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US stocks (^DJI, ^GSPC, ^IXIC) are off to a volatile start in 2025. Niles Investment Management founder and portfolio manager Daniel Niles joins Seana Smith and Madison Mills to share his five top investment picks for 2025: cash, Cisco (CSCO), KBWB Bank ETF (KBWB), S&P Midcap Value ETF (IJJ), and Adtran (ADTN).
Niles explains why Nvidia (NVDA), investors' artificial intelligence (AI) darling, is not on his list. He says that "Nvidia has been a big beneficiary" of "really strong AI spending on infrastructure over the last two years," but he expects "a pause or digestion phase in AI spending as you get into 2025."
Niles says investors should focus on sectors that benefit from the incoming Trump administration's policy priorities, specifically deregulation and tax cuts. He says Trump's expected policies will benefit "more of the small and the mid-cap type of names," especially as the Federal Reserve may be more hawkish.
"The last time I picked cash as a top-five pick was in 2022 as the S&P went down 19%, and you got pummeled on bonds as well because, remember, inflation was going up," Niles explains. "If everything goes right [in the S&P 500], it's up 10%, but the downside is down 20[%] to 30[%] because multiples compress because inflation comes in higher than what we're thinking, and the Fed doesn't cut, in fact, pauses or raises then yes, obviously, you know cash is in there for a reason."
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This post was written by Naomi Buchanan.