Stocks Aren't Overvalued, Buy the Dips: McAlinden

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April 25 (Bloomberg) -- Joseph McAlinden, founder and chairman of McAlinden Research Partners, discusses the outlook for the U.S. stock market and his investment strategy with Pimm Fox on Bloomberg Television's "Taking Stock." (Source: Bloomberg)

Thanks very much.

For more on today's market decline i want to bring in joe.

He's the founder and the chairman of macalindon research partners.

Tell me about the market right now.

First, give your record so far this year, so we understand the context.

We've been bullish.

Been bullish since march of 2009. and advocate dips every time we get them.

This time i would say the same thing except for the one launch i'm worried about, we talked about launches, is if the russians launch a full-scale invasion into ukraine, which there is noise later this afternoon that that could be brewing.

That could create a bigger dip.

But i would still buy the dip next week.

So it's a question of when to buy the dip?


What stocks?

What industry groups?

Well, the high p.e. guys that have led the rally and took the really bad hits on these corrections -- like the nasdaq today, 1.45% decline.

The economy is going to be stronger than people think.

Inflation's going to be stronger than people think.

Therefore the fed might start tightening a little earlier.

That leads me to want to be invested in things, more like materials, and in industrials, than these high-flying internet stocks and biotech stocks.

So when i want to buy -- why is that?

Why is that the move to make?

Because g.d.p. growth in my opinion is going to accelerate, up to a 3% to 4% range.

Over the next several quarters.

And i think the stage is set for that.

We've had a lot of economic positive surprises, a few negatives.

The confidence is coming back and -- but just to make that case.

If you see the economy start to grow and accelerate g.d.p., you want to be buying material stocks, you want to be buying industrial stocks.

That's the thesis?


I also still like housing.

Even though there's been a whole bunch of negative news lately and negative interruption of the news.

I think it's just a pause in a major recovery.

So the new housing starts, the existing home sales numbers, maybe just discount that for the moment.

What about the companies like home depot, lowe's, home improvement centers, the paint companies?

It's all part of the same process.

As i see it.

They would all be positively affected.

Not just by an upturn in starts but by the wealth effect that kess -- that's coming out of a record level of stock market and the huge recovery we've had in home prices.

The renovation and home improvement side of this story is going to keep getting better and bet for to -- for the next couple of years.

When you speak to clients, did they behave as if we are at record high levels for the stock market there sn no.

I'll tell you why.

The market's not at all overvalid.

It's setting at 16 times what's likely to be this year's earnings and 14 times or less what i think next year's earnings will be for the standard and poor's. and that's just fair value.

Which is not a reason to go out and necessarily buy stocks because they're not -- i can't argue that they're cheap.

But when you get this kind of recovery in a business cycle, they usually go into overvalue territory which i think they will.

In vladimir putin and russia

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


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