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Kaltbaum Capital Management CEO Gary Kaltbaum and Bahl & Gaynor Investment Counsel portfolio manager Matt McCormick on the markets since the 1987 ...
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-- -- -- -- October 19 1987.
In the mostly known as black Monday when the stock market crashed and the Dow lost almost a quarter of its value and a single session.
Leaving markets in disarray for months I was there -- Wall Street Journal today 25 years to the date later some are saying it could happen again.
Gary Kaltbaum joins us from.
Capital management and Matt McCormick -- ball and Gainer thanks for being with -- -- Matt McCormick let's start with you you say overall the the chances are unlikely but you look at that chart on what happened in that one day and it's truly scary what are the chances that could happen again this month.
This month -- I think it's unlikely Dennis but could -- sure and I think when you look at the market right now.
It when he -- situations what happened yesterday with Google with.
-- -- you see high frequency trading be an issue and you see the flash crash that occurred in May 2010 we saw a 9% decline.
They're just out of the blue.
I get concerned when you see -- a sense of unknowns that could happen you look at the market today right now Dennis.
They're expecting.
And Europe to remain -- you're expecting the elections go off of that initiative fiscal cliff to be resolved you're expecting to sequester -- issued to go away.
All these issues are know the market is expecting to be handled easily benefit it's my opinion anyone of them goes wrong the market could go off.
That is not Gary when you do look -- the longer chart where we've been since the 87 crash.
-- have -- -- maybe 87 a buying opportunity not the end of the world.
87 crash was a great buying opportunity yet we actually hit a low.
Within days of that and we were off the the races again because when -- this big secular bull market so -- you are correct on that.
Luck all I'll give you one guarantee.
Will eventually have another crash.
But the world is littered with people that have been calling for craft -- for the last 25 years.
But and they've been out there since I was -- it's good.
The bottom line is you can't predict one you never know -- gonna -- But there are too many derivatives out there you have a fed creating a bubble so one will eventually happen I just don't know -- -- from what point.
But another chart look at that now -- this October 187.
To November 11990.
Which is basically the same three and a half years or so.
Since we've bottomed in the -- all of march 2009.
To right now and look at how similar the two charts are -- recovery in stocks.
And here's what I wanna know of from you -- You know after we got through that 87 and I cannot -- -- -- going into a huge bill bull market what are the chances -- -- were about to embark on another big bull market from here.
There is some chances however I think 2013 can be difficult year regardless of who wins I think yes of deep fiscal issues that we have to address.
And when you look at the charts from 87 to nine.
QE1 QE2 and QE3 so the growth from 87 and ninety I would argue -- more organic and realize oppose the growth right now has been more on a sugar high.
I absolutely agree with -- that you know crashes come out of the blue but I think the point here for looking for a bull market I would have to see the fiscal issues addressed by our politicians in a more.
Concrete way right now you're not seeing that happening.
Yet and I Gary that we were just showing a chart where you see.
The -- rise in that same period post -- 87 vs post 09 lows they are eerily similar.
And getting 87 from you know 91 we that we started that bull -- in 92 Gary can we be at the start.
Over the next year of another big -- I think in the next couple years local -- -- thousands thirteenth starts the fourteenth year.
Of what I call -- secular bear market that started in 2000.
I have been saying this would last about sixteen -- seventeen years just like what happened in 196682.
Then I think we can lift off the races if an only yet.
We can get our debt bubble under control if we can't.
I think that's gonna continue to provide headwinds and if you notice same thing the market right now that would get little trouble here because earnings are terrible because the economy is not growing enough.
We gotta get rid of the debt select the economy bloomed then I think we can be off to the races again valuations have come down and a lot of people have been leaving the market.
Selling their mutual funds with is actually good news going forward.
Did you know and Matt we've been told that buy and hold is dead and yet I don't trade stocks outside -- -- have mutual funds -- my 401K.
And I never sold after 87 I never sold after 2000 -- never sold after 09.
And look at where stocks are over the long term -- should European stocks no matter what your retirement account just sit there.
I I think you need to be selective on stocks need to buy high quality -- for a longer term.
Dennis when you look at the people say buy and -- dead they're usually high frequency traders or hedge fund traders were they have an economic in -- are trading a lot.
I think when you look at say over -- long term.
I'm much more bullish on stocks I am bonds I am I believe with the cost of living increasing every day you need to have stocks with high quality dividends due to state and pace of inflation.
-- much more bullish on stocks over the next 10 years I am bonds are.
Our -- budget UBS -- -- -- I think crashing bonds will save you and one last thing data point past ten years ended September cap.
Cash return one point 6% a year stocks with dividends reinvested.
Returned 8% a year for the past ten years thank you so much Gary --
