Market Outlook: Will 2012 Flatline?
Will the market have better values going forward?
- Duration 8:24
- Date Dec 20, 2011
Will the market have better values going forward?
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Some are about the markets right now we are gonna go to Kent croft president of the -- -- my stare and of course manager of the crap value fund crop value -- he's he's there.
See your value fund guide you -- auto world the world you're seeing right now is an eight.
Today it actually right.
Yeah looks good but yet we think there's today -- market.
Many different times and then they give us central run out of market is undervalued.
And then you could argue it has been for awhile but -- it's got even cheaper so.
It should be we should have better values today -- force -- companies have conviction and can hold for long term will continue to get cheaper.
That's anybody's guess really all we know especially if you take truth for an investor.
The long term investment view.
That that stocks are relatively cheap.
And that you can find good companies right now buy and hold at good prices.
And I think we will be a good bit higher you know 34 years from now.
So OK so what does that mean for and I would come -- -- this year was total bust -- 2012 is that also kind of fine.
No I I think a lot of bad news is priced into the market -- -- and so the question is is how much.
Do we have another leg down can psychology take -- you know further than fundamentals might justify.
All those questions are are not easy to answer the one thing we we can sort of look and see is you know how companies are doing how -- valued.
And do we think it you know it is this a good time and I would argue that we are.
Closer to bottoming you know type.
Then certainly than the top so if you do take that view I think it's a good time that January figure out what -- sentiment in this market.
-- every day I mean you know Angela Merkel.
Sneezes and in the -- good -- 400 points so.
She smiles and then it goes back up so.
-- -- it's tough but if you view in times like this is what we look forward are really are some opportunities.
Macro issues can overworked overwhelmed fundamentals and and a lot of -- are very good reasons but.
It also means that those are that does expose them opportunities again some companies.
Really get companies to buy and hold for longer term.
Okay and before we get to your picks.
Your guess for 2012.
You know you said and many of these companies are not gonna be you'll see results 34 years down the line but does does that mean 2000 is flat line again.
No I met for returns.
You know by the gods are with you that did to better your -- -- necessary even now we get so that a lot of even though crack.
We got there are there we got all residential on this stuff.
Markets tend to climb walls of worry I -- -- question is how much is priced in and what and you could also argue that the last couple years have forced companies to become lean and mean and they are.
Our cash on hand it's absolutely great way up Johnson and Johnson and which is your first pick a lot of -- which again is part of partially probably why you you chose to acting today.
He had doubled to talk about -- and it's illustrative of other company that is best in class balance sheet.
They are throwing money at stockholders right now they're increasing their dividend their buying back stock.
And so as part of a portfolio makes a lot of sense to have name like that and you're only paying a market multiple are slightly on -- on on earnings going forward so.
-- -- -- -- -- -- -- -- -- And laziness kids -- -- as a JJ product in their house at some point so it's also back Brett Peter Lynch on investing right.
-- -- -- lady asked for an baby aspirin Charlotte it's everywhere.
Southwestern Energy is interesting though because it.
Natural gas is I guess.
The better play in in honor these days well.
If you have a if you look at things that we do from time time also from a -- standpoint.
You say yes it's the one commodity over the last couple years it is going dale right.
Really end up because -- finding tons of it here and -- and you shale gas exploration.
Looking forward again you know it has been tough for these stocks but going out from this point forward.
We're -- much more uses of -- being transportation.
I don't think you'll ever see another coal plant -- in this in this in this country you and gas plants -- -- with -- it will be the answer there.
Also as we get more of our new -- gas on the global markets were.
Building some gas.
For qualification -- Global market natural gas prices four times what it what we spend here.
We still loyal to move today because of the housing data as well you know.
I guess all's not lost as far as the commodity sector goes can do is sketchy for a while.
No I mean those -- the that takes the companies got hit the hardest in the third quarter yes -- -- into the for a fourth quarter here so.
He had a lot of them in -- trade on global economic growth and and that's you know that where the big macro issues -- right now.
Let's talk about Belmont this is irrigation support -- seriously irrigation like -- much -- gonna make really.
Big stuff if you're flying across the country you see those big circles over Iowa down there on the on the farms.
That chances -- of Belmont senator center pivot irrigation system so what it does it is it makes.
Much more efficient use of -- -- have -- -- more water issues in this country and brought up and you don't realize -- coastal water shortage we are -- and we and it's free and we don't pay for -- right.
And so it is an issue it also makes it's a more efficient delivery Warner.
So we actually get increased crop yields and is not just US this is a global thing they sell these things globally.
But also they make this huge.
On transmission towers that you see is that help build -- the grid.
Electric grid either attached new alternative energy to the grid.
Toward securing infrastructure we have right now which is certainly something we need.
Now this is chemical company what kind of chemicals.
Mostly going back to agriculture which -- there -- like insecticides and and herbicides for.
All types of crops.
That's about half their business so we like that it's sort of independent of a normal business cycle dagger Baghdad's cycle.
They also how are the world's largest and lowest cost producer of soda ash.
Which goes in the making the last.
Making advanced filtration equipment for you know clean.
Air air water and clean air the legislation -- requirements -- that type of thing.
And then lastly they have deposits and lithium which goes in the advanced you know lithium ion battery so that this.
Three areas that we think have you know good long term why do you like -- city like agricultural why we think this notion that the global economy -- CE.
Yes and you're seeing -- -- emergence of you know globally more of you know people graduating to the middle class and in whether it -- China is India Brazil what have you.
But -- exchange requires.
More food and so as you'd mentioned -- pressures on commodity prices for General Mills.
And you Cheerios.
Is really that's why.
-- mind and and FMC -- in the bag businesses will benefit.
Before I let you go you have been in the business allows you battered worked back of it with some of the Brothers back and get back in the day that's what's so we look.
Are you seeing her -- How do you feel this banking industry is these days compared to what it was back then.
You -- in some ways it -- it hasn't changed.
-- I started selling an 85 and and and and pretty as a as a -- solve the crash and 87 -- Grown men crying then which was our big crisis.
We were down we were we rebounded from -- in a fairly quickly.
Human nature hasn't changed now so we've you know we've run in the same issues -- lot of problems we had back then that was advent of program trading.
You know at times like that Michael Lewis wrote in his -- liars poker just great and -- which was a terrific book and and -- pretty on the spot and so you know we've had some those same issues today and then again it's human nature and down.
When it comes to investing sometimes it's best ago countered that human nature -- -- Greece -- -- -- still there.
It's still there greed is good and and and risk avoidance when things -- bad.
Can cost should be.