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Santa Claus Rally Led by Hedge Fund Buying?

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    NBT Equity Research CEO Tobin Smith gives his outlook for the markets.

  • Duration 5:12
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As the fiscal cliff hogs all the headlines in the markets are headed for negative week -- rally.

Tobin Smith.

-- NBC equity research founder and CEO by the way and -- next big thing he joins us for the last hour of trading that Foley an optimist here.

Well.

Everything you know it's like the note -- in the unknown knows we know the knows -- Lino -- -- -- don't they're gonna do what when Israel goes in Oregon there's going to be things that are going to happen but nothing should take anybody by surprised.

The hedge fund the big money guys are still way behind the market they were sort of the guys -- forces up September October.

There's also betting on -- you you know -- like talk for months about -- was almost impossible Romney went.

Every right -- Republicans don't think it's well.

-- -- -- -- Statistically it was an episode but all the spend money was coming up on this Romney went so we needed a correction we're -- a correction as we get in December though.

You know fiscal clue what.

Remember -- -- Charlie Brown Lucy yeah right well this try to -- -- it.

-- -- -- -- -- -- -- -- -- -- -- -- -- And -- just that it doesn't -- we're gonna come down the eleventh hour we know that's gonna happen they're gonna do dug down table that's my favorite term now who's going to be the down table which we're gonna greeted agree disagree on this stuff we're agree on 10% quite does Charlie Brown follow -- has to he does well on his focus but.

At the end of the -- -- -- that's known as well I you know I -- live in DC and and I have many many people telling about.

There's working groups already put together they know what it's going to be the theatrics Kabuki theater is gonna go on here -- -- -- market -- If I'm -- prince correctly either way the head she's how to let me -- -- to win best yes they -- paid to sit on the sidelines so they have to by year end.

Make some type of the -- with the client's money.

Diet and I think I'm not being Sinclair but.

80% of the hedge funds are below the the index funds so the people we're getting -- nothing.

Are -- 120 basis points a year -- -- driven guys who take 20%.

Right sell all of those fees -- paying.

And they're not even matching the S&P 500 right -- analysts also understand triathlon club right we also understand also that we've got this you know insane thing with apple were people a particular capital gains now and -- may be well all be buying it back you know December 2 the -- away as soon as they're.

You know the -- laws you can ticker tax laws now a couple of them are -- -- today.

Actually you know they erased about a 4% loss earlier today with some positive -- now we've reversed again were down about a dollar 47 but.

If you look at the intra day you'll see that kind of behavior at the moment and and I look at that -- today's suddenly wake up and say that a 25% correction in the stock might be a buying opportunity.

Haven't we seen this a couple of times before.

We have you know if you go back and I guess we've been sampled it offensive so to.

We get 30% pull back some -- lose that that's what we get an at at about 480 -- That's where we are about 30% pullback you know what thought -- unified -- and by the way we never had it though at a five PE because at Ford die for eighty particular forward earnings.

You're buying it for five PE if you took the cash out it may be a three price surgery where that would June by apple right now.

I'm going to be a little more picky because I'd certainly wanna buy below 500 I think we're gonna we're gonna test that over the -- salary cap so it but that's now just market.

Massive nations that has nothing to do with investing it has to do with with funds some funds have been 12% of their money in apple they got a slowdown got to bring these numbers -- but accelerated.

Market.

OK let's say the slow for JD protect.

And then I then did you do you value that it becomes a value viral what Warren Buffett would buyer for crying out loud for has a great -- It has huge amount of cash and -- be buying it for but thirty excuse me -- -- 60% discount to the overall mark why he doesn't.

-- -- -- would you estimate they have absolutely -- just like technology but he finally dipped into Intel for a minute and then also IBM.

So let's look from the pictured here because if apple might eventually do well perhaps some of that has to do with the fact that it will be on a lot of people's holiday shopping west slope I don't know about.

Ladies was saying not the last hour shut up thought you know she's right whether its iTunes gift cards.

Or even just a little -- who knows what -- do you feel as we look at the overall retail picture 'cause you don't you don't retail all the time.

That worst may be good to see some type a better -- we head into December.

Well make a -- percent to.

Right right I think the Santa Claus rally let's never confuse the economy with the stock market right to the start target is room for reasons it's going down -- -- go up later.

The economy is gonna be some you know post sandy -- -- I was just.

Content scattered clouds rally is happening the economy I don't they received his massive retail moved.

But -- -- -- do well you know you have lives in a -- you have other guys who you are involved union look at that -- Viewed as a little baby boy -- recently in -- and as a twin brother named Brian.

You cannot tell them apart I you -- that was definitely -- -- -- Santa's lap break dancing giving giving giving.

So you believe we'll see that rally.

I do you believe probably fourteen it was cause of B 14100 about Tobin is coming back later on in the show he's going to have sitting next to boost your portfolio even during a market correction.

You cannot -- that closing bell in 49 minutes what's.

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