You're watching...
Bob Phillips of Spectrum Management and Stifel Nicolaus portfolio manager Kevin Caron discuss how to prepare your portfolio for going over the fiscal ...
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
Well it is time now for our fiscal -- survival kit series all week we're gonna be bringing you the tools that you need to prepare for the changes.
That could be ahead in 2013.
Due to the fiscal Clinton.
Joining us now about Bob Phillips spectrum management group managing principal and Kevin -- Stiefel -- Portfolio managers -- wanna start with you because you are telling your clients to reduce stock exposure here that nervous.
Yes I think as we work towards the end of the year obviously fiscal cliff.
What is congress and the president gonna do I think is completely up in the air.
If you look at down I think tax taxes are going up when you look at the magnitude of the spending problem.
If they let taxes go back on the top people -- over 250 year erases about 85 billion dollars of revenue.
That still leaves us short about closing that the deficit by.
Close to a trillion dollars so spending as a major issue and that's not being talked about okay about tax rate yeah.
Right right it was about tax rates but that -- you know -- -- on the other ten years you're tell your clients.
Stay focused stay in stay -- your portfolios don't make any big changes but you've also set another research notes.
And -- last four months.
That volatility is going to be in the markets and also the GDP's gonna -- no matter what happens.
And Washington with the fiscal -- so what Huckabee state confidence stocks.
Well I don't think we're I don't think we're gonna have shrinking GDP.
That was not part of our assessment but what we do see is a very significant drag.
But for all the right reasons if -- if -- if you're.
Fiscally conservative for example and you look at what has to happen here -- spending in and debt deficits need to be reined in.
And stocks discount earnings over the very long term he might look at stocks and say gee you know after ten years or twelve years -- going sideways at very.
Inexpensive stock market compared to many other right asset prices you have to -- a bullish longer term point of view but I agree with the other other -- that.
This is a significant change in terms of fiscal policy biggest change last three or four years and it is a transition now create some volatility hence.
Our position that we'll have some volatile in the month.
I think every Tuesday that -- there was a mini deal in place about a -- -- that GP because both sides are gonna get basically what they're looking for Democrats want more social spending programs Republicans.
Don't want tax rates touched.
Yes exactly and is essentially and essentially what we're what we're looking at is as is a situation where you've had -- Trillion dollar plus deficits run for each of the last four years.
But it is -- president JP about I mean that's gonna affect JP isn't that what you've sat.
Bought that -- Yes those deficits do affect our GDP contract but it's all it's all -- together are right it's all them together and our expectation is that.
There will be some reduction in the deficit but we're not gonna go back to balance -- like -- think positive -- There couple wanted to be clear and that's why I want any -- -- -- -- let's talk about.
About things that you do like can -- -- in particular the gold is a good play for our viewers to protect themselves.
Up from the clip but but a gold is very volatile depending on what the Fed does so what do you what do you say about all -- like so much.
Well it it if you look at Tom.
The banks around the world the Federal Reserve as well as the European Central Bank everybody's printing money and that goes for Japan and England.
So the money supply is correct is vastly increasing -- not motion but we know that it's increasing.
CF to have some way to protect your purchase at a -- -- about 3% last year -- gold -- articulate guy and I I -- -- I understand -- and you got to look at the longer term trend.
And as long as interest rates are effectively negative.
And the money supply is being printed an -- we think the odds that gold going up or are quite high and it it's a protection mechanism people -- -- -- OK Kevin Kennedy you can't give me specifics -- but you do like certain sectors -- we're best sector right now that you think is gonna proforma 2013 despite.
What happens in Washington.
Yeah I take a Barbell approach and we look at consistency consisting companies for example consumer Staples there are number of -- -- -- -- counties may be a little bit.
Little bit pricey but I think -- given the volatility we expect to see in the months ahead they're still values to be had.
And number two -- technology makes a lot of sense again very clean balance sheets innovation tremendous.
None of innovation and a tremendous net earnings power coming out of technology a -- that will be a place.
And I might worsen over the last year.
Guides and so yes OK our ability CF and he would block actually -- the average haven't drawn Bob Phillips thanks about to -- appreciate it.
