Senior portfolio manager at american century investments.
He oversees $23 billion in assets.
He says diversification is investors' only protection from geopolitical shocks.
When you look at this global instead, it is a complete mess, from the middle east to russia and ukraine.
You know, catastrophes, whether they are natural or man-made, generally have significant negative impacts in the markets, but short-lived.
Unless you can see some economic ramifications, like in the case with russia with oil prices, not much you can do after the fact.
Your only protections, your best friend, as you said it, is diversification, geographically across asset classes.
One thing is clear from historical analysis, and that is reacting to these types of crises after the fact that a knee-jerk reaction is rarely a moneymaking strategy.
I want to break in and update everyone.
Facebook actually climbed above its record intraday high.
It is able to beat its record high from previous on that killer earnings report we saw on the closing bell.
Of almost 100% in the past 3 years.
I note -- up almost 100% in the past 2 years.
Are you a fan of that?
Is that where the risk should be?
Well, that is one of the sectors we are overweighted in -- growth stocks in general, technology, industrials, commodity-related stocks.
Basically, we see this recovery, as slowing grinding as it has been, as consuming but decelerating.
This recovery is long in the tooth.
You have evaluations in the equity market that are much less compelling.
Earnings growth this season is coming in positive but decelerating, as is topline growth.
Short-term interest rates are about to rise.
The whole tenor of this bull market is changing.
You have to move in the mid-to-late cycle sectors and we will see utilities take over as the lead sector and then you know it is all over.
You mention how short-term interest rates are going to rise.
I want to bring the banks because you are a little bit less excited about this sector.
Bank lending is about to pick up some steam.
Citigroup, wells fargo, jpmorgan, reported on average 3% increase in total loans.
Bank of america reported a drop off because of products the bank no longer offers.
With interest rates starting to head higher, should and that boost margins for these things?
Not if short-term interest rates rise faster than long-term rates.
That will compress and that interest margins in particular.
It generally speaking, reits, financials, banks in particular, the valuations are fair and fully discounted.
We have seen a nice quarter pop in earnings because interest rate rises have not come as soon as most people expected.
That is a sector where we are shying away along with other value-related stocks.
I saw a new know that you prefer credit risk to interest-rate risks.
I wonder where you are searching for yields.
If you look globally, years are near an all-time low.
If you look at higher-yielding things come even janet yellen, head of the fed, says we might be in a bubble year.
If you like credit, where are you going to find your return?
Geographically, it is all over.
They have taken some high-yield exposure, they have taken international exposure at the margin.
It is not about what the absolute level of yields are.
It is a horserace, it is a relative game.
At the margin we have been able to add a significant amount of the value at the indices and a commit is others just by eking out a little extra yield in these credit issues, rather than extending durations and betting on interest rates staying lower.
We spoke with mark mobius of templeton, the emerging markets guru.
Olivia, you had asked him in the past who he admires and he said putin.
Can you believe that?
He is not alone there.
There are other leaders who have said that.
True, but he says that putin has shown remarkable restraint.
Take a listen to what he said.
The whole strategy is to take as much as you can without any consequences.
If there are consequences, to logically pull back.
That is the reason why sanctions are so important, if a impact on the russian economy.
There is a good chance that if the europeans pull off a very strong set of sanctions, then logically putin will pull back.
Tensions could rise, the water could get a little hotter.
He looks at all crises as opportunities to buy in.
Don't just have a knee-jerk reaction.
Perhaps mark mobius does have that knee-jerk reaction, he is a knee-jerk bull.
What do you think about that?
At the margin we'd say we agree.
As tough as it is from a visceral reaction to jump in after a crisis, nine times out of 10 that is the right way to go.
When i talk about knee-jerk reactions, most people's initial reaction is fight or flight and they run from the latest trouble.
But the groups -- gurus are right on that one, you have to jump in on these types of incidents, if you have the intestinal fortitude.
Thanks so much.
We covered a lot of ground there . senior portfolio manager at american century investments.
Olivia and scarlet, thanks for
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