You're watching...
Ariel Investments vice chairman Charles Bobrinskoy explains how the election will impact the markets.
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
We just talked about bipartisanship.
In our next guest says when it comes to fixing this fiscal cliff.
Kicking the can down the road is the best that we can hope for.
Really Charlie about brands board's vice chairman and director research at aerial investments that was start with this major sell off today why isn't happening why the selling.
Well I think people were getting their hopes up some of the polls yesterday were starting -- -- like Romney had a chance there was some optimism.
And clearly that optimism was misplaced.
And so you have industries today.
That this administration has been hostile to that are taking it on the chance so financial.
Services firms.
In particular -- getting hit very hard some other industries like for profit education defense.
Coal stocks obviously this -- -- this administration has not been particularly friendly to lots of different histories -- You make portfolio changes Charlie on a day like today which by the way we should say aerial.
Is the firm founded by John Rogers who is a -- is from a close friend of the president's and plays basketball them.
On a regular basis have a way of so what do you do -- their portfolios on a day like today.
You know we think investors should be long term we think long term but I will say the next three months -- going to be bumpy.
We're gonna have some very tough negotiations between the president and congress.
Dealing with the fiscal cliff they're going to be some bad headlines about no agreement people walking away from the table.
I think investors -- -- buckle up it's going to be a wild ride for the next three months would you not would you -- treasuries.
On a day like today we are seeing buying there.
I personally wouldn't I think treasuries are are.
Very high risk longer term high of one point 6% you're getting less than inflation return.
There's clearly a flight to safety in treasuries but in -- long run that just you're not gonna make money interest.
In terms of what happens when the -- Automatic tax increases how they're addressed and the automatic spending cuts set to kick in January the first.
Do you believe.
That taxes on wealthier Americans will go higher.
That taxes on dividends and capital gains will go higher is that a certain date that you could start betting on -- -- unfortunately I think people are acting like it is a certainty and I think this is going to be a very tough negotiation.
I think frankly that people would did Republicans would take good deal with higher taxes in exchange for cuts.
And entitlement spending and overall cuts but I'm not sure.
That that's gonna happen you saw a lot of optimism last night from the Democrats rightly so and I think there's a real chance they're gonna dig in their heels and so I think there's.
A real danger that we can't come up with an agreement.
And -- we get some pretty bad outcomes at least temporarily I think there's a real chance we go over that fiscal cliff.
If only for a short period of time frightening -- treasuries if you don't like treasuries what is safe here at.
While cash you know why didn't -- if first -- in the long run we do believe that stocks are still cheap.
Stocks are earning -- -- earnings yield of over 7%.
You have the market trading at less than thirteen times earnings that's still cheap on an absolute basis and very cheap relative to bonds.
But in the -- run it's going to be bumpy so I think people should have exposure to the market.
But they if they are worried about things they should not be afraid to keep money in cash is not a good idea put your money in ten year treasuries at one point 64%.
-- is great to see a -- over convoy of Errol investments be well thank you for taking the time and oh what it.
Last night it was you know what a day it is -- -- thank.
