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Fallout from Investors Flooding the Bond Market

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  • Description

    DLS Capital founder David Steinberg gives tips for investing in the markets.

  • Duration 3:22
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-- even with the recent rise in the market and the S&P 500 is up nearly 2% this month alone.

Still more and more people are putting their money in bonds we keep seeing in the mutual fund flows still.

Our next guest says though that by doing that that's -- supreme themselves out of the position that they need to be for long term returns.

Joining us Andy -- found their DLS capital.

David I would like you speak to my mom she just retired.

She has lived through a decade of -- returns -- tech bubble bursting scandals in the debt equity markets and of course there's the sovereign debt -- -- to put -- money back.

OK very simple if you started ten years ago you look at historically -- paying 23 times multiple for their earnings.

Which is about 50% higher than one term.

Average -- now you're at a twelve.

OK so what happens in human nature you people chase performance and people like to feel comfort and by doing so they really over -- the market's ten years ago.

You've got a paradox now where.

At ten years ago you paid any price.

No matter what the logic rice cooking over valuations.

-- on the area out onstage exactly and it didn't matter the didn't the logic was was not the issue it was -- -- here.

And now you've got sentiment on the other side of the spectrum where I just can't be in somewhat low volatility one low risk and you've missed price the way -- right.

The big but this is a worldwide issue I mean that the financial to have a piece today even Australian markets have low volume the Asian markets have little buying no one is in this so.

We've been hearing this for the longest time taking uncertainty out get people back -- how do it.

-- is what's gonna get people back in for -- little what got people out primarily the heart of the problem has been Europe.

And what happened there is you've gotta risk that rose about having -- did you know -- European currency break up.

A lot of people -- -- -- positioned for that he had a lot of money from -- up move into the dollar on the dollar -- you had a dramatic slowdown in the United States we've had that right.

But let let -- let's let's comes at present we know what happened okay let's go forward how you need -- these people back because you would you -- you going evacuate the market is gonna run.

And all -- people are gonna miss it.

And that the -- trying to put exact timing on is always difficult eventually what happens is.

Things dissipate the selling hands -- people turn around look around -- what am I doing.

And at one and a half percent ten year returns in two and a half percent for thirty governments.

There's mathematically no return there's no return money management it's safe it's preservation vs appreciation right and everybody wants preservation of capital they want low volatility.

Until the market rallies.

And -- difference between bonds and equities is equities are adaptable.

These are companies are run by people they can move their assets and into growing markets cut their expenses -- -- his unique non organic -- -- a limited maturity.

It's got a limited currency can't do anything.

There now so well why can't give -- target.

Long term returns are 1011% for large -- all over the world you're talking about comparing it to a two and a half percent and I'm not gonna -- Harris and her and -- -- The mean people still are scared and I guess I'd like there's something about that uncertainty David Steinberg thank you and the markets up 11% I know -- -- business and then I guess I don't know.

Thank you sir thank hopefully mom's been the opposite way it is sold so well last -- well you have to give Oracle.

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