Money manager John Davi is positioning himself for challenges related to newly elected President Donald Trump’s tariff agenda.
Davi said he worries the new government’s policies could be “highly inflationary.” That is why he thinks it is important to choose investments carefully.
“Small-cap industrials make more sense than large-cap industrials,” the CEO of Astoria Portfolio Advisors told CNBC’s “ETF Edge” this week.
Davi, who is also the company’s chief investment officer, expects the Red Sweep will help advance a pro-growth, pro-domestic policy agenda, which will benefit small caps.
So far, it seems like Wall Street agrees. Since the presidential elections, the Russell 2000 The index, which tracks small-cap stocks, was up about 4% at Friday’s close.
Davi, whose company has $1.9 billion in assets under management, is also keen to stay domestic despite tariff risks.
“We are overweight in the US. I think this is the right playbook for the next few years up to the midterms,” Davi added. “We have two years where he is [Trump] can control a lot of the story.”
But Davi plans to stay away from fixed income due to the challenges associated with the growing fiscal deficit.
“Be careful if you definitely own bonds,” Davi said.
Since the elections, the benchmark yield on ten-year government bonds is up 3% from Friday’s close.