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Hedge fund manager David Neuhauser gives tips for young investors


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David Neuhauser (hedge fund manager) shared his top tips with CNBC. Neuhauser has made quite a reputation for placing bets against the popular stocks on the market.

Talking about the most recent CNBC Pro TalksNeuhauser advised investors to be cautious of technology stocks with big names that have experienced “explosive growth”, in the wake of the coronavirus pandemic.

Neuhauser stated that it was still worthwhile for younger people to invest their money in certain stocks of technology because they are invested for long periods. The theory is that major highs and lowers are more likely to level out in the future.

Livermore Partners’ founder and chief investment officer, John Livermore Partners said he favors smaller technology companies because of the “potential for them to grow.”

Neuhauser claimed that long-term opportunities for growth are more difficult to locate among “mammoths”, companies valued in excess of trillions of dollars or $800 billion.

Rates of interest

Neuhauser stated that young investors should not only consider company valuations but also the impact rising interest rates may have on stock prices.

Neuhauser indicated that he did not believe younger investors are paying enough attention, pointing out this could be both a market headwind and a buying opportunity.

Watch the full Pro Talks with David Neuhauser here

The youngest generation of investors has “never experienced a bearish market,” he said. They have also never been in a recession.

Neuhauser stated that in the 25+ years he has been investing Neuhauser had made many money by identifying stocks that were out of favour as the economy was about to turn.

It is risky to bet against tech stocks

Neuhauser shorted some (betted against). major market namesThis year’s top ten were: Meta(formerly Facebook). Tesla. Livermore Partners also had previously been shorted the ARK InnovationCathie, an investment genius and manager of exchange-traded funds, manages them.

Take a look at: Neuhauser says Ark ETF stocks are a potential ‘time bomb’

Neuhauser stated that it was more probable for the larger tech companies to see their valuations come under increasing pressure during CNBC Pro Talks.

He explained that amid the pandemic these companies had benefitted from increased demand for technology, like software-as-a-service, along with the Federal Reserve’s emergency economic support measures.

Neuhauser believes that this will slow down. In addition, he said the Fed’s plans to raise interest rates this year, and pull back other supportive measures, would make capital expenditure — the cost of maintaining certain internal investments — more expensive for these companies.

Philadelphia Fed President Patrick Harker told CNBC last weekHe could be subject to up to four rate increases this year. Investors believe the central bank will raise interest rates in March. 

Markets have had a difficult start to 2012 due to increased expectations of rate increases and tighter monetary policies. Technology stocks led the sell-offs. According to data from Refinitiv, the technology-heavy Nasdaq Index is down almost 8% for the year.

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