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Sierra Core Retirement Fund Managing Director David Wright and Cetera Financial Group Market Strategist Brian Gendreau on what investors should consid...
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Our market panel right now joining us is David Wright Sierra core retirement fund managing director -- -- -- gross a -- financial group.
Market strategist.
All right gentlemen you know you get to write off the -- explain where you stand with these markets is everybody is either completely scared are saying now's the time and David let's start with you -- a little bit of a shaky October and it looks like we'll have the first.
Down October since 2008 does that shake your resolve when it comes to investing.
Well not at all we're we're heavily positioned right now and high -- US and foreign bonds we think that.
The overarching issue is the key wealthy the major trend in the market cycle.
The market trend in our opinion is turned -- -- very stuff for the coming months.
Right now let me get you think as your little bit more bullish on you is -- potential for an upside surprise here and if so where's it gonna come from.
Well I wouldn't say we're all that bullish where -- slightly defensive we're recommending a substantial allocation equities and we would not recommend.
That people.
Produce an allocation right now.
But there's a potential for an upside surprise we're in the bit of a contradiction here where.
The economic news for the US is coming in a little better than expected -- we saw -- new home sales go up better than expected today but the earnings are coming in.
Not as well it's expected to be sure.
Yesterday.
About a third of the S&P 500 had had reported earnings -- earnings were 50% of them still beat expectations but.
The upside potential comes because right now ESP 500 is trading at report PE of thirteen.
May -- interrupt you here -- we are getting Zynga numbers you can see the stock is moving positively one of the headlines as we Parse the numbers is that daily active users.
Have jumped from 54 million to now sixty million that's got to be a positive for the stock and as we work on those numbers.
Let me let you finish your thought there Brian.
Yes -- is the front upside is simply a map almost a matter arithmetic yes support S&P.
Price earnings ratio was thirteen -- the consensus 2000.
Thirteen earnings are dollar fifteen and the S&P 500 it's all -- would take us a move on that PE from thirteen to fourteen to get us up over 16100.
That's why even though I'm not looking pretty big gains between now and the end of the year.
There is a potential for upside surprise and we wouldn't advise our clients to reduce -- equities and miss out on the other side.
-- -- All right let me bring David back in -- -- is we -- get more details on Zynga is latest earnings.
Despite -- bearish outlook -- at least for the end of the it to the end of the year.
All what's the most undervalued asset right now in your opinion where would you believe that would be on the markets right now.
Right yeah we think that mini bonds are still undervalued relative to other bond categories around the world.
We think that you're gonna get some upside just from that and guess what if our tax rates who -- firm wealthy investors in January.
Muni bonds will automatically get a boost in attraction.
Yeah we don't you like the mortgage backed securities and mortgage backed also yes they're they're being -- -- now.
By the Fed's new program no downside to end up pretty good upside.
We're getting more headlines on zinc I wanna give you this one because the stock is moving on the news it is moving higher than its closing price at the moment just to let you -- -- -- has again announce that reduction plan they're gonna learn about 5% of their workforce but.
What's interesting here's of their monthly active users MA US senate and I -- -- to figure increased from 227.
Million in Q3.
Of 2011.
To 311.
Million in this quarter so so some of these numbers show that there's still an adoption.
Of people sitting around.
Naming that pixelated house after all the way I don't get the whole thing that they -- by.
I -- -- was inching his face except the revenue they received from Zynga was down 20%.
So which was a negative but this is actually perhaps more on the upside.
What if it is also in keeping with with FaceBook obviously coming out with better number yeah at least on the monetization a factor of -- -- to Brian.
And if you were sitting at a cocktail party at divorcing what should I buy what you -- -- you know what is the one area they -- about ten grams.
To invest here where you would say you know this might be a good side window -- Where if you had a little extra money you might make this -- Well I think we advise people to do the same thing we are rising all your life.
I think that we don't like spread product we do like high grade corporate bonds in addition -- the Munis.
How what.
I think probably the best place to be right now still high dividend paying stocks even a year ago people were saying has -- the class gone too far is there a bubble of high dividend paying stocks.
Yet I look and I see.
High dividend very blue chip companies still paying 33 and a half percent and that's a real return because dividends tend to rise would do quite relaxed I think the dividend party lasts.
If you know things like this don't last forever.
In particular given high dividend paying stocks are heavily concentrated in the more defensive sectors such as health care.
And -- utilities and telecoms bill that won't last forever but I think in this period of heightened uncertainty particular for the next 36 months they still make a lot of sense.
All right our thanks to David Wright and Brian -- are we so appreciate you coming on to talk about what you like right now and edit them.
