[MUSIC] Well we think the best opportunities in the global
markets today are in stocks. And really, stocks outside the
US more than stocks inside the US. And in particular,
the biggest opportunity we see, is in Japanese equity. With
the currency hedged. Well, we like currency hedged, Japanese stocks.
For, a bunch of reasons. Let's start with valuation. The
Japanese stock market is at a big discount to the
US Market. It's at a discount on, price to earnings.
It sells at 1.2 times, price to book compared to
2.7 times for the US, it's at one third, of
the price to sales ratio of the US market and
offers a much more attractive dividend yield, than the bond
yield in Japan. But in addition to great value, there're
good things going on, on earnings. There's a very positive,
monetary policy in Japan and we're seeing Japanese corporate managements.
Pursue shareholder value, to a much greater extent than ever
before. the, allocation that an investor, should have to cash,
varies with the investor. At Blackhawk Global Allocation Fund we
have some cash today. Almost 20% of the portfolio. But
that's not because we're bearish on stocks, we're not. We
think, the stock market looks okay. We are, very concerned
about the outlook for the bond market, and so, a
lot of that cash, represents what it takes to keep
the duration, of our fixed income portfolio low. And to
manage the overall risk of our portfolio. Well, we're concerned
about the fixed income market. Because quite simply, coupons are
low. The yield on government bonds, is low. And it's
not very good compared to, the volatility of the bond
market. And doesn't protect against the risk of higher interest
rate. Nor does it reward, people for taking risk with
inflation, which has already running at 2% year after year.
Well, we can never be sure what the stock market
is going to do. Today, stocks looked more attractive than
bonds. And, stocks outside the US looked more attractive than
US stocks. The big question mark about the outlook on
markets, is what happens to monetary policy. And 18 months
from now we could be seeing some tightening of monetary
policy, in the U.S. but we think in Japan, monetary
policy will remain favorable. And that's another reason, we like
the outlook for the Japanese stock market. [MUSIC].