Are Tech and Health Care 2014’s Hot Investments?

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Dec. 12 (Bloomberg) -- Adam Parker, chief U.S. equity strategist at Morgan Stanley, discusses his investment strategy for 2014 on Bloomberg Television’s “In The Loop.”

Tell us about the materials call.

That is interesting.

What we did for our 2014 outlook is that -- say we have high oil but we do not want to buy energy stocks.

We downgraded industrials that have outperformed.

High oil prices will continue, but chemicals -- i don't think it will be because demand is strong, it will be because of a fear of a supply constraint.

That doesn't bode well for energy stocks.

I think they will continue to do well.

So much over play on gas.

Oil does not seem to be a problem at all.

If you were about fear from stuff in the middle east, and makes the oil price go out and, not because fundamentals and demand a strong, but because of supply fear.

You are increasing your allocation in tech for a little bit.

It is above where it is in the benchmark.

Yes.

We are overrun that -- over recommendation for tech.

How are you changing that call?

We have specifics that matter for picking stocks but we do not have dispersion.

When you make a bet, you have to make a bigger one.

I don't think companies are going to hire a lot of people.

I don't think they will spend a lot of capital on buildings and tools.

They're going to invest in productivity.

Software is the best way to benefit.

That seems aggressive to me.

Sales -- i was just doing the work yesterday and there have been $3 billion of acquisitions in the last three years.

I do not see a lot of bending in tech land.

They'll be a difference between the hardware and the old tech.

One stock we are recommending is ultimate software.

They are gaining share in a faster growing part of the market.

We are old tech sparring partners from decades.

It has 100 pe.

It is trading at three times -- it is a store growth.

It fast-growing stocks that are cheap underperform fast-growing stocks that are expensive.

In a certain market.

Because why?

If it is already cheap, the market is doubting its sustainability.

If they are fast-growing, they should be expensive.

You should be growing into that valuation over time.

You can santa like it because you will miss out on the highfliers that do well.

Ask you cannot say that i don't like it because you will miss out on the highfliers that do well.

There are companies that don't make money that would be great stocks.

It is about, -- isn't that confusing?

They do until they don't. they do well until they miss revenue versus expectation.

That will be the key for the expense of growth straw -- stocks is can they deliver?

If they can, they will get more expensive.

There will be a harsh moment someday, but it could be a valuation from 50, 100, 200% higher.

You also have calls in health care.

Scarlet has been looking at the bearish case.

Scarlet has them looking at pfizer.

Here's the thing.

A breakup probably won't happen until 2017. if it does happen, it is the equivalent of selling off the family silver.

The remaining business lacks long-term revenue growth profits and are patent expert -- peer . if i can grow the dividend, i think -- means really well.

All got expensive when bond yields were low.

I don't think you can only buy fast federal stocks.

I don't think you can only buy high-yielding stuff.

Pharma was attractive compared to staples.

They have better achieve ability, lower payout ratios and equal dividends.

It is a better risk reward in other parts of the market.

There always has to be some market strategy.

One way we are thinking about the fundamentals and portfolio manager.

Pharma call is really more of a strategy call.

Stay with us.

We are going to take a dive into one of your picks.

We will be back with adam

This text has been automatically generated. It may not be 100% accurate.

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