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Sanibel Captiva Trust Company’s Pat Dorsey on why investors should focus on stocks for their portfolios right now.
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Now we have a money manager who says it's time to stop focusing so much of Europe there are plenty of US companies they're trading at bargain basement prices and it is time to get in now.
That door seasonal Freddy's vice chairman -- director of research and strategy at sentinel cat team the trust company packed great is your first of all I don't.
And I'm gonna go against that -- little bit just ask you about Europe do you think that this deal is just another mandate.
It's certainly not a permanent solution but it moves you in the right direction at the end of the day you cannot have currency union without fiscal union.
And so you either have to break up a whole currency union or move towards greater fiscal union and the EU is moving in that direction than they get there remains to be seen.
Now if you look at what's happening with the market today and haven't -- markets for file now and I see despite all the bad news it seems.
We seem to have a desire for the market decline these walls of worry don't we.
It seems like -- I mean I think if -- at the end of the day you know corporate earnings have remained quite strong in the US despite all the headwinds.
And you know it is earnings that -- stocks not so much macro headwinds the macro environment affects earnings and so far.
US companies have not been terribly buffeted by all the macro stuff that's dominating the headlines.
It's so I would think because of that that you you over indulge yourself with stocks at the moment do you think that stocks are good bet.
Well think about it this way so they're ten year treasury -- -- 2% you flip that over that's fifteen times earnings.
See him play paid fifty times earnings for an asset which will -- of growth is of course a -- -- fixed income that's like all fixed.
Or you can pay twelve times earnings even eleven or ten times for cheaper stocks.
For equities with three -- 4% yields and those dividends will grow over time I don't think it's -- science to figure out which is the better deal.
That is a great way of putting up by the way you're not obviously not -- -- -- -- -- and other people of that come out saying that their treasuries this awful of the mobile but.
What kind specifically then if you follow your life to what kind of stocks what sectors are you looking at right now.
Well so and so we'll start with you know it's staying away from one area which is utilities.
Silly because they've gotten very very stretched field -- -- yields they're not getting yields out of bonds.
So -- -- equities -- paying 1617 times earnings for utilities growing at three and 4% which seem to get pretty bad debt to me.
I've got to -- you know very broadly had to kind of mega caps.
With pricing power and good dividends specifically on I would be focusing not so much -- any particular sector but you know one company.
That we're very excited about right now would be actually a money manager BlackRock you know worldwide it was largely managers.
3.3 trillion in assets under management.
Has about a 3.4 percent yield they've been raised the dividend.
And about 15% per year trades at about twelve times earnings and the nice thing is they have both the bond investments -- -- they started.
Equity investments and during the financial crisis -- bought Barclays which -- iShares they have a stake in the very fast growing ETF market.
So wonderful business with 30% operating margins trading at what I feels pretty cheap price -- this.
-- by the -- once -- day again forgive me -- emerging markets you like them now even though Brazil is now well it has stopped its growing.
Well there.
And emerging markets broadly speaking are trading at about ten.
A half times earnings right now historically that's a very low rate.
If you're looking at emerging markets I would specifically look at smaller cap companies not the little -- -- because the bank accounts like Petrobras and Samsung they're tied to the global economy to smaller companies.
They are tied to those fast growing emerging market economy -- -- I'm up against a -- break you know what that means that Dorsey great to see have a good weekend appreciate it.
Thank you sir thank you.
