Markets have been volatile, with stocks making sharp gains after sharp declines last week. Part of those gains came on Friday, when the Dow rallied more than 700 points, while the S&P 500 and Nasdaq each fell around 2.3%. Still, there is uncertainty about inflation and interest rate hikes, with a Wall Street Journal report indicating that some Fed officials are concerned the hikes could go too far. Investors will be looking at corporate earnings and future guidance during this peak reporting season, with tech companies due to report this week. “The question is, what is the future direction for those companies as they dominate the index,” said John Petrides, portfolio manager at Tocqueville Asset Management. He noted that the top five holdings of the S&P 500 are all tech giants: Apple, Microsoft, Amazon, Alphabet and Tesla. “Some of them, if not all of them, are bigger than the entire energy sector,” he told CNBC’s “Asia Street Notes” on Tuesday. “These companies reporting this week will determine where the market will definitely go next.” Petrides highlights three plays that investors can get into in the trash. He said the three themes his firm is currently focusing on are: income, energy and small-cap stocks. Income One great asset to make money from is real estate investment trusts, said Petrides. “REITs had one of their worst calendar years in a very long time. And that’s a headache for us because a hard asset, a structure that REITs own should be a big inflation play.” He noted that they pay “very strong” fees of between 5% and 7%. “That’s why we generally like that location. Because you have higher inflation, you have stable cash flow and rent and you get a great payout,” Petrides said. Fund pick: Vanguard REIT ETF. Energy Petrides highlighted an “interesting play” in the energy market – Master Limited Partnerships (MLPs), which trade like stocks but are actually a partnership interest. MLPs have general partners who run the day-to-day operations of the business, which can include pipelines to transport oil and gas. MLPs are attractive because they offer yields that can exceed 7%. They also saw strong gains this year on high energy prices. “We know that commodity prices are high. This is a market place where you move commodities from point A to point B and … the U.S. is sitting on a lot of natural gas, obviously it exports a lot of natural gas. does [liquified natural gas]”So commodities are flowing into pipelines, those pipelines are giving investors big returns,” Petrides said. Fund pick: Global X MLP Energy ETF. Small caps Petrides said small-cap stocks are “one of the best performers.” ” is. “Since the 1950s capital classes on average. “So obviously, you’re getting the long-term play there. And we think the value is still attractive despite its relative performance to growth,” he added. Some small-cap stocks can be referred to as value stocks, which are stocks that appear to be trading at a lower price than their fundamentals. Fund pick: Vanguard Small Value ETF – CNBC’s Darla Mercado contributed to this report.
