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Haverford Trust CIO Hank Smith on how investors should adjust their portfolio for the current market.
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Comments in the financials a lot of people pointing to the financials being up yes -- caught because of Mitt -- performance I.
We'll see how long that -- -- outlook when it comes to is investment strategy on next guest says don't fight the Fed joining us is Hank Smith have a for trusting.
Oh with more on -- let's look about the -- FOMC minutes.
You know -- it seems to me that the Fed is saying what we are old saying a lot of caution in those notes a lot of concern and a lot of skepticism.
From quite a few members that QE3.
Is gonna have limited value what's your reaction.
Well what I think what's implicit in those.
Notes in the Fed notes.
Was the fact that Bernanke.
And the FOMC is really buying an insurance policy would this open ended QE3.
In case the fiscal cliff occurs because we know -- the fiscal cliff occurs the US economy Turbo charges into a recession.
And the Fed wants to have all available ammunition.
To go all in the fight that now the stock market does not think.
Did the fiscal cliff is gonna occur.
And that's why it keeps trending up so don't fight the Fed.
And the trend is your friend that is the the two operative cliches if you will and -- regarding equity investing right now.
Not -- so hard to trade and cliches right 'cause then there's also -- make sure you cover your but 12.
So if everything does come crashing down even -- I know the market is pricing in the fact that the fiscal clip.
-- not happen where -- put your money.
Well I think that is why you need to have a balanced approach.
And don't go too aggressive with -- all what we -- call offensive.
More cyclical companies although we do own some industrials and basic materials.
On the other side we only the traditionally defensive companies.
That held up.
But relatively well and -- eight and 09 from Staples and and health -- names like McDonald's all Wal-Mart.
Johnson & Johnson the first two were the only two positive stocks in the Dow and -- So truly defensive companies we think you need that balance in your portfolio.
Hank -- -- -- heading towards the corporate earnings season hair and I really could set the tone for the markets and from.
All accounts that's -- could be pretty negative -- you concerned about that.
Well so far.
And almost all of the last ten quarters may be even more.
Corporate profits -- could have exceeded expectations.
Now granted.
Of corporate profits are slowing but look that's where we are in the cycle right now we're beyond the recovery part of the cycle we're in a moment.
More mature -- so we're getting single digit.
Our earnings growth.
I think the real question is looking forward in 2013.
Of the fiscal cliff is averted and congress and the president come to an agreement on.
-- pro growth comprehensive tax reform then all GDP estimates -- all.
And corporate profits re accelerate north.
Then about ten seconds Hank do you think is right.
-- -- -- I think a little bit to do with a -- were positive regardless of the outcome.
All of the presidential election as long as we have a split government and they split government.
Will force either candidate to come to the table in terms of comprehensive tax reforms you know.
And Smith oh yes thank you so much for joining us tankers -- --
