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Thank you very much thank you well -- even bond kings are beginning a look at the stock market -- a new kind of fixed income but many fixed income investors are still wary of giving stocks as they've got to trust.
They're used to giving bonds.
So we decided as one of Barron's top advisors a fixed income guy who's looking more to stocks these days to make the sale to what wary investor that's me.
Rich separate state is -- -- treasury partners managing director and he tells us where he is investing.
His clients' money rich -- deceived by the way folks this -- the number five investor according -- Barron's top 100 advisors list.
So you want to pay attention to what he says.
I -- the wary investor I've lost money in 2000 with a dot com bust I lost money in 2009 with a financial -- Convince me that it's time to take some of my money yet out of -- bonds and quoted in the stocks.
Well it's -- it -- -- situation that we have right now.
Bonds relative to stocks are back virtually upside down because typically.
Ten year treasuries yield more than the S&P dividend.
But today the S and -- yielding 45 basis points more than the ten year treasury.
Now if you go back fifty years the average is that ten year treasuries yield.
360 basis points more than yes and -- so that relationship is effectively upside down today.
Are you also have all of these dividend issue it's you have a lot of companies get increase their dividends by quite a bit and you mention -- Coca-Cola.
Now has a higher dividend yield than its ten year bought correct and that permeates through a lot of companies.
On the S&P today.
Looking to get yield can now move to high quality stocks.
And gain -- yield then owning bonds but it's the principle that concerns fixed income it's not they need the dividend yield is not necessary I mean obviously you want something.
That'll beat out inflation so you don't lose money.
But it is a feared this this underwriting fear of losing your principle which word came face to face with a 2000 night.
That's what scares us right that there's a great risk in owning bonds right now because normally the interest yield on the bonds.
Of the risk of a rising rate environment.
But today if rates move higher.
The principal decline in the bonds will be offset.
Will offset the yield that investors get on the bonds because very -- rate environment now have you had trouble.
Talking fixed income investors into this idea into the idea of getting more money into stock.
Well typically our client portfolios are bounced between stocks bonds and some hedge funds so where justice that balance right now we're up right now I'd say -- 25%.
Stocks -- 50%.
And hedge funds and a 25% also.
So the real question is how much are we changing the allocation and today we've reduced the bond allocation and increase the stock allocation.
He is meeting its best asset class out there right now are right now for those who have not been convinced for those who still feel that they -- they want to focus their investments on something secure like a government bond.
We heard Bill Gross Pimco saying that he was into tips now the treasury.
In the treasury adjusted inflation are -- -- inflation adjusted -- would that be something that that you would have at least part of in your portfolio.
No we're not concerned about inflation right now so what we really want to do is balance the portfolio.
Diversify our asset classes and participate in what we believed to be a secular growth economy right now.
What about medals what about gold in particular no we do not have exposure to commodities or to metals right now.
And and why not I mean on that ahead shoot at some point that you need to get into we don't think it's necessary right now.
Really -- sometimes you don't have to leave fish to find fish and as -- and I -- to say that and quite off and we have great opportunity right here -- American common stocks okay now specifically I would imagine you're going for those sort of blue ribbon stocks like PNG which actually had some tough times over the past couple of days and other -- like that that -- big dividends is that the kind of -- you're looking -- you know what we're focusing on is so large cap value primarily consumer staples.
And small caps you know GJ -- -- Johnson & Johnson number starts like that correct a lot of the large cap consumer staples stocks with.
Fairly dependable earnings stable dividends and good growth potential because keep in mind we have foreign investors.
That are relocating from Japan from Europe into dollar denominated assets and finally I mentioned inflation you think it's going to be low have spurred the near future anyway should you always look for a dividend that's a little higher than inflation.
No I think the combination of growth.
Plus a dividend will provide attractive total return to investors OK rich separate staying high terror or treasury partners good to see -- -- -- -- much appreciated thank you blizzard --
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