In this week's Stansberry Investor Hour, Dan welcomes Pete Carmasino back to the show. Pete is the chief market strategist at our corporate affiliate Chaikin Analytics. He's also editor of the Chaikin PowerTactics and Chaikin Power Portfolio newsletters.

Pete kicks things off by discussing the current trends he's seeing. He says that you can't focus on just one area because there are many moving parts that shape the market, including other investors. The goal, he states, is to react to the movements, not predict where things are headed. Predictions can be wrong, and folks who don't react wind up missing out on new opportunities. Pete then shares his investing process. He understands that sectors rotate, and when he sees a shift from one sector to another, he follows the signal on where to start moving money. He also looks at fundamentals and technicals to determine whether the stocks he's looking at are good buys at the moment. And he shares his thoughts on the Strait of Hormuz tension and how things might play out...

It's a geopolitical event. I don't think it's going away. I don't think it's going to be shrugged off as unimportant. I think it's more of a chess game than anything. And I've migrated to the style of game-theory analysis. And I haven't become an expert in it, but I've used it over the years... When you look at the [tariff tantrums] we were dealing with last year, it just made sense that eventually [the market thought], "This too shall pass," and it kind of did... [so] I feel like the Strait of Hormuz and the uranium situation is gameable.

Next, Pete shares his thoughts on the energy crisis. He says the root cause is less of a supply issue and more of a distribution problem. He believes that properly equipping refineries will encourage miners to produce more oil. According to him, if the supply can increase while conflict tensions decrease, we can have an equilibrium where consumers are comfortable with gas prices and miners are content to continue drilling. Then, he talks about the producers that he finds most promising in several different sectors...

We have sectors and then subsectors. We rank them by Power Gauge... Just looking at the Power Gauge, from the ranking of the Power Gauge, the top two subsectors right now couldn't be more opposite. [A banking exchange-traded fund] is No. 1. And the second one is [an oil and gas fund]. Sector-wise, it's energy... and then materials. And so materials are the other area [contributing to distribution].

Finally, Pete explains how his portfolio works. Using a "top-down analysis," he looks at themes throughout the year to find the best names in the strongest market sectors. He then shifts to the market corrections we've seen since the sell-off from last year's "Liberation Day." But he notes that the big names in the Magnificent Seven didn't recover with the rest of the broader market last November. And that implies that the baton could be getting passed from tech to energy. So he adjusted his portfolio to prepare for a sector rotation. He then wraps things up by stressing the importance of handling risk management in your portfolio...

Risk has two components. They always exist. One is the ability to take risk. You have the money, you have the ability to take this risk. And the second one is the willingness. Do you need to [take this risk]? A lot of people go into wealth-preservation mode because they've built a huge pool of money... [You should know] when to take a little more risk and when to back off... It's so personal that no one can give you a rule of thumb about how to figure that out, but the old adage is... "If it's keeping you up at night, you probably have too much of it."

(Additional past episodes are located here.)

The transcript is coming soon.

This Week's Guest

Pete Carmasino is the chief market strategist at our corporate affiliate Chaikin Analytics. He has more than 25 years in the financial-services industry. His years of knowledge in many different strategies help his thousands of subscribers decipher the markets.

Prior to joining Chaikin Analytics, Pete owned and operated a registered investment advisory firm where he managed his clients' portfolios using his proprietary methodologies. And he spent the bulk of his career as a portfolio manager for high-net-worth families, individuals, and institutions – including Prudential Securities, Lehman Brothers, Wachovia Securities, and PNC Investments.