Investor Sarat Sethi says don’t chase this rally, but you can buy these safe stocks

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Sethi pointed to healthcare, consumer staples and commodities as reliable areas for investors.

Chasing the market higher is a bad idea right now, and investors should turn to safe-haven sectors instead, investor Sarat Sethi warned. "Inflation is coming down but is still embedded in our system," Sethi, managing partner at DCLA, said Thursday on CNBC's "Squawk Box." "I think as an equity investor, one needs to be really careful here and not chase some of these rallies, especially for stocks that are looking for lower discount rates.

Areas where you have pricing power and solid balance sheets," he said. Sethi highlighted major copper producer Freeport-McMoRan as a strong play. The stock has added 12.1% this year. Freeport's second-quarter results, posted in late July, beat the Street's expectations in revenue but fell slightly short in expectations for earnings per share. Haleon and pharmaceutical giant Johnson & Johnson were also mentioned by Sethi.

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