Coinbase may be the right stock but it’s the wrong price: Strategist

David Nelson, Belpointe Chief Strategist, joins Yahoo Finance’s Alexis Christoforous and Kristin Myers to discuss market outlook and Coinbase’s public debut on the Nasdaq.

Video transcript

ALEXIS CHRISTOFOROUS: Let's stick with the markets now and bring in David Nelson, chief strategist at Belpointe. David, before we delve into the broader markets, would just love to get your take on what you're seeing with this incredible debut for Coinbase, the company worth more than Facebook right now, more than Airbnb, which recently went public. Have you heard from your own clients that they were interested in getting in? And do you have any exposure to Coinbase?

DAVID NELSON: I don't have any exposure to Coinbase. And a lot of investors have asked about crypto. And the fact that Goldman and others have started private funds, it tells me that there's a lot more asset classes coming out there. I expect ETFs sometime before the end of the year. It's going to be interesting to see where SEC Chair Gensler comes out on this. I expect that they'll actually come out with something probably in the next few weeks.

As for Coinbase, it's obviously a pretty important story, pretty important stock. It's the valuation that it's coming out at speaks to the demand. It may be the right stock, but just the wrong price right now, hence the volatility. I'm not involved. I tend to look at more mature companies.

KRISTIN MYERS: All right, but David, if you do want to get some exposure to crypto, you don't want to hop on Bitcoin because Bitcoin trades pretty-- there's so much volatility in a lot of the cryptos. Is Coinbase the way to get some of that exposure? Or should we stick with more of the crypto ETF route?

DAVID NELSON: Well, I think Coinbase is right now one of the few stock ways. You can play a direct way to it. You know, you could go out and buy Tesla, but obviously that's not really directly tied to it. And there are other stocks out there to do it. I've told clients out there, both institutional and retail, if you want to play crypto, go out and buy crypto assets. That's the best way to do it.

I think the fact that Goldman has started a private fund, that tells me that there are going to be ETFs and a lot of other ways to play crypto in the months and years ahead. Coinbase is just going to be one of them. Obviously, as a concentrated asset right now, everybody wants into this space. This is one way to do it. So it's probably an overshoot right here.

ALEXIS CHRISTOFOROUS: All right, I want to talk a little more broadly now about the markets. Earnings season starting up. We've got the big banks out. And of course, it's going to start up in earnest in the coming days. What's your trade during this earnings season? Is it the reopening trade? Is it the value growth trade, as we're going to see a lot of these tech companies come out and beat earnings expectations? Where are you right now with your portfolio?

DAVID NELSON: You know, I came into the start of the year pretty levered towards the reopening trade. But the volatility of the market, with everybody rushing from one side of the boat to the other, has forced me a little bit more to the center of the boat right now. Right now, the value trade is working today. It hasn't worked much this month. I think it's the better play longer term.

Look at the economic data that we're getting. We haven't seen data like this in decades. We had an ISM manufacturing number, highest in 40 years. You're going to have GDP this year somewhere between 6% and 8%. I think the biggest risk to all of that is really a hiccup like we saw with J&J, a hiccup in the vaccine rollout, or even more, something like a variant that the vaccines couldn't work. But right now, if you look at those cyclical assets, I think for the rest of the year, that's going to be the better trade.

ALEXIS CHRISTOFOROUS: All right, David Nelson of Belpointe, thanks so much. Good to see you, as always.