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Al Frank Asset Management CIO John Buckingham and ProShares Head of Capital Markets Stephen Sachs on the outlook for the markets in the year ahead.
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But for the moment let's bring in our market panel we have Stephen Sachs sees pro shares head of capital markets and John -- Al frank asset management chief investment officer gentlemen good to see about John.
-- just went through -- 2012.
Has been a lot better than anybody thought it was going to be twelve months ago.
Is there any chance that 2013 for all the naysayers could turn out to be a good year.
Well I think that's precisely -- there are a lot of naysayers out there are a lot of pessimism.
You know the fiscal cliff it's certainly a big big issue and we gotta get through it but once you resolve that.
You know Federal Reserve is forecasting -- economic growth in the 2.3 to 3% range next year.
-- think that's a favorable environment for equities especially given where we are in the interest rates cycle.
Given the strength of corporate balance sheets and the health of corporate profits so I think that investors should be taking advantage of any sellouts like we're seeing here we saw today.
By you know adding to their equity exposure.
-- -- but that's an excellent point Stephen I mean if you look at some of the names and that pulled back today that have actually done pretty pretty well let me separate sample gap stores GPS saw a lot of these names work.
Pulling back in the retail space but simply because the broader market was lower is this a day work.
Mark where stocks are on sale or do you look at the bigger picture and say.
Folks were heading for recession if we go off the fiscal cliff.
You know I don't think we're headed for recession if we go off the fiscal cliff I mean ultimately obviously it's gonna -- headwinds forest.
But just is is we're just talking about all the other factors the you have in the US economy particularly the strength of corporate balance sheets.
Earnings estimates CO for next year -- that top line growth -- we've seen for this year I think ultimately that boils down to I think it is a buying opportunity if you are in need of adding equity exposure to your portfolio.
I think the environment we've been -- That's -- massive and growing and again when is it not Stephen is not the best thing going at this point treasury yields are horrible savings accounts aren't doing anything so let's say yes.
Where would you put your money in her clients' money.
You know it is really the best thing going and particularly -- and -- when he thirteen you know we think that large cap equities mid cap equities.
You probably continue out outperform particularly relative to other international markets.
We think the sectors that have worked the vast majority of this year continue to work as you go and it's when he thirteen I think tax a great example of an industry a sector.
That -- will probably continue to see flows early in the year it'll probably continue to see strength throughout the year again given all those core fundamentals that are -- place the other still pretty attractive hosting sector.
I was curious we were looking at you're -- balancing your portfolio balance may we can put that back up and your underweight.
On health care a lot of people who we have come in -- very bullish on health care because they see health care law.
As meaning that like it or not you know we're all gonna be spending more and that.
-- -- -- -- -- -- Not really underweight on health care really just -- -- relative to the broad market performance if you look at call all the sectors you know domestic equities.
It's it's a sector that we think probably.
Benefits less from the momentum going into the first of the year has more headwinds more uncertainty so again.
Good balance sheets in that sector good value in that sector but -- -- basis if you're looking across all the sectors I think there's better places from a from a sector perspective.
John it's your turn what.
Sector -- names would you be putting into the stockings at this point of your clients what looks good going forward into about six months from now.
While we certainly like technology -- specific names that are attractive or Kla-Tencor.
In the semiconductor capital equipment space fantastic balance sheet.
Very profitable and a great dividend yield.
-- in excess of 3% Microsoft Intel to other names and I think have have not gotten any lover early this year.
I think those are really attractive again same story great balance sheets inexpensive valuations.
The cycle these companies are sort of at the low end of the cycle I do think we'll see a pick up.
I'm as we go buy into into 2013 and resolve the fiscal closer technologies -- we like since we're talking check -- we can't not mention apple what new is is the big good question -- of going into 2013.
25%.
Loss of the most exciting stock in America is that gonna continue in 2013.
While -- an interesting act conundrum because we recommended in the prudent speculator at seven dollars in 2003 -- well so -- percent that was then this has now since it isn't a fire at 590.
I get get below 500 and we may be willing to acted to take it up but -- live amazing it's gone from 700 to 500 and the and the market has remained very strong with that happening I I I I don't dislike apple is still -- -- my -- -- But I'd like to -- buy it somewhere in the the mid four hundreds.
Okay John that the vampire crosses tell -- and Stephen to what do you avoid at this point.
Well you know where where where -- broadly diversified in our shop and our client accounts -- not really avoiding anything but.
I utility is -- where we don't find it tremendous amount of value and consumer Staples those are two areas that I not really finding much in the way of the -- -- -- what's your shot there.
Well I think you know we're -- -- this in the same vein we don't avoid anything but I will tell you from the flows that we've seen in the conversations that.
Our clients are having -- us about our our various alternative ETFs.
Hedging fixed income as a big theme right now frantically going into the first of the year I think it's gonna drop.
Stephen Sachs John -- -- gentlemen thank you very much have a great holiday weekend we appreciate you being here thank you all but --
