Finding investments deserving of your hard-earned cash is a challenge. There are thousands of publicly traded companies, exchange-traded funds, and bonds to choose from, and knowing when it's the right time to buy makes picking an idea even harder.
In a bid to help, professional investors are sharing their single best trade idea with TheStreet.
Related: Single Best Trade: Portfolio manager at firm managing $7 billion shares favorite tech stock
While everyone's crystal ball is hazy and plenty can go wrong with even the best investment thesis, professional investors have years of experience and resources Main Street investors only dream about.
In this latest edition of Single Best Trade, Doug Kass shares his most compelling pick now.
Kass has seen a thing or two over his nearly fifty-year career. He's navigated more than his fair share of bull and bear markets, and having experienced runaway inflation first-hand in the 1970s, he's uniquely positioned to maneuver headwinds associated with sticky inflation, economic uncertainty, and strife in the Middle East.
His career, which stretches back to working for the global money manager Putnam Investments in the 1970s, includes serving as Senior Portfolio Manager at Omega Advisors, one of the world's largest and most successful hedge funds.
Nowadays, Kass is the portfolio manager for Seabreeze Partners, L.P., an active long/short hedge fund. In his daily trading diary, he also shares his daily buying and selling on Real Money Pro.
A self-described contrarian with a calculator, Kass is most comfortable when he's going against the herd. You'll often find him buying when others are selling, so his single best trade now is perhaps unsurprising.
TheStreet
What is your single best trade idea?
My favorite trade is buying (TLT) -) ($82.99 as of market open on Oct. 20).
TLT is the bond ETF iShares 20+ Year Treasury Bond ETF | TLT. It comprises Treasury securities with an average effective duration of about sixteen years with a yield of approximately 5.06%. This ETF is liquid (average daily trading volume of 52 million shares and about $37 billion is managed by the Fund).
Why do you like it?
Interest rates have risen dramatically (from virtually zero) since March 2022, when the Federal Reserve began to tighten monetary policy and raise rates.
That increase in rates has accelerated in the last two months, providing a good entry point.
I currently view credit as more attractive than equities and I expect investors to continue to buy Treasuries, which are not volatile and provide a high absolute and relative return. In fact, at over five percent yield, this is nearly equivalent to the long-range return on stocks.
Moreover, I expect the domestic economy to begin to experience decelerating growth and morph into a mild recession in the first half of next year. Interest rates should decline as the variable and lagged impact of tighter Fed policy should shortly be felt.
Consumers should lead the economy lower — under the weight of a deteriorating jobs market, higher mortgage/consumer installment rates, and still elevated inflation.
Finally, the geopolitical problems around the world could lead to a flight to safety - benefitting Treasuries by placing pressure on yields.
What could go wrong?
The economy may remain resilient.
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Single Best Trade does not represent investment advice from TheStreet. All investments should be researched carefully through consultation with an investment professional.
