Now is not the time to be stock-shy: Cetera strategist

Now is not the time to be stock-shy: Cetera strategist
OCT 03, 2011
Today's weak jobs report notwithstanding, the economy has moved past last month's “soft patch” and there are reasons to be bullish on equities, according to Brian Gendreau, market strategist at Cetera Financial Group Inc., which has $82 billion under advisement. “We're coming out of a period in which the market went down for six weeks because of concerns about a soft patch,” he said. “And there was a soft patch related to the tsunami in Japan, $4 gas, and general supply getting ahead of demand.” While Mr. Gendreau doesn't believe high gas prices represent a significant actual impact on the economy, he said they have a major effect on consumer sentiment. So, when gas prices started to fall over the past few weeks it was seen as a good sign for the economy and the markets. “The economy won't grow as fast as anyone would like it to, but at least it's growing,” he said. “Corporate balance sheets are very strong, stocks are arguably not expensive and wage growth is zilch because nobody is asking for a raise right now.” In terms of Europe, where serious sovereign-debt issues linger, he said, “It's a bit of a puzzle.” “You'd think the euro would be weak, but it's not,” Mr. Gendreau said. “France and Germany are still strong economies, and most of problems are so far confined to the peripheral economies.” The weakened U.S. dollar, however, does present opportunities for certain sectors, Mr. Gendreau added. “More than half of the revenues from the Dow 30 stocks come from abroad, and a weak dollar will help those exporters,” he said. With that in mind, Mr. Gendreau favors the materials, energy and technology sectors as the most globalized areas. “I don't think this is a time to be in defensive sectors like health care, utilities, telecom and consumer staples,” he said. “They are not going to benefit from a weak dollar.” In general, he advises overweighting stocks relative to bonds. In a portfolio set for 60% stocks, Mr. Gendreau said he would bump that allocation up to 65% or 70%. “I'm not saying you should back the truck up and just load up on stocks,” he said. “But I do think the outlook is positive.” Portfolio Manager Perspectives are regular interviews with some of the most respected and influential fund managers in the investment industry. For more information, please visit InvestmentNews.com/pmperspectives.

Latest News

Maryland bars advisor over charging excessive fees to clients
Maryland bars advisor over charging excessive fees to clients

Blue Anchor Capital Management and Pickett also purchased “highly aggressive and volatile” securities, according to the order.

Wave of SEC appointments signals regulatory shift with implications for financial advisors
Wave of SEC appointments signals regulatory shift with implications for financial advisors

Reshuffle provides strong indication of where the regulator's priorities now lie.

US insurers want to take a larger slice of the retirement market through the RIA channel
US insurers want to take a larger slice of the retirement market through the RIA channel

Goldman Sachs Asset Management report reveals sharpened focus on annuities.

Why DA Davidson's wealth vice chairman still follows his dad's investment advice
Why DA Davidson's wealth vice chairman still follows his dad's investment advice

Ahead of Father's Day, InvestmentNews speaks with Andrew Crowell.

401(k) participants seek advice, but few turn to financial advisors
401(k) participants seek advice, but few turn to financial advisors

Cerulli research finds nearly two-thirds of active retirement plan participants are unadvised, opening a potential engagement opportunity.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today’s choppy market waters, says Myles Lambert, Brighthouse Financial.

SPONSORED Beyond the dashboard: Making wealth tech human

How intelliflo aims to solve advisors' top tech headaches—without sacrificing the personal touch clients crave