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Hefty Wealth Partners CEO David Hefty and Steel Vine Investments CEO Spencer Patton on the economy’s impact on the markets.
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All right let's bring in David have to you have the -- partners CEO Ed Spencer Pratt and -- -- investments founder.
And chief investment officer and I know Spencer we usually -- -- commodities but I -- -- look at this overall point of the economy in general.
Because federal express has come out with these very -- we.
Sort of advisory comments about what's happening not only in China but in the whole world economy let me just quote Fred Smith who of course is -- founder of FedEx.
He said that China observers completely underestimated.
The impact of slowing.
Exports -- of course they have a lot of skin in the game they have big facilities they've spent millions of dollars on in trying to.
And then the chief financial officer Alan -- -- said we see the US economy.
Not improving from here so both in the US and in China.
FedEx anyways sees a slowdown in the economy have they got it right.
I really think they have a good point one thing that's really difficult about China is you never know when you're getting true data may give out numbers that we kind of have to take a look at and compared to the country's electricity demand and other indicators looking at the backlogs of steel and copper and everything that's been reported -- -- -- has spent asserts ventured directly to my point that's why you don't believe the numbers.
You believe people like Fred Smith who has facilities in China is actually -- -- and working with the people.
The people on the ground always -- much better than the government statistics right.
Without a doubt that -- -- absolutely right way to look at.
David hefty if there is indeed and we know there is a disconnect between how well the stock market has done and how the economy is just sort of grinding along.
Tell us how you are investing through the chasm between the two of them for your clients.
Yeah absolutely because you know there's -- -- that disconnect though we see between the market going up.
And the economy where it is of course keep in mind.
Last Thursday when he announced QE3 -- and make those types of announcements with really no end in sight of pretty money with QE3 and extending served -- -- fifteen.
That doesn't happen if the Fed thinks we have a healthy economy I think that -- the general consensus says that that we do you have a sick economy it is limping along is growing.
The -- -- at a fast enough steel.
Up always Olivia but we know that okay so we whether we agree with what the Fed's doing our viewers just want to -- the trade they want they're worried they're concerned about their money.
Is this -- all all hands on deck when it comes to investing in equities because you don't fight the -- -- act -- here's what happens when when they print that type of money.
You're gonna see.
An increase of valuations it across the board in the stock market there's certain sectors that we favour over others but the bottom line is the probably all gonna rise over a period of time.
You know we've been talking about the Vicks index -- at a at a low.
Don't use of that either when you have federal intervention raising these prices.
You're gonna have a lot of volatility -- as investors go to try to make that extra profit on -- -- they're gonna have to understand that comes with the trade off.
If you can't accept -- 1050%.
Sudden pull back and not feel comfortable at that you probably not should not participate.
But that is where the action is going to be just buckle up and and ride that ride -- -- the Fed's got -- check out.
-- Spencer I know you're for GLs day you believe in gold right now but but let's put -- back on there because there is a trade you can make with -- The Vicks index is -- is at a very very low point now below fourteen which is highly unusual I think the low.
This year was 1402.
Were that was the absolute low so we are really trading at sort of historical lows here in the mix.
If you buy into the DXX which is up a combination of funds that that are based on sort of the reverse of what the market does maybe now's the time.
Just does today as it to -- hedge your bet inequities now's the time to buy the BXX what are you set.
I wish that was a good -- good instruments.
The right thought volatility as an incredible lows and we need to have an instrument that allows us to get long volatility the -- -- BX -- is that it's it gets complex was it's an instrument that has to roll month to month through -- futures.
And it inherently loses money every time that rolls and so this is an instrument that's a decaying apple pick up but they don't like fruit you know like an apple -- orange -- -- is over time and so if you don't.
-- capitalize on it immediately you're gonna lose money a month down the road and so if you look at the historical chart of the -- that it just has gotten slaughtered it's down more than 95% since inception so maybe looking at at options on the -- itself would be a better way to play that the volatility than -- -- it's just a flawed system.
Unfortunately so that's the science project that's in my fridge there you go -- -- fruit that is the -- -- finally -- have a -- It the dividend play has been awfully popular lately but you say -- now rotating out of some of those very popular place why and which ones.
Well again and as we see with.
QE3 we're gonna see other asset classes start to rise -- starts to take the risk off of those asset classes.
So as -- depend on what stage you are in your investment cycle you know pre retiree retired retired.
But -- if you want to take more.
Moore -- play and assets that should rise greater you can start eliminating your exposure to the dividend focused.
Stocks that.
Most people have been participating in the last couple of years -- start to go to the other side.
-- you can I mean really depend on your appetite I mean really mean if you if you wanna go all out aggressive and you can start actually start looking overseas and start looking emerging markets again -- -- -- that more selective but there are opportunities in Asia.
Even in Europe with the ECB and and and their liquidity plays that -- just recently announced it start to take some risk off of those assets away as well.
So -- is this.
Fed and -- in your area all central banks around the world with this intervention again.
There is some safety is start moving in that direction I don't think it would be prudent to maybe eliminate all of your safer securities.
But but definitely an area to start.
Plain and David have -- -- Spencer patent a lively -- great discussion thank you so much thanks guys.
