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Differential Research Managing Partner Michael McCarty and Peter Maris of Resource Financial Group on where to invest for the rest of the year.
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In the -- but at this point you know we're nearly.
Halfway through the year and -- you know after weeks of major volatility in the markets many investors looking to readjust their portfolios as we said today in a nice rally -- And pretty good day for straight but we thought -- embarrassment that resource potential report -- Street fight.
Mike McCarty with differential researches is the bear in today's street fight but Peter.
Let me start with you make the -- -- the start the the discussion this -- make the bull case.
For the rest of the year and ended down seven out of eight weeks in the stock market the reason -- -- right now is one.
-- -- to me that the market's oversold right.
We have a situation in Greece and in Europe is overshadowing a lot of good things that have happened over the last week suggest we have oil and gas while we have oil and gas prices -- Connell.
We have agricultural commodities down.
We have gold and silver down.
-- -- Manufacturing report him up this morning it's seven they have percent better than last year -- -- durable orders up.
All this positive -- hasn't process that the market yet because what's happening -- -- are so that is not allowing us to see the good -- -- you say what.
-- -- -- -- Well first it sounds like the bull case is that the dollar will continue to decline.
Our agents -- needs to rise which is really -- the pressure of the -- -- commodities and gold right you -- basically the discount a process that is the stock market is composed of three thanks.
Not only fundamentals or earnings which have have the benefit of stimulus and the weaker dollar.
But also -- lowest rate and and risk and basically the risk lowest rate is at zero effectively -- -- be negative after adjusting for inflation.
So it has nowhere to go but up ultimately.
And finally is the risk in the uncertainty which -- Stuart -- made a good case for it may even mr.
Kristol made the point a second ago.
You know we have huge risks that are out there.
That are now increasing in likelihood.
And the impact frankly is unknown as we've he mentioned were going down through uncharted territory we are -- -- some sort of a big you think a real political.
Induced scatter market and -- is is is there's a likelihood worth betting on Mike.
Well I think the likelihood of about event is increasing and I think the market is coming to the realization -- that even the certain unlikely events that could have a potential huge impact.
Are now becoming even more likely well here's the bigger point.
That brings up what Mike just talked about Peter is that all I think everybody in the market for the last -- many months as been assuming and just making the -- did blanket assumption that they're gonna figure out this debt situation in Washington no way -- allow ourselves to default on our debt in other words we've been writing that he or.
Pricing that -- to markets across a number of different asset classes.
What if we're wrong what they don't figured out Peter.
Well -- those sooner though that many -- -- wanna think about but what if they don't know that you got to at least give it some thought is it is it fair at this point out of ended -- beginning of July to at least give it some -- now.
Well.
I think it would give it some thought we're gonna think in the negative -- I but I think people got to remember words come from we've come along way.
Since 20082009.
We have a recovery that's see a stock market -- seen an economy that's creating jobs for the last thirteen months.
Positive G impedes positive GDP.
And I think what's going on now is simply the market's taking a pause every recovery since 1925 has been a pause in the recovery.
I called the pause that refreshes and and moving forward.
So I think that a lot of things are being over analyzed innocent Leo pause -- over -- -- -- -- -- -- -- year.
Mike.
Sounds to me like the bull case is denial and I think -- and investors are no longer in denial.
You only can kick the can down the road so many times before you hit a wall and I think the likelihood of -- -- wall is greater.
So what do you do in what do you do about it from a just from the investment point of view what are you by what -- self.
Wolf first you reduce your exposure to equities that's the simplest.
If you can't do that fast enough you can by S&P puts.
Near out the money is usually good -- I prefer to -- with the fixed futures or deep in the money fixed calls if you can't buy futures.
Ultimately I think the best thing to do those reduce your equity exposure -- the market house doubled off the bottom.
You know while the fundamentals you can make the case that maybe they've improved they've really haven't even the Fed -- -- downgraded the outlook for the economy.
Recalling and I've spoken 2008 yes we we won't climb the wall worry to the to the top share it is looking more and more like that again.
Tell us what Peter what's and at this way to tell Mike why he's wrong in other words you've made the case she said -- well.
You know this is just a pause but why why why is Mike's case wrong.
Because Mike is trying to do a lot of advisor doing since 2008 and 2009 -- -- to predict the future.
This is so simple pause was going on with the -- suing the not to penalize the president for sins of the past that's -- it's not gonna happen.
But to try to predict.
Ups and downs of the market something and no reserve and able to do from Peter Lynch -- George Soros.
I think any advisor to try to do that are doing a disservice to themselves and -- -- -- to service their clients you do in a disservice Michael knowledge have the last word yet.
Why I think looking and being aware of risk is not a -- -- walking blindly and then having -- caught off cut off from money you right is it is really the disservice.
Are pretty good tucked inside both sides of that certainly covered there Mike McCarty Peter -- thanks to both fiesta coming up I'm Sharma thank you will see overtime.
