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Kevin Caron, Washington Crossing portfolio manager, weighs in on today’s current market environment and gives his investing advice.
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So is a market due for a pullback or is there even more -- and -- -- as Kevin crumpled Poland and watch the crossings Kevin welcome back to the shell.
I want to tell you when they're talking about the stock market in my hair salon it makes you ain't.
This puppy has some room to run what's your take a lot of talk about capitulation the bears are caving what do you think.
Yeah I think that's exactly -- I think we have -- improving fundamentally looking at the job market or housing manufacturing in -- same time.
When you look at stock stocks are relatively cheap compared to underlying earnings and there's not a lot of other places to go you look at bond deals -- very low.
Cash yields are essentially zero so investors are looking at all of this thing altogether.
And moving into equities and particularly since the risks about the fiscal -- seem a little bit.
More remote -- -- about -- he will more remote.
Why not go into equities especially when.
There isn't a lot of compelling alternatives out there.
It has been quite a rally even if you look back to 2009 and one argument would be this is all the benefits created by the wealth effect.
Of the Federal Reserve in keeping interest rates as you -- -- to historically low for so long and now what else is driving the market what it will.
Give me more of a bullish case here.
Well I think a lot I think you're right I think a lot of it was that -- it looking backwards to 2009 a lot of it was.
Coming out of the very deep recession the economy.
Was in big trouble -- stock market was extremely depressed.
And police and the government spends approximately ten trillion dollars all the and to you -- -- to get the economy recovers so we've had a recovery margin profits have come back.
The economy the market stock market move along -- it.
And I think now we have to have his -- -- where.
You need to see more private investment needs -- confidence on the part of individuals suspend it was trying to see some that we're seeing it housing data audit data.
We're seeing some present those songs and prevent.
So again overall you said the market is cheap so you're confident the overall health of the stock market but again if you look at the rally of the last couple of years there isn't a low hanging fruit so what's your advice to investors if they're just getting in now.
Well.
When you say low hanging fruit I I'm at you know it's curious to me if I look around at some of the best -- out -- taken apple today for example trading it.
Very depressed multiple particularly when you strip out the cash in the stock price -- looking at a very.
Cash rich company with a tremendous -- earnings power underneath the trading at very low.
Multiple I think maybe ten times earnings or less at this point so and Apple's not the only one there -- plenty of companies out there that had sustainable earnings that can grow.
And I just think that at this point since you've had this big recovery in profits I think maybe just wanna take a look at companies that can sustain their position -- -- -- Meanwhile are companies like would you take more risk would you go high beta right now.
I love the -- -- I appreciate that I what I see no problem I don't I don't think you have to take a whole lot of.
Would take a lot of data and one of the things you have to just recognizes we've had.
Two or three very strong weeks we came -- off the year end -- concerns and investors have poured back in the market equity moved mutual fund flows for example up strongly last three weeks.
But has only released very short period of time so I wouldn't put too much on what's happening here now I think you look out.
Last next few years if you can get an eight or -- -- kinda reader -- -- -- that's a very nice greater return Kevin I got real quickly when do you expect the data retrace its all time high if -- -- I think we see that sometime later in the second half this year okay appreciate thanks so much static from -- -- -- thank you.
