Rich Bernstein is a market bull who excludes some of Wall Street's most popular groups.
He blames a see-saw dynamic in the marketplace.
The Richard Bernstein Advisors CEO and CIO said on Friday that they have all of the bubble assets. You have everything else in the world on the other side of the see-saw. I think if you are looking at 2022, you want to be in the world side of that see-saw.
Bernstein thinks a scarcity of capital will lead to opportunities.
He said that your returns are higher there.
He listed energy as his number one pick for the year 2021. Bernstein called oil the most ignored bull market. He thinks it could be the growth group of 2022.
The Energy Select Sector SPDR Fund is up over 50% so far this year.
Bernstein wrote in a note to CNBC that the last time the free cash flow yield for the energy sector was this high was around the Tech Bubble. The yield on the sector's dividend is over 3X that of the S&P 500.
Bernstein, who ran strategy at Merrill Lynch, warns that bubble assets could hurt investors like they did in the early 2000s.
He said that the valuation is more important than the story.
The internet and cellular communications became a reality over the next 10 years. It took a long time to collect the profits.
It took 14 years to break even if you invested in the real companies of the time. Something tells me that the people are not paying attention to valuations, but also not thinking it will take them 14 years to break even.
Bernstein thinks that the problem with cryptocurrencies is a major one. He warned on "Trading Nation" last June that the rush to own cryptocurrencies was becoming dangerous.
Bernstein said that the financial bubble was the biggest ever. This is a monster.
Over the past month, the price of the virtual currency has dropped about 30%. It is up more than 50% so far this year.
Bernstein thinks that bitcoin could fall as much as 90 percent like tech stocks did in the 2000 bubble.
Bernstein said that one should wait to look at the true fundamentals and valuations before making a decision on the future of the market.
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