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How Undervalued Stocks Could Help the Markets

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  • Description

    McGervey Wealth Management president Mike McGervey gives his outlook for the markets.

  • Duration 4:09
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Thank -- once again that slew of disappointing economic data plaguing markets a surprise drop in manufacturing.

The Philly Fed index shrinking by the most in ten months -- you've got last week's jobless claims learned today.

Higher than expected four week average now the highest level since December may existing home sales fell one and a half percent.

Well joining me to digested off Mike in the Gerke he's president the -- wealth management.

So my green here data like VAS and you critical in Sachs.

Is said recommending in -- -- short the S&P with a target -- 1285 does that make you wanna -- your expectations for the US equities markets as well well.

A good afternoon.

I do believe that the Philadelphia fed index has been obviously a sharp surprise for many.

What's interest being is that many of the Philadelphia manufactures.

Are even more optimistic this month than they were the prior month suggesting.

That maybe this is going to be short lived.

With regard to the housing market we have seen obviously some softening in the last month.

We still are.

Approximately nine point 6% over last year this time we've seen inventories declined by about 20%.

And worst we're currently sitting in about a six to seven month inventory which is.

Perhaps.

Just above normal levels at six I do believe that we will see more pressure in housing.

I really attributable.

To the fact that.

We're we're we're facing more -- -- to to move to higher.

And right price when listening because I wanna really zero in on your expertise and -- you tell me how all of -- information swirling -- it's really concerning.

You know day after day getting more bad news after the next piece of bad -- so how does it work out here at your market perspective your investment thesis.

-- -- Well one of the things that so we see is that stocks power companies are -- very reasonably priced are somewhat undervalued right now.

They're trading at multiples about twelve a half times earnings.

Which -- significantly below historical levels that may be seventeen to eighteen.

On this may help us keep a bid in the market.

I do believe that we're seeing a little bit of a trading range right now on the S&P.

Somewhere between thirteen 23 and maybe thirteen 64 on the high side.

-- -- -- more bullish than Goldman is tomorrow and obviously this is the headlines so I'm.

Sticking with the here Goldman again -- -- shortness of -- 1285 why do you think your a little more optimistic than perhaps as analysts are.

Will the structure of the market right now still somewhat -- normal.

Now we haven't.

Gone into a catastrophic market structure.

I do believe it is possible -- -- go back and test to the 1266 levels that we're hit earlier this month.

But if if some of the major wild cards in the market such as the European crisis.

Some of our own US fiscal.

A policy dysfunction and and may be you know even considering global contraction to remain at bay.

Not saying they will but anything is possible they remain at -- It's possible we remain in this trading range and eventually work our way out of it in the government as you know has taken a very explicit stands.

On being more accommodative if conditions worsened so Mike then -- what you doing in just these last couple days in terms of your cash allocation have you increased sure.

Well we we we have moved.

From high is in the in in in -- may be having attended five or 10% cash allocation.

To having about a 45%.

Allocation at this time.

We've also diversified away from some of our higher growth stocks.

Which can be a lot more volatile in times like this and had used to tranche of more defensive higher capitalized.

Our company's high quality high dividend.

To absorb some of that.

And you know where we are comfortable right now also in the that local various sectors of of bonds.

My quicker Vietnam -- wealth management Chinese market outlook for us thank --

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