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Gradient Investments senior portfolio manager Michael Binger on whether now is a good time to invest new money in stocks or to take the risk off the t...
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-- Eyeball to -- the market effort to rally for a fourth straight day OK we just slipped into the -- my next guest says you should be prudent about putting new money.
It to the market right now.
Michael bing is the senior portfolio manager -- -- investments and he joins me now Michael thanks for joining us.
I guess my questions you has this rally basically being built on the sentiment that things less bad than they weren't.
Well I think that's a little bit of the case but I truly believe that this rally has been built upon.
Earnings and I believe that earnings and stocks are correlated almost 100%.
Over time.
And earnings have been that great but they've been okay and because of that I think stocks have rallied up to these new highs so at this point I think it's a little bit prudent.
To take a little risk off the table.
Not get completely out of stocks but watch what kind of stocks who invested.
But the guidance on the latest settings -- being well inconsistent to say the least we have some people HP kind of perhaps being more optimistic but overall it's been very I'm certain -- -- it.
Well third quarter guidance has been a little squishy and that's why -- say we should take a little risk off the table when -- that high.
But there is some nice strategies that you can deploy in this type of market environment right now.
Usually when people talk about taking risk out of stocks.
They talk about putting it into the bond market but you really don't get any return potential in the bond market right now so what were doing as we are sticking with.
Dividend paying stocks that are stable in multinational.
And secondly we're building we're using a little bit of the unique strategy right now that's perfect for the times we're building.
Bond ladders for our clients and this really locks in yield we use high yield bonds or locking in yield.
And we're taking away interest rate risk.
A -- -- mentioned Europe talking a squishy.
You think durable bottom out sometime in the first quarter of next year.
I would say it's pretty optimistic what are you basing that on.
Well I'm looking for the point when Europe.
Starts to not you get any worse.
That doesn't mean -- -- -- automatically be better I'm looking for when it doesn't get work I think the powers to ECB the -- These people are going to get together.
They are gonna work a solution.
To help fix the problem and to me that's when the market recognizes that the the problem and the solution is again.
It's not fixed yet.
But it's on the path to incrementally getting better and I think that occurs in the first quarter point thirteen or maybe at the end of this year what about the Fed as the -- done enough to do expect them to take any action boom perhaps a fully into the it.
Well if you would ask me a month ago I would've said I was almost certain that we would have QE3.
But at this point I'm backing -- that a little bit the stock market has rallied I think that's an important indicator that the Fed looks at.
I think they're going to at this point just fled there -- their Operation Twist play out for the rest of the year.
And I would say we have less of a chance of QE3 coming into play looks -- I do think that.
Barbaric side -- wanna get this -- what sectors do you think investors should avoid when a very uncertain time we've got a presidential election now hanging over -- -- the fiscal cliff because.
How -- investors play this.
Well right now I would avoid industrials and materials I'm seeing worldwide PMI is just collapse and degrade.
Not only in this country but around the world so I would avoid industrials and I would board materials I think there -- a little bit scary right now.
I would stick with the consumer Staples.
I would stick with health care the consistent growth stocks but I'd also stick with technology because I think companies will continue to strive to improve productivity.
And that's where technology comes into play there right -- get my -- -- thank you so much for joining us we appreciate.
