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Fiduciary's Andersen: US Market Still Best Game in Town (Audio) · Bloomberg Intelligence

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  Speaker 1: Let's turn our attention now to valuation, but for companies
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  Speaker 1: that are already public. Peter Anderson is the chief investment
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  Speaker 1: officer and vice president of Fiduciary Trust, and he joins
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  Speaker 1: us now from Boston, home to Bloomberg. Peter, Hi, thank
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  Speaker 1: you for being I thank you for being with us.
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  Speaker 1: You just heard this a little bit about Snapchat and
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  Speaker 1: a potential billion dollar valuation for a company that's doing
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  Speaker 1: a billion a billion in revenue a year. How how
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  Speaker 1: do you value the stock market right now? And generally,
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  Speaker 1: I mean, what are some of the key metrics? And
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  Speaker 1: do you think that investors are paying too much for
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  Speaker 1: the earnings that they're currently receiving. Well, you know, normally
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  Speaker 1: I would give you a rational answer to that, Pim,
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  Speaker 1: but I think what's happening now is, uh, things seem
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  Speaker 1: to be trading far more on feelings, hope rather than logic.
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  Speaker 1: And let me explain. I think there's a ton of
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  Speaker 1: uncertainties out there. I mean, we always can point to something,
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  Speaker 1: but now we seem to have such a confluence of uh,
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  Speaker 1: really worrisome factors. I mean, let's just tick them off right.
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  Speaker 1: The election outcome. Banks are in the forefront now, Deutsche Bank,
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  Speaker 1: and well as far ago, you've got the Fed always wondering,
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  Speaker 1: you know, we're wondering about their raising rates. You have Brexit,
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  Speaker 1: the jobs number tomorrow, which is less an extent the
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  Speaker 1: jobs number. But in general, you have all these uncertainties
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  Speaker 1: and they're kind of combining in a time that is
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  Speaker 1: really unfortunate for analysts because it's so hard to make
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  Speaker 1: any predictions on any of those things right now. Well,
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  Speaker 1: it's understandable then to why people are, you know, eager
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  Speaker 1: to keep buying stocks. You gotta get you're gonna return someplace.
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  Speaker 1: Yields are low in fixed income. At the same time,
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  Speaker 1: it's just the same thing happens to the Fed. It's
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  Speaker 1: happened for but three or four years. Every time they're
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  Speaker 1: ready to really make a move, something happens. Brexit happens
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  Speaker 1: with the Chinese stock market just plunges. And I guess,
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  Speaker 1: if I'm an investor, that's what I'm I'm gun shy, Yeah,
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  Speaker 1: I would say, but the best way to approach being
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  Speaker 1: gun shy at this point is to be fully diversified.
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  Speaker 1: I mean, I know that's a trite phrase, but it
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  Speaker 1: really does come into play when you have so many uncertainties.
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  Speaker 1: You know, normally I think we can handle oh, probably
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  Speaker 1: two or three, but when you start getting four or five, six,
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  Speaker 1: I think the best of modelers out there just cannot
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  Speaker 1: really factor that in. And you can either stay on
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  Speaker 1: the sidelines and risk market timing, or you can go
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  Speaker 1: full steam ahead or maybe turned back a little, but
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  Speaker 1: not stay on the sidelines, because there is just no
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  Speaker 1: way to call things like this election. Even tell us
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  Speaker 1: a little bit about some industry groups if you don't mind,
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  Speaker 1: because the election and politics can play a role in
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  Speaker 1: the valuations that investors give, for let's say, the healthcare industry. Absolutely,
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  Speaker 1: and you know him. I think the other thing is, uh,
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  Speaker 1: it's so difficult this time around because when you look
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  Speaker 1: at both candidates, Uh, it is truly. You know, the
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  Speaker 1: metrics we've used in the past to predict presidential victories,
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  Speaker 1: I'm not sure how applicable they are in this case,
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  Speaker 1: because this might go down in history as one of
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  Speaker 1: the most disliked, unenthusiastic elections we've had. I've heard anecdotal
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  Speaker 1: stories about there are no lawn signs on anybody's lawn,
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  Speaker 1: bumper stickers, etcetera. You can see a lot of that
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  Speaker 1: in our nation, which is indicative of the fact that
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  Speaker 1: there's not a lot of enthusiasm. So when you try
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  Speaker 1: to use general common sense principles, for instance, healthcare, you know,
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  Speaker 1: we've always heard that calculus that, uh, if Clinton is elected,
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  Speaker 1: uh friend of healthcare, etcetera. But I'm not certain that
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  Speaker 1: we can go that far at this point because it
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  Speaker 1: doesn't seem like there's a convergence on who will actually
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  Speaker 1: be winning. So, Peter, what should I do? I mean,
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  Speaker 1: if everyone's gun shy uh and and and if if
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  Speaker 1: some individual companies will continue to grow, you know, because
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  Speaker 1: they are, they're they're luckier, they've got a great busines,
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  Speaker 1: whatever it is, what do I do if I'm I
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  Speaker 1: don't want to stop investing, I'd like to make some money. Well, first,
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  Speaker 1: I think the the US stock market is probably the
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  Speaker 1: best game in town, right, especially if you're looking at
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  Speaker 1: say mid or small cap companies. Let's just figure that
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  Speaker 1: the reason why that would be attractive is that it
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  Speaker 1: doesn't have off overseas exposure. The product lines are usually
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  Speaker 1: ring fenced within the United States. The consumer, for all
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  Speaker 1: the gnashing of teeth we've we've mentioned on these programs
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  Speaker 1: about as a consumer up or down or sideways. I
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  Speaker 1: would say the consumer is growing okay and sentiment is okay.
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  Speaker 1: So if you tie into that, you probably want to
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  Speaker 1: buy stocks that are in the mid and small cap
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  Speaker 1: space because the US exposed to international pressures and currency
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  Speaker 1: for instance. Make a You make a good point, is
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  Speaker 1: there is there a different Do you look at the
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  Speaker 1: valuations differently for a small or mid cap stock? I
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  Speaker 1: think in this case, you know, it always depends on
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  Speaker 1: the situation in that hand and excuse me, And in
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  Speaker 1: this case, I think you do because you have to
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  Speaker 1: look at the relative attractiveness of say large multinational companies
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  Speaker 1: in the risk of y're opening yourself up to with
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  Speaker 1: that currency risk, etcetera. Interest rates off their rays. How
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  Speaker 1: does that impact currency and those divisions? Whereas a small
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  Speaker 1: a mid cap maybe there isn't more of a premium
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  Speaker 1: because it's uh, I don't know, coin of phrase, it's
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  Speaker 1: an analyze herble. You know, the the capability for it
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  Speaker 1: to be analyzed is better. Therefore, maybe it demands a
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  Speaker 1: higher premium because you can understand it easier in this environment. So, uh,
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  Speaker 1: what about just the your your your macroeconomic outlook. You've
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  Speaker 1: got about twenty seconds left. And is it going to
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  Speaker 1: be strong enough to support the stock market. I think
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  Speaker 1: the U s it will, but I think Bregxit we
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  Speaker 1: have a long long way to go. People are not
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  Speaker 1: focusing enough on the fact that it might take two
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  Speaker 1: to four years for us to figure out how Brexit
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  Speaker 1: is going to play out, let alone how it's going
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  Speaker 1: to impact stocks, say in the next six months. Therefore,
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  Speaker 1: stay a long term investor. All Right, Peter Anderson, thank
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  Speaker 1: you so very much for joining us today on taking stock.
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  Speaker 1: He's chief investment officer at Fiduciary Trust in Boston. Well,
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  Speaker 1: we're almost there. The market closed. That means our Stocks
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  Speaker 1: editor Dave Wilson will be back to join us for
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  Speaker 1: the movers and shakers. Stocks narrowly mixed, but within that
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  Speaker 1: you've got some stocks that are really making some moves.
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  Speaker 1: This is Bloomberg