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Blowout start to the year of the market seem to have taken a bit of a pause over the last month to.
The Dow is down three months or 3% rather over the month in the S&P down 2%.
While the NASDAQ has posted a slight gain of just 1%.
Our next guest says this is just the beginning of what could be a double digit decline in coming weeks but even in a downturn there are ways to make money.
He's Don -- -- and co portfolio manager of WBI funds with more than two billion in assets under management.
What makes this bearish outlook significant is that back in June you were much more positive why the change.
Well -- what would.
We've gotten really -- more visibility on the second quarter GDP.
We went from one point 8% in the first quarter annualized growth rate to one point 4%.
Everybody seems to be convinced we're still gonna get to -- -- for 3% somehow.
This huge revision to the upside.
I don't know where that comes from you know that's sound like it's coming out of thin air to me when -- this correction which you say it will be about 15% -- When does it com.
Well you know we have valuations that have started to get stretched -- along with the GP historically found out a -- were 21 times earnings on the S&P 500.
We start to get into a little bit more rich quarters here.
You know with GDP soft.
And earnings not doing as well as they were and revenue actually declined for corporations.
We think that it's unlikely that stocks stay in this uptrend too much longer I have heard that for a year.
-- why is now -- -- on the -- in August and we're in the beginning of September which historically have been some of the most dangerous times for investors.
You will usually get really big pull -- during this time a year people -- off often.
There's not too many people at home.
On the exchanges and people were not working at their desks and we get the beginning of a pullback last week I think we saw a preview of that.
But what does say they'll put their success of optimism we haven't seen massive inflows into equity funds index ticked up a bet there's a lot of negative news out there -- mean we have.
-- fed change coming.
We've got the public and look politician screaming for the end of QE3.
I don't know what replaces that I think the feds -- in a box because we have.
Fundamental economic conditions.
In general with GDP and corporate.
Performance and I don't how they just all of a sudden stop the stimulus.
That's the only former.
-- -- -- -- -- Taper have you not heard the word -- pick up some ducks are so let's say your right corrections coming.
What are the ways that you are organizing your fund your portfolio we can show your fund's performance as well but.
What are the ways what are sort of the criteria that -- now using to pick stocks -- -- have.
-- gonna go into a period where we think we're gonna have declining prices you wanna focus on something.
-- gives you -- safe consistent return and that's dividends OK so the higher the dividend yield the better you war.
And the more the more likely -- you -- to hold through any downturn which is what.
You'd have to do if you're gonna add.
Equity here people don't want to miss the uptrend I think they have a little bit of time to position there and -- -- recommending caution.
The other thing I think you have to do is you have to find what value remains in the market there are still stocks out there especially small caps and it caps.
That do look good if you'd are patient and you hunt.
Let's get to what your arrows have found when you're on your hunting mission at your hot not looks -- what how to corporations and oil and gas exploration company four point five point.
Four point 5% dividend down 21% for the year -- and we like to buy stocks when they're cheap and their trends are positive they double.
Earnings expect -- what is this last quarter four point 52% that's that's really generous -- relative to the ten year treasury.
So and we like Ken -- we like when a stock has positive trends confirming why you should buy.
So and we look for those trends to be in the dividend payout increase is earnings and revenue.
We also have Emerson Electric.
Which is another company that we think he's reasonably valued here at seventeen times earnings.
You know there industry sector is and significantly higher than I think it's about 28 times earnings.
And then the -- -- we have a semantic.
I don't know about you guys but we have semantic software to prevent ourselves from getting.
And the virus business is booming.
Doctor Norton anti -- right we have Symantec very well there's competition out there from younger upstarts and of course McAfee was bought by Intel.
You -- so why would you -- -- The stock is that a fourteen PE.
Again with a very high 24 multiple for its industry peers.
The stock is doing -- really well and so is their performance on the our corporate side.
From earnings and revenue starting how much in cash do you have forcefully we have -- 20% cash right now.
And you're comfortable with yeah the cash for -- is a defensive weapon.
When we see prices start -- forward we get stopped out of positions and so we raise cash and if there's not a lot of good value we end up holding cash for a little while and -- usually pays.
For us to do that you know typically that's a good thing to do he's not -- crazy whip or snap her up there he's got two billion in assets under management using it well good to see Don thank you very much.
Don Shriver closing bell.
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