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Tice Capital President David Tice and Mittleman Brothers CIO Chris Mittleman on the economic outlook and its impact on how you invest.
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Talk to duke it out suburb where the markets go from here in our street fight for the bears we have David Tice who is president -- capital hand for the -- -- Chris that -- the chief investment officer at middlemen brother is great to see you both guys David first united you actually think.
We're going into recession -- it looks like we're going to recession.
If things are so bad why are some of the proper car corporate profits so good particularly when you look at SanDisk IBM -- -- Well corporate profits are ahead of expectations however is still the forecast is for earnings.
Down 2% for the quarter you're every year.
So that's not great and corporate earnings are always a lagging and that's not recessionary.
Is at a 2% losses overall.
We could certainly be in a recession and have corporate profits be up that is -- -- usual.
But Chris your -- -- 76% of Americans believe that we are in recession right now right.
Well gather the what people believe and how they feel was certainly perhaps just as important Chris but you you differ and you say that you're buying right now.
And that is is simply based on know the markets cheap foreign and does it worry you when data points out that the cents.
-- that we are in a recession and that may affect people's purchasing power.
Well I think that in the last each of the last four years -- enough fear usually in the summer time.
That we are falling into recession a lot of people -- predicted that.
But it hasn't actually come to pass there will be a time when -- does come to past recessions happen it's a natural part of the business cycle but I don't think investing has to be.
Except successful investment program does not.
Have to be predicated on your ability to jump out of the market before recession happens you can make good money staying with.
Good companies which we're finding right now in in any economic environment.
We're gonna get your picks and Obama but David if -- as afraid as as as you seem to be that we are going in -- recession frankly that makes me a little afraid that so many people are saying that.
Where do you put your cash where -- ever portfolio how do you divide it.
Well right now I end up having a lot of money in gold stocks.
I also -- some -- I believe that the current monetary system is breaking down.
You look around the world -- far the problems in Europe that are.
Horrible.
China's slowing down Japan is a basket case US faces a fiscal -- And we really don't have other than that everything is wonder -- out of office.
But oh yeah that's right so that gold is where people are going to end -- don't mean you know I.
Had you know some success talking about gold long time ago when gold was of 400 dollars on saying it today.
In 75.
Okay where's it going because none of what you say is wrong yet you look at the chart.
If it were stretch up to one year you would see the gold as well -- and that sort of 2000 dollar -- a lot of people came right on the shows and said would hit.
Hasn't come to pass.
Well gold is certainly had.
You know a slowdown here and it surprised us and sometimes our short term calls aren't great for sure.
And I think it's headed to 2500.
Golden's over is where I'm comfortable with -- now there are.
Also I believe in being short some stocks being long the vick's.
I think gold mining companies are incredibly cheap then really are -- in the gold price.
Thousand dollars to 12100 dollars alright Chris is in here licking his chops because all you gold guys make him happy gives him more room to maneuver in the stock market Chris you have 95%.
Of your portfolio.
In stocks what are some your best -- I -- Revlon is one of oh sure Revlon is -- Great example of a business that.
Can do well even in and a pretty brutal economic environment if you look -- well they did during the last recession which was the worst recession since the Great Depression.
The company's cash flows actually -- straight through that procession from 20072009.
They actually went up.
So if a company can indoor what was some very brutal period of time -- imagine if we get another one they might have a similar type of resilient -- That's the thinking behind that is that because.
People will say no more fancy pants for -- -- -- call mention now we're gonna go with -- with.
It -- something like Revlon which I know firsthand five dollar 79 cents for a silver city pink lipstick but it really try wearing right now.
Is that it's not just the trade down -- -- -- because they obviously are more in the mass market but.
It's the fact that people don't change their behavior as dramatically as the stock market might indicate so.
When people have a loyalty to a brand these that they stick to it you know -- -- generating about a hundred million dollars of free cash flow.
The stock should be I think 24 dollars a share it's only trading at fourteen and change right now so it's good place to make money and what a lot of people consider uncertain market.
All right let's go back today -- -- -- David I just wanna ask you when you think is over it.
Even if you're right and were in a recession we always come out of recessions of -- -- takes longer than others sometimes a recovery is very mild.
When and how do we get out of this one.
Well we're talking about for more than ten years -- that we believe we've been the beneficiary of a credit bubble and where having.
Private sector deleveraging.
Is now being offset by public sector leveraging.
And frankly we're just kicking the can down the road we're not dealing with reality is that we have way too much debt the system.
Unfortunately I think we're gonna have ten years.
Underperformance.
In stocks and I think bonds are going -- -- -- bear market add things are going to get dramatically worse here I hate to be it.
Doom -- bet that's way I see it.
Chris quickly because you also like health management systems and Virgin Media can you give us a word on Virgin Media.
-- of -- Virgin Media is another recession resistant business the stock -- to 25 that the largest cable TV company and United Kingdom.
And again their business didn't flinch during the last Great Recession so if you worried about a recession.
It's not it's not a bad place to be the company generates about 700 million dollars of free cash flow this year going up to close to a billion next year.
Stock trades for about seven billion dollars a market cap right now so those are those of good values and in you know market that.
May or may not go up or down we're not trying to predict the market we're just looking for good businesses keep your eye on the prize that's what he says Chris middlemen great to see it David Tice thank you very much.
