far, far away. Not just China, places like Brazil, India, those kinds of things.<\/p>\n
We want managers that have teams with boots on the ground who maybe are from those countries who can speak the language to understand the culture and the opportunities.<\/p>\n
Okay. So, you’ve made a big case for emerging markets, international markets as part of the core portfolio. What else should be in there?<\/p>\n
Yeah. So, you know, I talked about defensive equities, you know, really and retail investors have access to things like that. And so there are a lot of different companies who who have these types of strategies. Again, we call it defensive equity. But there are hedge like strategies. A manager that we use called global, and they have these kind of defensive equity strategies that are really in line with an investor’s risk tolerance, whether you’re more conservative, but there’s a way to do it depending on your risk tolerance.<\/p>\n
Also real assets. I think I’ve talked about that before. Real assets is one of the asset classes that really buoyed our portfolios in the first quarter. Again, January, February, great March. Everybody. Like we all woke up and it’s like, wait a second, the world has changed. And so that, you know, with our clients, it’s where we manage money for institutions.<\/p>\n
We are graded on a quarterly basis. So while we’re looking at markets not, you know, every month, every week, every day, our clients are greeting us quarterly. And so we thought everything was going well. January, February, and then again, March went a little bit crazy. So real assets are real asset portfolio was up 13.1%. So we do that in an ETF strategy.<\/p>\n
We use a manager called Metis. It’s great. But there are so many real asset, ETFs out there. And.<\/p>\n
Real assets just break that down for us.<\/p>\n
Yeah. So so we’re talking about real estate reads. We’re talking about like infrastructure. We’re talking about some commodities. We’re talking about minerals. There there’s just we want to invest in all of it. We don’t want to play the game. We’re picking one because some of those things kind of, you know, play, play like, the leadership game, we want to own all of it.<\/p>\n
And again, for the first quarter, our real asset portfolio was up 13.1% that are defensive equities and also private credit. Private credit has actually been doing really well. We kind of go a little bit further and do like an opportunistic credit kind of strategy. Those three asset classes for us really saved our clients in the first quarter.<\/p>\n
And how should investors be thinking about tech right now, given the fact that the Mag seven is actually weighing on the returns of the S&P 500 right now, is that a buying opportunity? And is tech part of the core portfolio because you have exposure through the S&P 500, or is it a satellite play? And maybe you’re focused on something like memory after micron earnings.<\/p>\n
Yes. So I think tech is such, such a I hate I hesitate to call it a theme because the theme implies that it’s going to be fleeting or passing. And tech is such a, a big part of, of, of everything, that it has to be integral in the portfolio. I think whenever I think about tech companies and someone asked me that question, you know, should we get on the bandwagon or what should we be doing?<\/p>\n
I think about that, that moment in, Jurassic Park and like that first movie where, the guy says life always finds a way, right? And so for me and we’re talking at our firm, we’re having conversations. Tech always finds a way. It is innovation. It is, it’s progress. And so we believe it’s always going to find a way.<\/p>\n
Yes, we’re going to have these moments of volatility. We’re certainly seeing that. And of course we cannot talk about tech right now if we don’t talk about AI. And we’re thinking about what is the best way to invest in AI, we don’t necessarily want to chase all the Nvidia’s. I mean, yes, we want to be in that, but it’s not.<\/p>\n
It’s moving away from just Nvidia, you know, alphabet, Microsoft.<\/p>\n
So are you saying that you shouldn’t be stock picking right now and you should be investing more in funds, or you should just be moving away from magic seven and choosing other names? If so, what are they?<\/p>\n
So I think it depends on what kind of investor are you. So we like to pick stocks, but we also like managers. And I think that there’s a way to do both. Right. And to do both in a way that the investor feels comfortable with. But in terms of our AI trade, we don’t want that to be held to 3 or 4 or even five stocks.<\/p>\n
And we’re thinking about this from a broader perspective. So we think about I think I talked a little bit about this last time I was here when we think, but that first wave of I, it was the creators, right? The Nvidia is the Googles, the Microsofts, those are the companies that are really creating this technology. But now, you know it and we have been for a while.<\/p>\n
There are the builders, right? We want to own the creators. We want to own the builders, the companies that are building the infrastructure around all of this AI to make it go right. The heating, the cooling, all of these things. And then that third part is, are the adopters, these companies that are helping other companies harness the power of AI for, for, you know, efficiency for, for it, for production.<\/p>\n
So, so companies like, sell or service now, all of those companies are or what I would call a builder. So you have to own the creators. You have to earn the builder. You have to own the creators, the builders, and the adopters.<\/p>\n
Give us a list of a few names. I know you said you don’t like to put it into 3 to 5 names, but give us five names that you actually like right here.<\/p>\n
Yes. So I will say, you know, when we talk about companies like Nvidia, like Microsoft, first of all, I’m going to I assume that everybody’s in those already. Right. So if you own S&P 500 fund, if you own the Nasdaq fund, you should be investing in those. If you’re not, then you should definitely invest in them. And I understand that those, you know, that those are relatively expensive, but I don’t think that you can afford not to be in those.<\/p>\n
Right. So that those are the first things when it comes to like, kind of like the, like the builders. There are a couple of companies I think don’t get talked about enough. What is verdict that I really like? It’s cooling of our systems for for data centers. I think it’s up over about 160% year to date.<\/p>\n
But not too late to get in now.<\/p>\n
No, I don’t, because these are the companies that I think are going to do, very well later. So it’s like, do you want to own them or do you want to wait? We don’t want to play that waiting game. Right? We think that we need to own these things right now because eventually, people are going to start really talking about them.<\/p>\n
There’s going to be a spotlight on them, and then it’s then they’re really gonna be expensive. Another one, a couple other ones. Trane technologies up 26% year to date, but they just did a deal with Nvidia. Right. It’s also cooling systems for data centers. But to do that deal with Nvidia, that’s amazing. So that is something that I would buy right now.<\/p>\n
Also Modi manufacturing more of like a mid-cap stocks that with again thermal solutions for these data centers up 105% year to date. These these returns seem, you know, great. And again you’re asking should we get should we get into these? I don’t think you can afford not to be into the not like not to be into these right now.<\/p>\n
Microns earnings this week really enforced the fact that I demand remains strong. But now there’s this new kind of wrinkle and that is just the memory chip. Costs seem to be a big concern right now. We’ve certainly seen it weigh on Apple shares. Apple says it’s going to be raising prices because of them. Does that change the AI playbook at all?<\/p>\n
No.<\/p>\n
Because if you’re thinking about the AI playbook as a diversified strategy, again, I go back to creators, builders and adopters. And not just one from each of those categories you should be in. If you’re going to do a single stock, portfolio, you should be in five or 6 or 10 of those. Right? So you have to really hedge your bets and you have to be and I think all of these companies or you can do so in a fund, you can do so in a combination going back to that core and satellite of ETFs and active management.<\/p>\n
How much of a traditional portfolio, as we think about the second half of the year and some of this weakness that we’re seeing in tech and how far it’s already run for some of these names, how much of a portfolio should tech represent?<\/p>\n
Yeah. So I think that that’s a little bit tricky because there are a lot of people I think about the, you know, people who are left Gorman case. Right. So not necessarily like that high net worth individual who’s got hundreds of thousands or even more in a brokerage portfolio. What about the people who are just investing in there for one, four, three B?<\/p>\n
Chances are you are heavy intact. So I think that again, it requires a lot more thought and a little bit of vigilance. You’re not just putting your, retirement, portfolio into a target date fund and setting and setting it and forgetting it, but being a little bit more thoughtful about how that target, deep on this matter, is managed.<\/p>\n
A lot of these are a hybrid of, of passive and active strategies, which we really prefer. And so it’s really hard to say how much of tech, I would say probably no more than 30 than 20 or 30%. However, I think if you’re doing that in a diversified strategy, I think that gives you that puts you in a much better position than just going after the maximum.<\/p>\n
Okay, so just final piece of advice before we get to our rapid fire round, to the everyday retail investor, as they think about where the market goes from here.<\/p>\n
Caroline Woods:
You had an 8200 price target. I do you’re sticking by that.<\/p>\n
I had between I think I said between.<\/p>\n
79.<\/p>\n
79 and 82. So I’m just going to be still in that range. 79, 82 I think it’s probably going to be closer to the 79 than 82, because again, since since I bet since I was on, we are seeing this volatility. The volatility is not a bad thing. It’s a buying opportunity. But I do think that, you know, the that the end of the year this this is higher okay.<\/p>\n
And just finally what’s something that investors should not be buying on the dip right now.<\/p>\n
Yeah I mean I think that investors should should really be thoughtful and not chasing these big name trends. Right. So no.<\/p>\n
Micron 7% off the height.<\/p>\n
If you don’t have it. Yeah. Okay. But again, it’s not just when it comes to tech and I we’re not going to get there in 1 or 2 or even five stocks. We’re going to get there in probably about 30 okay.<\/p>\n
All right. Great time to pivot to our rapid fire game of this year that you’ve played before. You know how this goes. Quick questions quick answers. Going to start with the second half playbook. Are you ready. Yes. Second half stay the course or change the playbook.<\/p>\n
Depends on the playbook.<\/p>\n
What’s the playbook quickly.<\/p>\n
If you are diversified then stay the course. If you’re not diversified then change the playbook.<\/p>\n
Play offense or defense offense. Lean in or lock in gains linear momentum or rotation. Rotation market broadening. Temporary or durable? Durable. One sector poised to benefit most from broader market leadership.<\/p>\n
I’m going to go with industrials.<\/p>\n
Markets next like I winners or everything else.<\/p>\n
Everything else.<\/p>\n
Concentration risk overrated underrated.<\/p>\n
Underrated.<\/p>\n
Index funds or individual stocks.<\/p>\n
Whose wealth.<\/p>\n
I trade. Early innings late innings.<\/p>\n
Still early innings.<\/p>\n
Small caps or large caps from here. Small caps mag seven trim and rebalance or hold and diversify around them.<\/p>\n
Well, if you’re trimming, you’re still holding. So trim and rebalance.<\/p>\n
Okay. More attractive today Micron or Western Digital.<\/p>\n
You know what I’m going to fall for it.<\/p>\n
Micron workday or Adobe big losers or.<\/p>\n
I’ll go with workday.<\/p>\n
Apple after price hikes buy or avoid.<\/p>\n
That what it is if you’re not in it. Which would be surprising. Buy.<\/p>\n
Tech stock on steepest sale right now. Oh,<\/p>\n
Yeah. Maybe we go with up with micron 7%. Right.<\/p>\n
Sitting in cash right now. Smart defense or a costly mistake.<\/p>\n
Costly mistake.<\/p>\n
If you had fresh cash today where would you put it first.<\/p>\n
This is so hard. Private credit okay.<\/p>\n
You’ve given a lot of names in this interview, but three must own stocks for the second half.<\/p>\n
If you don’t have Nvidia, you have to be in that. I don’t care how much it is. Vertex, train technologies and Modi.<\/p>\n
Okay. I’ll take four.<\/p>\n
Yeah. Oh, sorry.<\/p>\n
Market for the rest of 2026. Volatile or resilient?<\/p>\n
Resilient.<\/p>\n
One word to describe how you’re feeling about the back half of the year. Confident Tiffany McGhee always a pleasure. Thanks so much for joining us here at the desk. That’s Tiffany McGhee, CEO and chief investment officer of Pivotal Advisors. If you enjoyed this interview, check out our street talk with Thomas Carroll. He explains why he thinks we’re in the final stages of the bull market.<\/p>\n