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Would a new tax help small investors?

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    Vahan Janjigian is a proponent for lower taxes so why is he want a new tax?

  • Duration 6:49
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This transcript is automatically generated

Now among other things with a by Heinz and -- The chief investment officer grants wealth management and -- it.

And up before I ask you what happened to this -- that's there -- lots of small investors probably think along the lines -- apple because it's a huge.

Name we have on average 444.

Dollars worth of apple products in our homes and -- Jason this is people want to know about.

Happening apple it's killing the NASDAQ today -- Hanson 500.

You know it's amazing the sell -- an apple has been unbelievable I've actually been avoiding apple.

Home because I always felt that it the price was not justified on a conservative valuation basis.

However apple is now my most recent recommendation my recommendation on apple came out today.

And I think it's a good time to get into the stock in my opinion although there are lots of reasons for the -- lawful and there are concerns that the company has lost its bearings since Steve Jobs passed away.

While there are concerns that the iPhone may not so as well won't that as they had hoped in China.

All this kind of -- what I really think that most of the selling is related to tax issues.

How -- is a stock that is very popular with retail investors and it's a stock that many people have huge paper gains on.

If they sell the stock and now they're they're tax liability will be a lot less than if they wait until the turn of the year.

My capital gains capital gains taxes for higher so I think that a lot of a lot of the selling is based on that so if I'm right about this in January we should start seeing the stock recover again.

OK so if you had put a price target on Apple Stock which is about 512 right now lastly -- believe.

You know my my valuation indicates that apple should be selling somewhere between 600 to 600 and 65 dollars a share right now so.

Here -- -- -- -- any investor you'd save by announced team.

I would you know we considered very cheap -- I don't think there have been any dramatic -- -- fundamental reasons to sell off the stock at least to this extent.

We consider -- cheap right now.

And down -- -- small small investors skittish.

You know on the ever since we've had these crises and this increased volatility in the stock market the small investor has really been -- stocks.

On and off I think to a large extent it's really due to what I would call -- computerized algorithmic trading on the part of -- margins intrusions including hedge funds.

-- now using computer models that are making the trading decisions.

Not based on any fundamentals.

But based solely on the most recent change in the price and this is increasing volatility tremendously.

And the small investor believes that they are at a disadvantage so they're basically staying out of the market.

They are investing in other vehicles for example exchange traded funds are now very popular and it's -- get her for a crazy right well it's either -- or mutual funds are actually very similar there are some -- minor differences but.

Many investors are finding that exchange traded funds or great way to get broad diversification and not worry about -- institution coming in and dramatically changing the price of a particular stock.

Now I think that a lot of this is due to the -- transactions costs have decreased dramatically over the past few decades.

-- you know the small investor can trade for less than ten dollars a share but institutions can trade for a whole lot -- tonight.

So it cost them virtually nothing to trade large blocks of stock very quickly through computer model and that increases the volatility.

So in my opinion if the transactions cost -- a little bit higher.

Then I think you would see the small investor actually coming back into the market.

-- Heat cool but it the talk flying off the fiscal Clinton spending debt ceiling and this and that heeding that kind of just keeps the small investor away.

Well no doubt I mean a small investors very concerned about a lot of these economic issues.

They don't know what's going to happen in the future I mean it's already in the middle December and we still don't know what tax rates are gonna be next year.

We only know what -- will be if there's no agreement on the fiscal cliff.

A hostile betting that there will be an agreement but in any case there's no doubt that tax rates -- -- going higher.

So law I think the small investors a little bit -- concerned about that I would say.

Actually I think there's good good news the that the politicians will probably reach an agreement even though.

The tax rates will be higher.

But I think the bigger thing keeping investors away is the fact that.

You can buy stock today and tomorrow it could be dramatically different in price simply because some institution is driving the price in one direction or an off another.

We recently found out for example about an extreme case of all window dressing where a lot of -- institutional investors are putting in.

Huge -- orders for stocks that they own at the end of the month just to drive up the price on the last day so that they can report better results to their investors.

On this kind of volatility is something -- draw a small investors way.

Yeah and in.

-- when computers get involved in things.

Anybody can be in -- anybody can do anything he sees things like that happen and a lot of people trading market from home from their couch other iPad.

They don't necessarily known for doing.

No they don't and you know computerized trading in many ways is a good thing because it makes things a little bit more efficient but it's a very costly thing to do.

These institutions will spend millions of dollars for the right kind of -- computer equipment.

-- and putting it in the right place just so that they can get a price quote maybe every millisecond was faster than somebody else.

Also that there -- algorithms can have some kind of an advantage so its a very costly thing on -- -- -- the small investors of many investors think wow this is great trading cost -- dropped.

But it's not doing them any good I may buy and hold long term type of investor I'm -- out what do you -- investing.

Well what I like to bodies stocks that I think are undervalued and only to hold them for long term -- long term I'm not talking about decades like -- -- -- but I'm talking about.

You know a year or 22 years or maybe a little bit more up to five years and well I have all like a -- -- recently recommended awful fact that recommendation came out this morning so I think I'm actually happy about the price drop because it allows people -- -- -- -- -- a good price.

All the no some are there stocks that are currently on my recommended list that I think are tremendously oversold one is Supervalu which -- supermarket chain.

Well -- we I was gonna bias.

Well it's it's -- -- I think somebody is going to -- -- called the stock has been going up and down lately based on the latest rumor but.

I think eventually the company or -- large part of the company will be sold and I think there's a good opportunity for profit there.

Thank you so much for coming and I think -- -- -- your website on the screen.

Changing.

The National -- Chrome gets triple actually that's -- fine thank you for coming I'm -- to break right now and we'll be right back activists.

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