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Now if you think another recession is a sure thing you can think again according to our next guest Charles suburb and -- with this vice chairman with -- investments.
Thank you Charles for coming on again we've had a number of guests in the last week or so -- say we're headed back into recession the odds are greater than 5057.
Cent higher than that.
So yet to factor that in when you're making investment decisions but you say what don't count on it.
We would say the market is factoring in a recession that's why the stock markets been hit so hard right but we think that's an exaggeration for two reasons one the value of the stock is the present value of all the cash flows.
All the way into the future not just over the next year.
And and stocks have been hit hard in anticipation of these short term problems second to cause an -- a recession right now we have to have a significant downturn.
In some level of spending inventories government spending exports.
And none of those things are -- bubble levels right now so we think we're gonna have.
Modest growth that's gonna continue and modest growth will produce actually excellent growth and corporate profits.
OK so companies can still make a lot of money especially.
Have for this is kind of I think becoming a -- also especially some of the real big well known companies.
And you know the likes of an IBM for example or Johnson & Johnson some of these big companies Exxon mobile and Microsoft are also showing on the screen.
Tell us why you like those it it seems like it easy pick a tell us what about those -- sky high quality stocks should be attractive to investors right.
There -- a wonderful combination of value and low risk and also dividend yield.
These companies are often most of them are trading at less than market multiples.
Microsoft and -- at less than ten times earnings Johnson and Johnson and IBM around twelve times earnings.
And yet they have very low risk.
They have excellent exposure to international growth.
20% plus in some cases in India and China.
And they're now earning excellent dividend -- a company like Johnson and Johnson's and I've got a three point 6% dividend yield.
Which is actually higher than what you can get owning Johnson & Johnson bonds.
Even though Johnson Johnson dividends have gone -- every year for the last thirty years.
To somebody is watching right now says okay I'm watching my 401K them and -- whatever 37 in my thirty's my forties -- my fifties and I'm saying.
I need to change by allocation because it would -- the sanctions some of the smaller funds she is less -- some of the smaller stocks.
And more allocation it sounds like to some of the bigger.
Stock funds to -- Yeah although I'd be even more specific I would say should take money out of your long term bonds which I think are in real risk of getting hit hard.
And moving that money into higher quality stocks particularly if you've got investment horizon of more than ten years.
I don't know what's gonna happen next week -- the next six months but over the next ten years I would that be very surprised if high quality stocks.
Didn't outperform bonds all right so that is specific -- out of the out of bonds and into the stocks -- high quality ones Strauss thank you very much for coming on again.
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