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DLS Capital’s David Steinberg on why it is a great time for investors to take advantage of undervalued equities.
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Even with today's losses are first gas remains bullish on the market saying that the market is undervalued right now -- joining us.
Is David Steinberg this founder and managing partner -- last capital lots of thinks of -- in here David we got the ask fed reiterating QE3 sell on the table interest rates.
Remain at all time lows volatility -- heard -- at -- leaves just talking about it no big swings but.
Volatility is part of the game now in a way that we haven't seen since probably back in in 2000 -- eleven I know you think that there's been no better time to invest in the market.
So how do you -- the sort of the pros of that with the -- of volatility and and possibly hear coming back.
Some fear creates opportunity once again thank you for having me.
Your creates opportunity last year hand wringing and gnashing of teeth over Europe which will legitimately is it is a good fear.
-- create selling and it creates movement of out of asset classes equities specifically -- fixed income.
Has put us into a position and I believe where.
Equities are under owned and bonds are over -- overvalued.
And therefore.
You have opportunity in equities just based on old fashioned business valuations.
The end of the day we have a paradox almost what we had in 2000.
99 and 2000 credit bubble where that was comfort in pain for overvalued businesses.
And it didn't matter what the value of those businesses where the S&P was of twenty plus PE.
We have the reverse of that now where we have -- market probably trader on a 1213 PE with growing earnings.
We have a majority or -- vast shift in -- -- into lower volatility.
Investments like fixed income which -- with extraordinarily low coupons.
Which -- -- -- with the inability really to make a lot of money or any forward progress over time especially against inflation but -- with equities are.
-- -- Well alassane you know equities have the flexibility to grow and adapt their balance sheets to changing economic environments -- -- -- -- Right -- that they do have the adaptability that I'm just looking at key technicals here David and the S&P continues to test this level thirteen sixty unable to break through it here.
Lot of that investors are trying to -- to wait for that to sort of happened yet again so we do have this technical.
Moment and that isn't materializing then we have Europe then we have Iran.
Fundamentalists taking a backseat certainly today -- over the last three trading days because of these bigger picture issues.
And no question about it -- the markets had a big run since the beginning of the year and it's gonna arrest and these issues in Iran are large issues as well as in Europe.
And you know on the market might have a -- back here for a week or two weeks and you know technically and that's a whole technical issues are -- -- style of investment.
Obligated business valuations investors over the long run are going -- provide.
Superior returns and better opportunities of themselves by buying undervalued businesses.
That's really the trick of making money in investments is buying undervalued.
Opportunities I just believe there's a lot of opportunity there's a lot of fear was created last year and there's a lot of -- still on the market place do what you just mentioned.
-- ran as wells what's going on in Europe.
David you talk about rational valuations and I'm looking at some of the stock picks that you like.
I find an answer saying that you like coal plays and I got to admit I've been scared out of our Arch Coal and -- for natural.
And you'll like them down there now what about the new that this sense that there's a new paradigm shift.
Natural gas is -- simply so cheap -- doesn't have a chance you still think that's not true.
Well basically I just.
Got involved in the coal area October November of last year due to the fact that natural gas in fact collapse and those -- stocks traded down on the back of natural gas -- There's a high correlation.
-- both those companies also are in the know leisure coal business which is quite under question right now do what's going on in China.
As well as pricing -- that's gonna need to be determined in new contracts in Europe.
I -- back -- -- -- -- -- minutes I don't wanna get sued too much indeed -- what I'm trying to figure for the viewer.
Is it looks like and Ellison lot of people worried about chasing stocks in the seems like you're trying to present ideas that are running yet -- stocks that haven't made a big move Francis you like Clearwire.
The bad news today -- -- -- home.
With a lightsquared rejection is that one of the reasons you like it are these -- see value there that no one else sees.
Clearwire is a tremendously undervalued company it is -- got extensive.
-- from that spectrum is probably vast majority available spectrum -- that we have to use our Smartphones to use our -- and so forth.
There's going to be nearly exponential growth.
-- this company has just recently raise capital to be able to build up their LTE.
They can have -- -- have great penetration.
And over the long run on the company was selling its six last year -- 25 but five years ago.
With what they've -- the ground in with the potential demand is I just I just -- Great opportunity for real significant returns -- any particular name and yes.
What we're gonna leave it -- David Steinberg DLS capital very much -- thanks very much of.
