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LPL Financial Fixed-Income Investment Strategist Anthony Valeri and RDM Financial Group CEO Ron Weiner debate whether investors should focus on bonds ...
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Very much investors have been pouring money into bond funds we told you that yesterday but.
Can you make any money with fixed income or would you be making so much more with stocks we've got to money managers to go head to head on the bond side we have Anthony -- -- Larry.
He is LPL financial fixed income investment strategist and on the stocks diet -- bringing back Ron Weiner all right let me get to Anthony first.
What do we look exactly what's going on with bonds and there some really -- term we should not use loosely.
We have all kinds of bonds we've got corporates we've got treasuries we've got sovereign debt what which party talking about where you really feel -- -- make a lot of money here.
Below Leslie just concluded our our big national conference focus conference -- LPL financial where we spoke to 3000 advisors on our strategy.
And really there is an opportunity and -- -- and specifically with high yield bonds both taxable and tax free we still think there's money being made there.
Never 7% -- in a high yield when you have defaults very low we think that's an attractive opportunity emerging market that some of the higher yielding more economically sensitive sectors.
-- the bond -- a look attractive here you know it's not all about treasuries here in the bond market.
Of course that's why wanted to stress that -- and -- make your case -- equities at this point over fixed income.
First -- we agree if you gotta buy bonds we agree with Anthony that it should be corporate.
Not quite John -- we go in the triple BM less category at a having said that.
First off the biggest difference is that you have to understand -- when bonds and bond funds.
A lot of advisor -- bond funds but they are really stocks that invest in bonds.
When interest rates go up when ever that is and probably more up than down next three years or so.
Then the investors are gonna lose money and bond funds because the value of the bonds go down on Soviet navy will go down.
So that's the first difference the second is that most people buy bonds for safety.
Once they -- bonds going up then in terms of interest rates they're gonna see the value go down.
More than likely that the common investor who -- and you know they're they're gonna bail.
So bond funds specifically are huge risk when interest rates go up and we don't see interest rates going down a whole lot more so we don't -- -- -- get much more than the yield.
Stocks on the other hand.
If you can please have a three to five year horizon -- there it.
It's -- -- you can -- right.
That you're looking at great companies with 4% for nips and yields.
Depending on the tax rate they could be tax -- as well I know Anthony is gonna take issue with the bond funds because you've got a whole bunch of ideas -- tell me why -- wrong about that.
But at the that the premise that yields are going to go higher is is one and I would take issue with yes they can't go higher and I don't think that's going to be a near term risk however eleven look at all the risk we have on the -- in September alone.
We've got to both the Fed in the ECB they need to follow through or disappoint the markets.
Beyond that we have election uncertainty policy and certainly the fiscal cliff coming up.
We see more of a low interest rate environment -- point that means lower returns for bonds but not negative it still makes sense to have.
High quality bond allocation again focusing on those more economically sensitive sectors -- higher yielding segments of the bond market.
Just we do expect because of those respect there's a short term pullback in the equity market so wouldn't abandon bonds just yet.
Here right now.
A bronco for -- what's a better stocked all -- a bond or bond fund that he's just talked about others there's lots of stocks on you can you can.
Go may have beat hand to her that turnaround from earlier you -- by Verizon you -- buy AT&T.
We just talked about the two biggest food companies in the world.
Very steady going into emerging markets -- have a go up and down a little.
But those yields are in the 3% range there's any number of of stock -- -- is a fund actually that we added to our portfolio recently.
Where to make their screens they have to have been increasing dividend.
A stock -- -- increasing dividends for ten straight years before he even makes this fund manager screen.
Companies typically that believe in themselves -- willing to increase the dividend.
And -- company you can find companies that have a long long track record of increase their dividends ML piece there of there -- great example master limited partnerships.
678%.
Yields.
In now oil and and gas pipeline companies not oil and gas their tax advantage to it and investors.
That investors get the right up to depreciation off their dividends so that the dividends can actually be.
Tax deferred for a long long time -- you both convince me so it's a balanced portfolio.
-- right after I am the me and -- great to see you Anthony -- it's great to have Iran is going to be joining us again with his number one moneymaker.
