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David Joy, Ameriprise Financial chief market strategist, on why now is the time to take risk off the table due to looming uncertainty, including the f...
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-- -- all the other problems in these volatile markets my next get says.
It's time to take risk off the table and protect your portfolio David -- -- and the tablecloth out.
Risk away he's Ameriprise Financial chief market strategist with 631.
Billion dollars in assets and and -- just yesterday.
We had a completely different message from -- real policy capital management we'd love and respect both of you guys.
She was saying don't be so worried don't do that while everybody else -- to -- but why are you feeling strongly about taking risk off the table.
Well I think a couple of things first if you look at the fiscal cliff and the possibility that it gets triggered I think to put the likelihood of it is certainly something north of zero.
I think there's lot of complacency on the street that this is going to get done and will buy ourselves some additional time twelve months of whatever -- But if you look at the rhetoric that's going back and forth I know it's early days and people sticking out they're negotiating positions but.
It suggests to me that this is not going to be an easy thing to accomplish and so whether it's a 10% chance or twenties.
That could have a significantly.
Negative impact on the stock market if it gets triggered and you need to defend yourself.
Well okay defending yourself.
How do you defend yourself against that instability that we know we will see with the markets between now and the clip of that fiscal clip December 31.
Well I think you have to do two things one is you have to make sure that the equity exposure that you have is tilted -- as the defensive sectors of the market things like utilities consumer Staples things like that.
In the bond market this is even may be more insidious has been a tremendous flight.
-- of cash into high yielding.
Lower quality debt instruments.
Because you just can't get the yield out of the treasury market -- -- them you know the highest quality bonds so.
If there is a rotation away from that in the event of a recession.
They're gonna get crushed so I think you have to maybe move up to higher ground -- on the bond market what form.
Well if you -- high yield maybe move up to investment grade.
And if you wanna -- -- -- and move up you're getting a better quality -- quality so now you're regulating Toyota -- single layer -- yet exactly -- been a great trade to buy high yield.
It's been very profitable.
But you've started to see those spreads widen out the spread between high yielding treasuries over the last few weeks it's widened out -- full half a percent.
So that's telling -- the market is nervous -- you know.
You say you don't like utilities at this moment.
They've been a great they've been I'm sorry.
You did say -- you like utilities and they have not been a great opportunity.
No they have and it's been a very very sort of crowded area this -- dividend paying.
Strategy.
But I think despite that and despite the fact that they're relatively expensive.
They will protect you in case things go wrong in Washington three names will also protect you at least according to David coming up David is going to be talking about.
Other ideas -- -- -- financial chief market strategist back to tell us which stocks to invest and while this.
With deadline looms -- hearing from people that they're totally annoyed with the expression fiscal cliff.
Trying to come up -- something else.
The closing bell ringing -- may not.
