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Speaker 1: This is a Bloomberg Business Flag BOM Bloomberg World Handquarters.
Speaker 1: I'm Charlie Pellett, SMP five hundred Index on track for
Speaker 1: a losing day, in fact, heading towards the longest weekly
Speaker 1: losing streak in four months amid lackluster results from large retailers,
Speaker 1: a topic we were just discussing nords from shares. They
Speaker 1: are now down by fourteen point three percent. The SMP
Speaker 1: downs seventeen of the cline of eight tenths of one
Speaker 1: percent down industrials close to the worst level of the day,
Speaker 1: down one d eighty one points. The drop there of
Speaker 1: one percent and has stack down nineteen a drop of
Speaker 1: point four percent. Gold up three dollars, the ounce to
Speaker 1: twelve seventy four, a gain of two tenths of one percent.
Speaker 1: Your tenure of fourteen thirty seconds, the yield there one
Speaker 1: point seven oh percent. I'm Charlie Pellett, and that's a
Speaker 1: Bloomberg Business Flash. Charlie Pellett, thanks so very much. Don't
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Speaker 1: That's your Bloomberg ETF report. I'm Catherine Cowderie. All Right,
Speaker 1: the sun it's going down just a little bit here
Speaker 1: in Bermuda. We are broadcasting live from Elbow Beach, Bermuda,
Speaker 1: an ocean front Enclavo classic style and contemporary luxury. Our
Speaker 1: next guest is very jealous that we are near the
Speaker 1: water because Michael Obohofsky, the founder of Merlin Asset Management
Speaker 1: based in Boston. He's a competitive sailor in addition to
Speaker 1: the fact that he probably has a good good qualification
Speaker 1: for understanding the psychology of investors, because dr Obohovsky knows
Speaker 1: a lot about psychiatry. He was going to be a
Speaker 1: doctor at one point, and he earned his PhD in
Speaker 1: clinical psychology from the New School for Social Research. Michael Okhovski,
Speaker 1: thanks for being with us. Great to be with your
Speaker 1: Did I capture all of that that I that I
Speaker 1: was able to put enough forward for you? To be
Speaker 1: a little bit sort of jealous about our proximity to
Speaker 1: the water. Well, it's it's very generous description of my background,
Speaker 1: but I am definitely jealous of you, of you being
Speaker 1: in Bermuer now, although I am I am actually in Newport,
Speaker 1: Rhode Island, so very close to the water. Also, oh
Speaker 1: all right, well then it's been very good. All right,
Speaker 1: So success follows success. Um, it's how how can people
Speaker 1: be successful using this Merlin large cap growth strategy in
Speaker 1: order to perhaps eventually enjoy all of these good things? Well,
Speaker 1: I think I think what it helps. It helps to
Speaker 1: focus on the fundamental characteristics of the companies, and also
Speaker 1: it helps to cut through through the incredible noise that
Speaker 1: we have been experienced in the markets. I think, you know,
Speaker 1: this is the end of the week where many of
Speaker 1: the large retailers we reported pretty pretty horrific numbers, and
Speaker 1: and I think everybody is questioning whether the consumers are dead,
Speaker 1: whether retailers are dead. I think the consumers do not
Speaker 1: appear to be dead. They are still spending, but they
Speaker 1: are spending differently, which might very well bring bring very
Speaker 1: unwelcome news to retailers, malls and sort of related businesses.
Speaker 1: The the world is changing and you have to be
Speaker 1: on your touse. You have to pay attention to what
Speaker 1: you're investing in, and it's um and as I mentioned,
Speaker 1: it is very difficult to keep focused on fundamentals, good
Speaker 1: characteristics of companies that are still out there, that are
Speaker 1: growing at the at the good pace and building their
Speaker 1: businesses despite the slow economy. Well, your strategy very in
Speaker 1: a very basic sense, is you select in one of
Speaker 1: your funds the fifty most attractive large cat growth firms,
Speaker 1: regardless of industry or sector. Uh, you've got a three
Speaker 1: to five year outlook, use a comprehensive multi variant approach,
Speaker 1: bottom up, topdown, contivacative evaluation, et cetera. Up Right, now,
Speaker 1: do you have any big retailers in any of your
Speaker 1: various funds or did you say handwrittings on the wall
Speaker 1: department store chiefs are becoming dinosaurs, Kathy, It's a great question.
Speaker 1: Retail retail business has been very, very tough, and I
Speaker 1: see the primary reason for the retail business being being
Speaker 1: difficult as Amazon. That Amazon is really just stealing their business.
Speaker 1: And when you think about it, it's only represents about
Speaker 1: Amazon only represents about seven percent of the of the
Speaker 1: retail business right now, and it's already destroying companies like
Speaker 1: we're like we have heard reporting this week. However, it
Speaker 1: is possible to find the good retailers, but what I
Speaker 1: would call them those are the retailers that haven't been
Speaker 1: Amazon yet are very difficult for Amazon to to capture,
Speaker 1: so I so I own some of them. They are
Speaker 1: the example is Michael Stores uh and other examples are
Speaker 1: are those um off price retailers like for example T
Speaker 1: TJ Max, which I also owned for my clients. And
Speaker 1: also the the building business. The home building has been
Speaker 1: doing well, so I own laws and also on HDS
Speaker 1: which is a spinoff from Home Home Depot that is
Speaker 1: focused on on professionals, so they It is possible to
Speaker 1: look look into retail and actually find good companies, but
Speaker 1: it has been very, very difficult and really eliminates the
Speaker 1: majority of the sort of traditional retail eage. Michael, what
Speaker 1: kind of time horizon do you recommend that investors take
Speaker 1: when they deploy this kind of strategy. Well, I look
Speaker 1: at the companies when I choose them for the portfolios,
Speaker 1: I look at about three to five years, so it's
Speaker 1: you know, five years, it's probably questionable whether you can
Speaker 1: really do it at such such period of time. But
Speaker 1: I think one to three years, and one year is
Speaker 1: probably two little, so I would say three years. It's
Speaker 1: sort of the average what you should be looking at.
Speaker 1: And uh, it's a on. All my strategies are fairly
Speaker 1: low turnover strategies. The annualized turnover is about so once
Speaker 1: they select the stuff, they tend to stay in the
Speaker 1: portfolios for a fairly long period of time. How you
Speaker 1: how you look at the come neat Apple? Now? You know,
Speaker 1: in some sense you get so big, you get sure.
Speaker 1: They had the big deal, right that a billion dollar investment,
Speaker 1: indeed the largest It's like the Uber of China. Right, Um,
Speaker 1: this deal led by Tim Cook really an interesting story.
Speaker 1: But I remember Microsoft was just nobody like Microsoft? Right Microsoft?
Speaker 1: See old and stodgy things. You're change to Microsoft. A
Speaker 1: lot of people like that stock. Now, how do you
Speaker 1: feel about companies like that and this this big mature
Speaker 1: text space. Well, I have to tell you the the
Speaker 1: A few years ago I was talking to San Francisco
Speaker 1: to some of the scene at people about liking Microsoft,
Speaker 1: and they were looking at me like I had a
Speaker 1: third eye in the middle of my forehead and I
Speaker 1: could see at that time, I could see changes happening
Speaker 1: to Microsoft, and it took a few years for for
Speaker 1: numbers to sort of show what they've been doing. So
Speaker 1: it's um it's an interesting question. They are they are.
Speaker 1: There's a benefit to large technology companies benefit or experience
Speaker 1: and what they are able to do, but they have
Speaker 1: to be able to change, and we have been seeing
Speaker 1: some of those those old style tech companies changing. Microsoft
Speaker 1: as a perfect example. Cisco is another example of a
Speaker 1: company that is completely reinventing itself. Oracle might be another
Speaker 1: one moving into the cloud. Apple Apple has been a
Speaker 1: really frustrating company. I think a few years ago there
Speaker 1: was a question, well was Apple really all about Steve?
Speaker 1: And they had a deep bench, there were a lot
Speaker 1: of people working with Steve, and at least so far,
Speaker 1: I have to say that the answer is that it
Speaker 1: was really all Steve. I have not been impressed with
Speaker 1: Tim Cook. I've always said that he was a very
Speaker 1: good CEO, but I don't see him as a good
Speaker 1: leader of the company. I think the design is also lacking.
Speaker 1: They haven't developed anything beyond what was Steep set them
Speaker 1: to do. So it's a company that has still great potential.
Speaker 1: I think they have. They just up there are and
Speaker 1: the budget to about ten billion dollars or something better
Speaker 1: come out of it. But right now was driven by
Speaker 1: single product Keeno. More than six of our avenues are
Speaker 1: based on an iPhone, and there was nothing else and
Speaker 1: there's still nothing else on the horizon. At the same time,
Speaker 1: Apple generates more cash than most of the technology companies combined,
Speaker 1: so they it is very inexpensive. They are questions about
Speaker 1: the growth. The company is still well well managed, isn't
Speaker 1: going to return to growth? Those are the questions that
Speaker 1: I'm struggling with. And I still own Apple, but I
Speaker 1: would call it I still own Apple, rather than I
Speaker 1: believe that I will own Apple for a long period
Speaker 1: to come. Fascinating. Thank you so much for joining us.
Speaker 1: And next time we come to Berne to maybe you'll
Speaker 1: get your sailboat and race down. Okay, you're very much
Speaker 1: great talking to Kathy and Fim. That's Dr Michael Obohovsky.
Speaker 1: He's a founder Merlin Asset Management based in Boston. On
Speaker 1: you heard him. He's the Newport Rhode Island. Today. A
Speaker 1: lot of people on this Friday afternoon are on the
Speaker 1: beach on anybody else is on quite a night speech
Speaker 1: as uspn Elbow Beach Elbows Elo Beach Resort, I'm calfing
Speaker 1: haze along with pin Fox ticking stock on Bloomberg Radio