WEBVTT - Fiduciary's Andersen: US Market Still Best Game in Town (Audio)

0:00:00.240 --> 0:00:04.120
<v Speaker 1>Let's turn our attention now to valuation, but for companies

0:00:04.120 --> 0:00:07.040
<v Speaker 1>that are already public. Peter Anderson is the chief investment

0:00:07.080 --> 0:00:10.399
<v Speaker 1>officer and vice president of Fiduciary Trust, and he joins

0:00:10.480 --> 0:00:15.840
<v Speaker 1>us now from Boston, home to Bloomberg. Peter, Hi, thank

0:00:15.880 --> 0:00:17.600
<v Speaker 1>you for being I thank you for being with us.

0:00:17.640 --> 0:00:21.160
<v Speaker 1>You just heard this a little bit about Snapchat and

0:00:21.239 --> 0:00:24.960
<v Speaker 1>a potential billion dollar valuation for a company that's doing

0:00:24.960 --> 0:00:28.600
<v Speaker 1>a billion a billion in revenue a year. How how

0:00:28.640 --> 0:00:31.840
<v Speaker 1>do you value the stock market right now? And generally,

0:00:31.840 --> 0:00:34.000
<v Speaker 1>I mean, what are some of the key metrics? And

0:00:34.320 --> 0:00:37.479
<v Speaker 1>do you think that investors are paying too much for

0:00:37.520 --> 0:00:40.720
<v Speaker 1>the earnings that they're currently receiving. Well, you know, normally

0:00:40.880 --> 0:00:43.080
<v Speaker 1>I would give you a rational answer to that, Pim,

0:00:43.159 --> 0:00:46.240
<v Speaker 1>but I think what's happening now is, uh, things seem

0:00:46.280 --> 0:00:52.000
<v Speaker 1>to be trading far more on feelings, hope rather than logic.

0:00:52.240 --> 0:00:54.600
<v Speaker 1>And let me explain. I think there's a ton of

0:00:54.680 --> 0:00:57.520
<v Speaker 1>uncertainties out there. I mean, we always can point to something,

0:00:57.920 --> 0:01:02.040
<v Speaker 1>but now we seem to have such a confluence of uh,

0:01:02.320 --> 0:01:05.200
<v Speaker 1>really worrisome factors. I mean, let's just tick them off right.

0:01:05.440 --> 0:01:11.000
<v Speaker 1>The election outcome. Banks are in the forefront now, Deutsche Bank,

0:01:11.200 --> 0:01:15.039
<v Speaker 1>and well as far ago, you've got the Fed always wondering,

0:01:15.080 --> 0:01:18.640
<v Speaker 1>you know, we're wondering about their raising rates. You have Brexit,

0:01:18.920 --> 0:01:21.680
<v Speaker 1>the jobs number tomorrow, which is less an extent the

0:01:21.760 --> 0:01:25.680
<v Speaker 1>jobs number. But in general, you have all these uncertainties

0:01:25.760 --> 0:01:28.319
<v Speaker 1>and they're kind of combining in a time that is

0:01:28.360 --> 0:01:32.440
<v Speaker 1>really unfortunate for analysts because it's so hard to make

0:01:32.480 --> 0:01:34.600
<v Speaker 1>any predictions on any of those things right now. Well,

0:01:34.680 --> 0:01:39.160
<v Speaker 1>it's understandable then to why people are, you know, eager

0:01:39.240 --> 0:01:41.800
<v Speaker 1>to keep buying stocks. You gotta get you're gonna return someplace.

0:01:41.840 --> 0:01:45.039
<v Speaker 1>Yields are low in fixed income. At the same time,

0:01:45.080 --> 0:01:47.320
<v Speaker 1>it's just the same thing happens to the Fed. It's

0:01:47.319 --> 0:01:49.960
<v Speaker 1>happened for but three or four years. Every time they're

0:01:49.960 --> 0:01:53.400
<v Speaker 1>ready to really make a move, something happens. Brexit happens

0:01:53.400 --> 0:01:55.920
<v Speaker 1>with the Chinese stock market just plunges. And I guess,

0:01:55.960 --> 0:01:59.200
<v Speaker 1>if I'm an investor, that's what I'm I'm gun shy, Yeah,

0:01:59.440 --> 0:02:02.280
<v Speaker 1>I would say, but the best way to approach being

0:02:02.320 --> 0:02:05.360
<v Speaker 1>gun shy at this point is to be fully diversified.

0:02:05.400 --> 0:02:07.720
<v Speaker 1>I mean, I know that's a trite phrase, but it

0:02:07.840 --> 0:02:12.000
<v Speaker 1>really does come into play when you have so many uncertainties.

0:02:12.000 --> 0:02:14.720
<v Speaker 1>You know, normally I think we can handle oh, probably

0:02:14.760 --> 0:02:18.760
<v Speaker 1>two or three, but when you start getting four or five, six,

0:02:19.360 --> 0:02:23.040
<v Speaker 1>I think the best of modelers out there just cannot

0:02:23.160 --> 0:02:26.280
<v Speaker 1>really factor that in. And you can either stay on

0:02:26.280 --> 0:02:29.640
<v Speaker 1>the sidelines and risk market timing, or you can go

0:02:29.840 --> 0:02:32.920
<v Speaker 1>full steam ahead or maybe turned back a little, but

0:02:33.000 --> 0:02:35.680
<v Speaker 1>not stay on the sidelines, because there is just no

0:02:35.800 --> 0:02:39.040
<v Speaker 1>way to call things like this election. Even tell us

0:02:39.040 --> 0:02:41.560
<v Speaker 1>a little bit about some industry groups if you don't mind,

0:02:41.600 --> 0:02:44.720
<v Speaker 1>because the election and politics can play a role in

0:02:44.760 --> 0:02:49.560
<v Speaker 1>the valuations that investors give, for let's say, the healthcare industry. Absolutely,

0:02:49.600 --> 0:02:52.360
<v Speaker 1>and you know him. I think the other thing is, uh,

0:02:52.400 --> 0:02:56.040
<v Speaker 1>it's so difficult this time around because when you look

0:02:56.080 --> 0:02:58.800
<v Speaker 1>at both candidates, Uh, it is truly. You know, the

0:02:58.840 --> 0:03:03.520
<v Speaker 1>metrics we've used in the past to predict presidential victories,

0:03:03.919 --> 0:03:06.919
<v Speaker 1>I'm not sure how applicable they are in this case,

0:03:07.000 --> 0:03:09.240
<v Speaker 1>because this might go down in history as one of

0:03:09.240 --> 0:03:16.040
<v Speaker 1>the most disliked, unenthusiastic elections we've had. I've heard anecdotal

0:03:16.040 --> 0:03:19.800
<v Speaker 1>stories about there are no lawn signs on anybody's lawn,

0:03:19.880 --> 0:03:22.440
<v Speaker 1>bumper stickers, etcetera. You can see a lot of that

0:03:22.880 --> 0:03:25.519
<v Speaker 1>in our nation, which is indicative of the fact that

0:03:25.600 --> 0:03:27.919
<v Speaker 1>there's not a lot of enthusiasm. So when you try

0:03:27.960 --> 0:03:33.200
<v Speaker 1>to use general common sense principles, for instance, healthcare, you know,

0:03:33.320 --> 0:03:37.080
<v Speaker 1>we've always heard that calculus that, uh, if Clinton is elected,

0:03:37.440 --> 0:03:40.720
<v Speaker 1>uh friend of healthcare, etcetera. But I'm not certain that

0:03:40.840 --> 0:03:43.800
<v Speaker 1>we can go that far at this point because it

0:03:43.840 --> 0:03:47.000
<v Speaker 1>doesn't seem like there's a convergence on who will actually

0:03:47.080 --> 0:03:49.360
<v Speaker 1>be winning. So, Peter, what should I do? I mean,

0:03:49.400 --> 0:03:52.920
<v Speaker 1>if everyone's gun shy uh and and and if if

0:03:52.960 --> 0:03:57.960
<v Speaker 1>some individual companies will continue to grow, you know, because

0:03:58.000 --> 0:04:00.000
<v Speaker 1>they are, they're they're luckier, they've got a great busines,

0:04:00.080 --> 0:04:02.160
<v Speaker 1>whatever it is, what do I do if I'm I

0:04:02.160 --> 0:04:05.840
<v Speaker 1>don't want to stop investing, I'd like to make some money. Well, first,

0:04:05.920 --> 0:04:08.960
<v Speaker 1>I think the the US stock market is probably the

0:04:08.960 --> 0:04:11.800
<v Speaker 1>best game in town, right, especially if you're looking at

0:04:11.840 --> 0:04:14.560
<v Speaker 1>say mid or small cap companies. Let's just figure that

0:04:14.920 --> 0:04:17.400
<v Speaker 1>the reason why that would be attractive is that it

0:04:17.440 --> 0:04:21.960
<v Speaker 1>doesn't have off overseas exposure. The product lines are usually

0:04:22.040 --> 0:04:25.360
<v Speaker 1>ring fenced within the United States. The consumer, for all

0:04:25.520 --> 0:04:29.000
<v Speaker 1>the gnashing of teeth we've we've mentioned on these programs

0:04:29.000 --> 0:04:31.680
<v Speaker 1>about as a consumer up or down or sideways. I

0:04:31.720 --> 0:04:35.520
<v Speaker 1>would say the consumer is growing okay and sentiment is okay.

0:04:35.600 --> 0:04:38.479
<v Speaker 1>So if you tie into that, you probably want to

0:04:38.480 --> 0:04:41.039
<v Speaker 1>buy stocks that are in the mid and small cap

0:04:41.080 --> 0:04:45.640
<v Speaker 1>space because the US exposed to international pressures and currency

0:04:45.720 --> 0:04:49.039
<v Speaker 1>for instance. Make a You make a good point, is

0:04:49.080 --> 0:04:51.960
<v Speaker 1>there is there a different Do you look at the

0:04:52.040 --> 0:04:55.800
<v Speaker 1>valuations differently for a small or mid cap stock? I

0:04:55.839 --> 0:04:59.200
<v Speaker 1>think in this case, you know, it always depends on

0:04:59.279 --> 0:05:02.320
<v Speaker 1>the situation in that hand and excuse me, And in

0:05:02.360 --> 0:05:05.200
<v Speaker 1>this case, I think you do because you have to

0:05:05.279 --> 0:05:10.839
<v Speaker 1>look at the relative attractiveness of say large multinational companies

0:05:11.160 --> 0:05:13.400
<v Speaker 1>in the risk of y're opening yourself up to with

0:05:13.480 --> 0:05:16.640
<v Speaker 1>that currency risk, etcetera. Interest rates off their rays. How

0:05:16.640 --> 0:05:20.520
<v Speaker 1>does that impact currency and those divisions? Whereas a small

0:05:20.560 --> 0:05:22.800
<v Speaker 1>a mid cap maybe there isn't more of a premium

0:05:22.839 --> 0:05:25.560
<v Speaker 1>because it's uh, I don't know, coin of phrase, it's

0:05:25.640 --> 0:05:29.400
<v Speaker 1>an analyze herble. You know, the the capability for it

0:05:29.440 --> 0:05:33.120
<v Speaker 1>to be analyzed is better. Therefore, maybe it demands a

0:05:33.279 --> 0:05:39.640
<v Speaker 1>higher premium because you can understand it easier in this environment. So, uh,

0:05:39.880 --> 0:05:43.240
<v Speaker 1>what about just the your your your macroeconomic outlook. You've

0:05:43.240 --> 0:05:45.920
<v Speaker 1>got about twenty seconds left. And is it going to

0:05:46.040 --> 0:05:48.760
<v Speaker 1>be strong enough to support the stock market. I think

0:05:48.800 --> 0:05:50.840
<v Speaker 1>the U s it will, but I think Bregxit we

0:05:50.920 --> 0:05:53.120
<v Speaker 1>have a long long way to go. People are not

0:05:53.160 --> 0:05:55.200
<v Speaker 1>focusing enough on the fact that it might take two

0:05:55.279 --> 0:05:58.120
<v Speaker 1>to four years for us to figure out how Brexit

0:05:58.240 --> 0:06:00.520
<v Speaker 1>is going to play out, let alone how it's going

0:06:00.560 --> 0:06:03.040
<v Speaker 1>to impact stocks, say in the next six months. Therefore,

0:06:03.160 --> 0:06:07.039
<v Speaker 1>stay a long term investor. All Right, Peter Anderson, thank

0:06:07.080 --> 0:06:09.920
<v Speaker 1>you so very much for joining us today on taking stock.

0:06:10.800 --> 0:06:15.200
<v Speaker 1>He's chief investment officer at Fiduciary Trust in Boston. Well,

0:06:15.240 --> 0:06:19.240
<v Speaker 1>we're almost there. The market closed. That means our Stocks

0:06:19.360 --> 0:06:21.440
<v Speaker 1>editor Dave Wilson will be back to join us for

0:06:21.520 --> 0:06:25.039
<v Speaker 1>the movers and shakers. Stocks narrowly mixed, but within that

0:06:25.080 --> 0:06:28.600
<v Speaker 1>you've got some stocks that are really making some moves.

0:06:28.960 --> 0:06:29.920
<v Speaker 1>This is Bloomberg