Moses Ventures’ Danny Moses: The market is ‘overvalued’ but energy looks attractive

The overall stock market (SP500), (COMP:IND), (DJI) is overvalued, but individual stocks and certain sectors could offer performance security, said Moses Ventures’ Danny Moses.

Danny Moses, the founder of the Connecticut-based investment fund, expressed concerns about potential interest rate cuts amid current economic conditions.

In an interview with CNBC, Moses warned that cutting rates for the wrong reasons could lead to dangerous economic consequences, particularly if inflation hasn’t sufficiently decreased. He noted that while the economy appears to be slowing marginally, it’s still holding up relatively well despite some signs of weakness.

Moses described the current market as overvalued but emphasized that this alone isn’t necessarily a reason to sell. Instead, he suggested focusing on specific sectors within the market.

“There are too few stocks controlling the market just like there are too few citizens controlling the economy,” he said, pointing to a significant decline in publicly traded companies in America from 8,000 to under 4,000 since he began his career.

Moses is particularly bullish the energy sector (NYSEARCA:XLE), which he believes is undervalued compared to its historical significance. The historical weighting of the sector was 7%, and it is currently 3%.

He added that energy companies have strengthened their balance sheets through transformational mergers and acquisitions in recent years.

Moses specifically highlighted ExxonMobil (NYSE:XOM) and Diamondback Energy (NASDAQ:FANG) as companies that offer attractive growth rates and dividends. He explained that energy stocks (NYSEARCA:XLE) are disconnected from oil prices, and with rig counts at four to five-year lows, these companies are in a strong economic position despite not being considered “sexy” investments by many market participants.