1 00:00:02,200 --> 00:00:05,560 Speaker 1: Global business news twenty four hours a day. If Bloomberg 2 00:00:05,640 --> 00:00:08,720 Speaker 1: dot com the radio plus mobile lab and on your radio. 3 00:00:09,000 --> 00:00:13,040 Speaker 1: This is a Bloomberg Business flag from Bloomberg World Headquarters. 4 00:00:13,160 --> 00:00:16,919 Speaker 1: I'm Charlie. Tell us the Dow, the SMP, Nezdak Hall advancing. 5 00:00:16,920 --> 00:00:19,240 Speaker 1: We've got thirteen minutes to go ahead of the close. 6 00:00:19,720 --> 00:00:23,480 Speaker 1: The SMP five hundred index very close to a record down. 7 00:00:23,520 --> 00:00:27,480 Speaker 1: Industrials up three points now at eighteen thousand, five hundred 8 00:00:27,480 --> 00:00:30,320 Speaker 1: thirty two, a gain of less than point one percent. 9 00:00:30,560 --> 00:00:34,600 Speaker 1: SMP five hundred Index also advancing by less than one 10 00:00:34,640 --> 00:00:36,800 Speaker 1: tenth of one percent. Right now up a point at 11 00:00:37,520 --> 00:00:40,960 Speaker 1: eight one. The nez Dak Composite indext up twelve to 12 00:00:41,040 --> 00:00:43,360 Speaker 1: fifty two twenty five, a gain of two tents of 13 00:00:43,440 --> 00:00:46,760 Speaker 1: one percent. Gold up five seventy the ounce to thirteen 14 00:00:46,840 --> 00:00:49,120 Speaker 1: forty two, a gain of four tenths of one percent. 15 00:00:49,440 --> 00:00:52,400 Speaker 1: The tenure up sixteen thirty seconds, zeal there one point 16 00:00:52,440 --> 00:00:56,440 Speaker 1: five three percent, and crude oil West Texas Intermediate Crew 17 00:00:56,600 --> 00:00:59,240 Speaker 1: down eight tens of one percent, falling thirty four cents 18 00:00:59,240 --> 00:01:02,480 Speaker 1: of barrel forty two six eight right now on West 19 00:01:02,520 --> 00:01:06,880 Speaker 1: Texas Enemydia Crude. I'm Charlie Pellett, and that's a Bloomberg 20 00:01:06,920 --> 00:01:13,120 Speaker 1: business flash. You're listening to taking stock with Bimbox and 21 00:01:13,280 --> 00:01:19,959 Speaker 1: Kathleen Hayes on Bloomberg Radio. Value investing versus growth investing. 22 00:01:20,120 --> 00:01:25,120 Speaker 1: Some of those growth stocks we know, such as Alphabet, Facebook, Amazon, 23 00:01:25,400 --> 00:01:29,200 Speaker 1: and Netflix. Well, that was maybe last year's story. Here 24 00:01:29,240 --> 00:01:31,480 Speaker 1: to tell us about what might be this year's story 25 00:01:31,560 --> 00:01:35,119 Speaker 1: and value is Scott Collyer. He is the chief executive 26 00:01:35,160 --> 00:01:39,160 Speaker 1: officer and the chief investment officer of Advisor's asset management, 27 00:01:39,480 --> 00:01:42,760 Speaker 1: helping to manage more than sixteen and a half billion 28 00:01:42,800 --> 00:01:46,440 Speaker 1: dollars of customer assets. Scott, thank you very much for 29 00:01:46,520 --> 00:01:50,000 Speaker 1: being with us. How do you define a value investor? 30 00:01:51,400 --> 00:01:56,920 Speaker 1: I think a value investor looks uh for um intrinsic 31 00:01:57,000 --> 00:02:02,320 Speaker 1: value or more historical value and rise to to um 32 00:02:02,440 --> 00:02:08,320 Speaker 1: the spot um asset classes that might be out of favor, 33 00:02:08,360 --> 00:02:11,280 Speaker 1: but but there's some sort of a catalyst that might 34 00:02:11,320 --> 00:02:15,239 Speaker 1: bring them back in favor. There. You know, the value 35 00:02:15,280 --> 00:02:18,799 Speaker 1: investor that got stuck buying buggy whips waited a long 36 00:02:18,840 --> 00:02:21,640 Speaker 1: time because there was really never a catalyst to to 37 00:02:21,720 --> 00:02:24,160 Speaker 1: bring those back. So I think what we look for 38 00:02:24,320 --> 00:02:27,200 Speaker 1: is is we look for not only value, as in 39 00:02:27,880 --> 00:02:30,400 Speaker 1: the asset is cheap. But is there a catalyst that 40 00:02:30,440 --> 00:02:32,920 Speaker 1: would bring it back into vogue. I thought you were 41 00:02:32,919 --> 00:02:36,239 Speaker 1: going to tell me it's being unpopular because the value 42 00:02:36,280 --> 00:02:39,760 Speaker 1: investor has been unpopular for quite a while. They have, 43 00:02:40,040 --> 00:02:43,080 Speaker 1: but sometimes you don't want to admit that about yourself. 44 00:02:43,160 --> 00:02:45,600 Speaker 1: So it may be unpopular. But but I tried to 45 00:02:45,639 --> 00:02:48,520 Speaker 1: define it in a nicer way. Well done. Tell us 46 00:02:48,560 --> 00:02:52,000 Speaker 1: about defining some of the areas that value investors ought 47 00:02:52,040 --> 00:02:56,040 Speaker 1: to look for for returns? Well, I think some of 48 00:02:56,040 --> 00:02:59,560 Speaker 1: the places where where we would we would spot value 49 00:02:59,600 --> 00:03:02,760 Speaker 1: today a would you know, in the US markets, we 50 00:03:02,840 --> 00:03:07,320 Speaker 1: continue to look at, you know, energy and materials, even 51 00:03:07,320 --> 00:03:10,240 Speaker 1: though they've had a good first half of the year. 52 00:03:11,320 --> 00:03:15,200 Speaker 1: We would submit that after a very long bowl excuse me, 53 00:03:15,320 --> 00:03:19,600 Speaker 1: bear market, especially for materials, being about four years in length. 54 00:03:19,960 --> 00:03:23,200 Speaker 1: Generally those trends take a long time to play out 55 00:03:23,200 --> 00:03:26,320 Speaker 1: to the upside, just like they do the downside. We 56 00:03:26,400 --> 00:03:32,720 Speaker 1: think that there's a a global growth uh cycle that's 57 00:03:32,760 --> 00:03:37,480 Speaker 1: just beginning, and quite frankly, there's been no new deposits 58 00:03:37,480 --> 00:03:40,160 Speaker 1: of this stuff found over the last few years because, 59 00:03:40,240 --> 00:03:44,240 Speaker 1: quite frankly, it hasn't been profitable to drill or dig 60 00:03:44,320 --> 00:03:47,160 Speaker 1: for them. So I you know, we we continue to 61 00:03:47,240 --> 00:03:50,800 Speaker 1: like those we've seen the catalysts begin to bring prices 62 00:03:50,840 --> 00:03:52,760 Speaker 1: up that we think there's a long way to go there. 63 00:03:53,280 --> 00:03:56,320 Speaker 1: On a more global basis, I think places that right 64 00:03:56,360 --> 00:04:01,640 Speaker 1: now are are hated the most, maybe like Europe, uh 65 00:04:01,840 --> 00:04:06,560 Speaker 1: England even in the Brexit vote, as well as Asia, 66 00:04:06,640 --> 00:04:10,320 Speaker 1: we think those are areas that provide a lot better 67 00:04:10,440 --> 00:04:13,440 Speaker 1: value than we find in many of the the you know, 68 00:04:13,480 --> 00:04:16,400 Speaker 1: the US based companies, And we would suggest that there's 69 00:04:16,440 --> 00:04:19,599 Speaker 1: catalysts there in the fact that there's huge amounts of 70 00:04:19,640 --> 00:04:24,760 Speaker 1: liquidity available at historically low prices, and generally governments that 71 00:04:24,800 --> 00:04:28,360 Speaker 1: are trying to be quite supportive of economic growth. I 72 00:04:28,400 --> 00:04:30,600 Speaker 1: wonder if you could just expand a little bit on 73 00:04:30,640 --> 00:04:35,800 Speaker 1: the concept of intrinsic value, because if you buy a stock, 74 00:04:36,000 --> 00:04:39,160 Speaker 1: it is possible you always run the risk at the 75 00:04:39,160 --> 00:04:41,680 Speaker 1: coming cope go out of business and you'd be left 76 00:04:41,720 --> 00:04:45,440 Speaker 1: with nothing. But in the case of an asset such 77 00:04:45,480 --> 00:04:49,479 Speaker 1: as a barrel of oil or a bar of gold, 78 00:04:49,920 --> 00:04:53,719 Speaker 1: you still have that physical asset. Does that change the 79 00:04:53,720 --> 00:04:56,719 Speaker 1: way you look at the investment, Well, I think it 80 00:04:56,839 --> 00:05:00,160 Speaker 1: changes the way you look at it at the very 81 00:05:00,160 --> 00:05:04,080 Speaker 1: fundamental base and that I'm not sure what you do 82 00:05:04,320 --> 00:05:06,719 Speaker 1: with a barrel of oil. I'm not really sure what 83 00:05:06,839 --> 00:05:09,680 Speaker 1: you do with a bar of gold, But folks that 84 00:05:09,880 --> 00:05:13,960 Speaker 1: mind them and folks that drill for them basically bring 85 00:05:14,000 --> 00:05:16,880 Speaker 1: them up to the surface and sell them, hopefully at 86 00:05:16,880 --> 00:05:19,400 Speaker 1: a profit. So at the end of the day, you 87 00:05:19,760 --> 00:05:23,039 Speaker 1: can buy gold as a currency replacement, or you can 88 00:05:23,040 --> 00:05:26,719 Speaker 1: buy a gold miner that potentially has an enterprise that 89 00:05:26,760 --> 00:05:31,080 Speaker 1: would throw off profits and potentially have some growth. I'm 90 00:05:31,080 --> 00:05:35,080 Speaker 1: not a big fan of trying to to play the 91 00:05:35,120 --> 00:05:39,960 Speaker 1: commodity itself because quite frankly, um, there's there's a number 92 00:05:40,000 --> 00:05:43,120 Speaker 1: of things that can happen to the commodity that you 93 00:05:43,120 --> 00:05:46,520 Speaker 1: would have no control over whatsoever, even though you can 94 00:05:46,560 --> 00:05:49,680 Speaker 1: buy gold coins and stick them in your mattress and hopefully, 95 00:05:49,760 --> 00:05:52,320 Speaker 1: unless you're robbed, they'll still be there tomorrow. I think 96 00:05:52,320 --> 00:05:54,720 Speaker 1: the way that we look at it is after you've 97 00:05:54,760 --> 00:05:58,320 Speaker 1: gone through a prolonged time period when depleting assets have 98 00:05:58,400 --> 00:06:03,000 Speaker 1: not been replaced, such as oil, gold, iron ore, and 99 00:06:03,120 --> 00:06:05,919 Speaker 1: you have demand that is rising for those which we 100 00:06:06,000 --> 00:06:10,200 Speaker 1: currently do have, then the scarcity value, the price of 101 00:06:10,279 --> 00:06:12,559 Speaker 1: that has to rise to the point of where people 102 00:06:12,560 --> 00:06:16,360 Speaker 1: will go out and try to find more. So once again, 103 00:06:16,480 --> 00:06:19,559 Speaker 1: it's it's really a traditional cycle. Pan It's not something 104 00:06:19,600 --> 00:06:23,440 Speaker 1: that's you know, that's popular right now. These are long 105 00:06:23,560 --> 00:06:26,560 Speaker 1: dated commodity cycles and they have happened, you know, over 106 00:06:26,640 --> 00:06:29,520 Speaker 1: the over the years and decades before. It's not really 107 00:06:29,560 --> 00:06:32,680 Speaker 1: anything new. Well, you mentioned that word popular again, and 108 00:06:32,720 --> 00:06:34,919 Speaker 1: I just want to pick up on that, because sometimes 109 00:06:34,960 --> 00:06:39,159 Speaker 1: it's difficult to invest in things that are unpopular. But 110 00:06:39,240 --> 00:06:44,000 Speaker 1: in your experience, is that where real money is made? Well, I, 111 00:06:45,360 --> 00:06:47,960 Speaker 1: speaking for me personally, I think that's where real money 112 00:06:48,040 --> 00:06:51,360 Speaker 1: is made. I quite frankly, I don't have the ability 113 00:06:51,440 --> 00:06:56,000 Speaker 1: to understand some of the valuations that might surround things 114 00:06:56,000 --> 00:06:59,560 Speaker 1: that are that are popular that have no history to them. 115 00:06:59,600 --> 00:07:02,880 Speaker 1: I do understand what happens when you have economic cycles, 116 00:07:02,920 --> 00:07:05,520 Speaker 1: and when you have a building cycle or a car 117 00:07:05,640 --> 00:07:08,640 Speaker 1: buying cycle. Those things tend to happen over and over. 118 00:07:08,839 --> 00:07:11,920 Speaker 1: So at least speaking for myself, that that is the 119 00:07:12,000 --> 00:07:15,400 Speaker 1: part of the you know, the investment spectrum that we 120 00:07:15,520 --> 00:07:17,920 Speaker 1: choose to to exist. And so I think we can 121 00:07:17,960 --> 00:07:20,080 Speaker 1: make money here. I'm not sure that I could make 122 00:07:20,120 --> 00:07:23,360 Speaker 1: money elsewhere, but but we make money in in this fashion. 123 00:07:23,760 --> 00:07:27,600 Speaker 1: What don't you like, Scott, I think I don't like 124 00:07:27,840 --> 00:07:31,400 Speaker 1: things that are defensive and expensive, right, and so if 125 00:07:31,440 --> 00:07:34,840 Speaker 1: you take a look at both of those, um, you know, 126 00:07:34,960 --> 00:07:37,320 Speaker 1: long dated sovereign debt would be right at the top 127 00:07:37,360 --> 00:07:41,280 Speaker 1: of my mind. Any time that you have historically high 128 00:07:41,480 --> 00:07:45,560 Speaker 1: demand for an asset class where the expected returns are 129 00:07:45,560 --> 00:07:49,240 Speaker 1: the lowest on record, I think we normally call that 130 00:07:49,320 --> 00:07:50,960 Speaker 1: a bubble. And I'm not trying to say we're in 131 00:07:51,000 --> 00:07:54,360 Speaker 1: a bond bubble. I'm just saying that historically were places 132 00:07:54,400 --> 00:07:57,960 Speaker 1: we've never been before with negative yields, and generally speaking, 133 00:07:58,080 --> 00:08:01,520 Speaker 1: capital does not sit comfortably in a place where it 134 00:08:01,720 --> 00:08:04,680 Speaker 1: is going to be destroyed, even if it's just a 135 00:08:04,720 --> 00:08:08,000 Speaker 1: little by little over time. The second place are more 136 00:08:08,040 --> 00:08:10,920 Speaker 1: defensive areas, and we've seen kind of a run up 137 00:08:11,360 --> 00:08:14,720 Speaker 1: at the last half of two thousand and fifteen the 138 00:08:14,840 --> 00:08:19,800 Speaker 1: first half of this year in utilities and consumer staples, 139 00:08:19,840 --> 00:08:23,360 Speaker 1: so you know soap makers and uh, you know, soft 140 00:08:23,440 --> 00:08:27,280 Speaker 1: drink makers. I think that those valuations on a historical 141 00:08:27,320 --> 00:08:30,040 Speaker 1: basis are stretched to their highest. So I think I 142 00:08:30,040 --> 00:08:32,760 Speaker 1: would want to I would want to be turning down 143 00:08:32,880 --> 00:08:36,760 Speaker 1: or decreasing my allocation to those areas and try to 144 00:08:36,960 --> 00:08:41,960 Speaker 1: increase allocations to UH not only UH materials, energy, but 145 00:08:42,040 --> 00:08:46,200 Speaker 1: also industrials and put costs er or down the consumer 146 00:08:46,600 --> 00:08:50,560 Speaker 1: discretionary which they've had a hard time over the past 147 00:08:50,600 --> 00:08:54,000 Speaker 1: twelve months. But I think we're beginning to see a 148 00:08:54,160 --> 00:08:57,280 Speaker 1: turn in that we've got a very healthy consumer. Once 149 00:08:57,320 --> 00:08:59,360 Speaker 1: they decide to start buying a little bit more, I 150 00:08:59,360 --> 00:09:02,320 Speaker 1: think it will have a huge difference, UH in the 151 00:09:02,360 --> 00:09:06,720 Speaker 1: price of the consumer discretionary area. How about the price 152 00:09:06,960 --> 00:09:12,280 Speaker 1: of emerging market assets, well, emerging market many of them 153 00:09:12,440 --> 00:09:15,480 Speaker 1: UM and if you know, we're talking maybe Eastern Europe, 154 00:09:15,480 --> 00:09:19,880 Speaker 1: we're talking parts of Asia, mostly Latin America. A lot 155 00:09:19,920 --> 00:09:23,040 Speaker 1: of those countries, their fortunes are tied to what they produce. 156 00:09:23,280 --> 00:09:26,559 Speaker 1: And since commodities that kind of bounced, you know, to 157 00:09:26,679 --> 00:09:29,160 Speaker 1: the first six months of the year, we've seen emerging 158 00:09:29,200 --> 00:09:33,120 Speaker 1: markets bounce as well. In the In the case of 159 00:09:33,880 --> 00:09:37,240 Speaker 1: Latin America, we've seen a number of governments change. We've 160 00:09:37,240 --> 00:09:40,880 Speaker 1: seen the government in Argentina changed to a very pro 161 00:09:41,000 --> 00:09:46,080 Speaker 1: business stance. We're seeing Brazil, besides the Olympics, we're seeing 162 00:09:46,640 --> 00:09:50,480 Speaker 1: President russaf has been impeached. She is out of office 163 00:09:50,520 --> 00:09:53,599 Speaker 1: for six months. While she's put on trial. But essentially 164 00:09:53,640 --> 00:09:57,440 Speaker 1: we're seeing the Brazil at the very end of of 165 00:09:57,520 --> 00:10:03,080 Speaker 1: a historically long u bear market and a very brutal 166 00:10:03,520 --> 00:10:08,560 Speaker 1: recession that they've they've uh they're trying to overcome. I 167 00:10:08,600 --> 00:10:10,720 Speaker 1: would expect them to come out with a much more 168 00:10:10,760 --> 00:10:15,240 Speaker 1: pro business attitude. Venezuela may collapse any day, but this 169 00:10:15,360 --> 00:10:17,880 Speaker 1: is changed for the better. This is not changed for 170 00:10:17,920 --> 00:10:21,080 Speaker 1: the worst. It's actually changed for the better. We would 171 00:10:21,160 --> 00:10:24,319 Speaker 1: argue it's at the end of a very long bear market, 172 00:10:24,440 --> 00:10:27,360 Speaker 1: it's not at the beginning. We would we would continue 173 00:10:27,360 --> 00:10:29,920 Speaker 1: to put assets there if you're looking for income. We 174 00:10:29,920 --> 00:10:33,560 Speaker 1: think emerging market debt is in great shape, and I 175 00:10:33,600 --> 00:10:37,600 Speaker 1: think if you can stand the volatility, emerging market equities 176 00:10:37,600 --> 00:10:40,760 Speaker 1: are just in the very first innings of their bowl market, 177 00:10:40,760 --> 00:10:43,560 Speaker 1: where one might argue that the United States is in 178 00:10:43,679 --> 00:10:47,040 Speaker 1: maybe the latter number of innings in our bowl market. 179 00:10:47,679 --> 00:10:50,839 Speaker 1: Scott Collyer he is the chief executive officer and the 180 00:10:50,920 --> 00:10:55,480 Speaker 1: chief investment officer of Advisor's asset management, helping to manage 181 00:10:55,520 --> 00:10:59,840 Speaker 1: more than sixteen and a half billion dollars of customer assets. 182 00:11:00,200 --> 00:11:03,679 Speaker 1: He's staying away from what he describes as the defensive 183 00:11:04,120 --> 00:11:07,600 Speaker 1: and expensive We're gonna take you through to the clothes 184 00:11:07,640 --> 00:11:10,760 Speaker 1: on Wall Street. This is taking Stock. I'm pim Fox. 185 00:11:11,120 --> 00:11:12,400 Speaker 1: This is Bloomberg.