Fear vs Value

Attached is part of a research report from a long conference call that we had today with one of our money managers.  This abbreviated report lays out a good summary of the current economic environment and resulting opportunities in just six slides.  The highlights of the slides are contained in the bullet points below. Please click here for the corresponding slides.

  • Price to earnings ratios are at 10.5X, which is well below recession averages for the last fifty years.
  • Stocks and Treasury Bonds are priced for a recession.
  • Real 10-year US Treasury Yields are close to 0% when netted to core inflation.
  • But the July economic numbers look OK.
  • Buying stocks when investor confidence is this low has historically proven profitable.
  • Diversification and time are the best weapons against volatility.

At Equitas we continue to preach asset diversification, strong manager due diligence, and disciplined re-balancing of portfolios.  We stand ready to talk to clients and friends of the Firm about specific portfolio related questions or general market related inquiries.

For more information, please feel free to contact Rich Bouchner at 504.569.9619.