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Gerstein Fisher CIO Gregg Fisher and Gabelli Multimedia Trust Associate Portfolio Manager Larry Haverty on how to invest in this market environment.
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Bring in our market panel we've got Greg Fisher and Larry have 36 I OK gentlemen let's start -- you know the markets have been on.
Really let's call it what it is just an incredible run up Larry schober was just saying.
We need to see something else yet alibi impress me more do you agree to is that what.
We need now I'm pretty impressed me you know -- gone 8000 points in the last couple years how much more impressed can you be.
I think we need to remember that the way investors show up is that we -- We we have something about yesterday's market movement yesterday's market prices that influences our choices about tomorrow.
And I think the momentum in markets that exists today it's going to be hard to see that turn around I think the trend from here will be up from for quite awhile.
Larry Aberdeen we just heard from our CME trader that another metric might move the market significantly one where the other.
Even if it's a negative metric though you don't see much of a pullback do -- Now I I just think we've.
We've got really a very favorable environment all brought -- by the Federal Reserve and other monetary authorities and -- I think you can see this in the that the deal market.
If you look at -- -- the consumer area companies that are doing deals and debt these deals are being done and it very very low interest rates the market's applauding them by yeah.
Going up companies buying television stations like wind television next door they're going up companies buying casinos Pinnacle Entertainment Boyd Gaming.
They're going up companies doing creative financial engineering turning themselves into reads like at Penn National Gaming -- Gaylord Entertainment which now.
-- and hospitality they're going up all this happens because of of low interest rates.
Second thing corporations are helping themselves they're doing a much much better job allocating capital and debt.
You take a look at some of the companies that are doing just a terrific job DirecTV.
Home depo GAAP IBM that the list goes on in one.
Companies that are basically distributing all of the free cash flow to shareholders -- after they've done some intelligent capital spending.
And interestingly the poster child of what not to do in this market.
Is apple and what's the problem with apple capital allocations so you know the majority of companies corporations are are getting it right the Federal -- helping.
It's a great environment and I think people are slowly like the you've -- -- three.
They're trying to stay out but they get pulled back -- What -- -- and correct and I just -- -- today that said that hedge fund involvement in equities moved up to about 38% the highest level but it's seen in about eight months so it's funny to see that may -- that the so called Smart money was a little behind but how do you pick a stock crank -- mean in this atmosphere.
With a lot of cross currents coming around but some positive moves.
What do you look for when you're picking -- name.
Well I think you know investors should probably think -- in general about you know budgeting risk across their portfolio.
So you know the way we think about the world does not necessarily look at any one name but to think about the risk characteristics of a particular investment and how that fits into the overall portfolio.
How but I think a risk factor that I would consider today because of the movement in markets -- momentum.
I think that you know it's classic you know we just saw fifty billion dollars of equity mutual fund purchases for the first time in awhile.
And I do think that investors are going to continue to move the market.
So I would look at securities and have positive price momentum has something -- put in a portfolio.
Yes well you know I think -- example of the security -- negative price momentum would be apple obviously okay but you might think about classes of risk earlier we -- -- there was a mention about you know real estate.
-- were looking that is is commercial real estate globally.
You know -- the movement in the REIT market and public real estate has been pretty broad.
I think there's a trend going on here that can continue for a while.
You know as we start to see the economy take up -- people spending.
Different areas of the world starting you know ratchet up a little bit I think real estate globally would be an important theme for investors as well.
This is reflected in the the -- here to RW which is jam packed with this kind of thing that's a perfect call mortar round.
I think so -- there's a lot going on around the world not just here in the US.
Trends in the real estate market and for the for the fact is that commercial real estate is still very much under owned by most individual investors.
A Larry you beg the question and I I don't mean to -- on Apple's ma am I'm an apple shareholders sucked -- -- worried about it.
But you talked about capital allocation -- lot of rumors today about how.
Apple might allocate some of its 137.
Billion dollars one way is they make.
Borrow against it taking advantage of these low interest rates of -- fifty billion to allocate that capital.
And therefore get a get a bonus would regard -- low interest rates is that something that would encourage stockholders about apple or discourage you.
I'll I I think they've they've got to do something that's precisely what.
I've recommended.
And the the reason is a lot of Apple's cash is -- debt.
Offshore and it's very expensive to -- let me just make -- -- -- -- 2% Larry let me just make trying to -- would you say -- you you do recommend that.
That they borrow against that 137.
Billion dollar okay -- -- Karen I figure it'll cost them I figure it'll cost -- 2% and they get a 20% return now on their stock so.
That's eighteen Knapp points do well play with that's an enormous spread.
And you know like I just don't understand what they -- -- so what they do without or money.
They by the stock they -- -- confined.
We want to mention too that Larry -- DirecTV and Yahoo! and Macy's Macy's by the way hit a new high once again so thank you for those topics we appreciate it.
Gentlemen thank you very much Larry governing -- Greg -- good to see you both thank you.
