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OppenheimerFunds Chief Economist Jerry Webman on how investors can adjust their portfolios to keep them growing despite fiscal cliff concerns.
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-- -- help you get your portfolio into very strong shape at a time when all of us have very little control over what might happen in the macro.
Jerry -- right next to me he's with Oppenheimer Funds he's the chief economist and our first personal trainer for your portfolio he's joining me -- a Fox Business exclusive.
183 billion in assets at Oppenheimer so people listen to what you're saying here.
What is your you to turn all of our traders right OK do you agree with what any of them have to say about what was going.
Here's -- -- most traders are very focused on what's gonna happen yet this afternoon overnight in an -- and by Monday morning good that people what does that then that's really eggs sold to the people who invest with us.
Are worried about yes the rest of this year but next year -- -- years beyond that so it's a little bit it's a very different perspective and we -- keep them straight.
But some think that fiscal cliff -- I don't have to be that 100 person Italian well yeah I -- so -- decided what nobody else is allowed to come on the show and simply say.
We -- concerned about the fiscal cliff they have to give solutions so here's what you do.
-- hold the it and the problem -- you've probably already done too much of this.
But you hold some quality and liquidity in the port in Europe in your whole portfolio that -- -- cash -- happy as cash she could be well could be long treasuries and as something that will do well if something bad happens so that you got money to pump out your basement if it floods like minded.
But here's the thing most people already done too much of that.
Gives those kind of holdings are insurance policies that are not investment so that's one piece at a bar bill.
Then there's the other piece of the Barbell adorned with a Barbell approach we're going with a -- -- some emergency money to get you through what ever craziness happens that this fiscal saying that side of the park that was already a little heavy with something -- just look so scared look people they polled said they put half a trillion all -- that and hiring top -- you know if you.
Made for me.
At the moment I don't buy it biceps like that you know would be I'd have I don't know what happened -- anyone -- or body building -- ever created didn't give a more hair to pigeon.
The look.
Most of -- people put a trillion dollars in bond funds over the last five years and taken half a trillion dollars out of equity funds one of the things we know -- on the horizon.
Next year or the year after five years from now -- the higher cost of living one point 7% treasuries not -- -- percent and in money markets isn't gonna keep you.
Op with -- rising cost of living you need for insurance.
But it doesn't give you growth while what's on the other side as we need the income producing opportunities to that well people waiting in between there's you -- you wanna make sure we talk about income you're talking about real -- the Fed has said we're gonna keep you negative real rates of return on treasuries for a long time see -- a look at real rates of return you may find them in more credit sensitive bond sectors emerging market -- -- -- corporate bonds including high yield and bank loans.
We're -- -- -- dividend paying stocks be careful in that sector but they're going to be there as well of.
It's making such a big deal and in essence saying that the dividend payers are getting jettisoned from people's portfolios -- they're scared about higher taxes.
Is that an incorrect to move -- If you look at the history go back and look at the 1990s and look at.
Not just dividend paying stocks to focus on stocks were able to increase their dividends over time -- stocks outperformed even -- Even when dividends were taxed at a full.
Income rate -- President Clinton on.
And we didn't see of the world follow our heart and and those that the stocks that had a sufficient cash flow to be increasing their dividends outperformed you talk about pricing power picking names that have solid pricing power.
Tell us how you do that well you don't.
Again this is a bottoms up approach but I think in general you're looking for three criteria you're looking for powerful brands could you can't invent a brand overnight.
We're looking for technology -- other people can't replicate and we're looking at access to growing not shrinking market now.
There lot of nuances to those but those things give a company pricing.
Let me just interrupt you -- a -- it's just been announced will be holding a news conference.
On Wednesday.
Peaking just got one he's going to hold another one we're presuming that means that there will be an update on the situation.
What's watch that the levels of the market right now we're up about seven points if the market cares about that announcement -- all of watches we.
Get closer just five of fifteen minutes before the closing bell rings -- -- Well my point is I want people to be positioned so they don't have to.
Worry about what happens next week of the -- won't pay attention and this and still be prepared for five years from now -- pick stocks that have ideas or technology that cannot be replicate ideas technology brands and access to markets that are growing it hard to get into.
Those are the kinds of stocks you wanna look for -- they will have pricing power they can grow their earnings whatever the politicians today's about losses.
Yesterday and the day before it is that the election or is that earnings are what is the same things that you win a 5% trade off after the election.
Four years ago were almost as bad the next day in and we were up 90% by the next so you've got the water out -- your basement.
You have we you have the water out of the basement area today and -- saying not me personally know me personally I know again yeah I mean I didn't item on the -- -- I bet was which but yeah I did -- it.
We did have a -- you can probably -- here in May help us on all of us we're gonna so much thank you glad it was okay monetary weapon Oppenheimer Funds.
