How to sell the investor who worries about everything
Hand-holding advice for brokers at a Philly strategy session
Every salesman needs a story. And if you're selling stocks, bonds and funds into an uncertain market, you need more than one.
To fine-tune their stories, more than 100 of the 700 financial advisers at Janney Montgomery Scott trooped into a Center City meeting room or linked up by phone to hear Janney chief investment officer Mark Luschini and Standard & Poor's boss investment strategist Sam Sam Stovall exchange sometimes contradictory views of what happens next, at Janney's quarterly "outlook event."
Luschini pushed large-cap, dividend-paying stocks with foreign customers. He likes Big Tech - Hewlett-Packard, Cisco, Microsoft, Intel. He's underweighting consumer-discretionary stocks due to "jobs, or the lack thereof."
Stovall pushed cash and bonds. Sure, returns are close to zero. But that's "better than negative," he told the brokers. Set aside some "dry powder" so you can cash it in without booking short-term losses.
Who to blame for the slow economy? Stovall's not buying JPMorgan boss Jamie Dimon's anti-Washington gripes - "That's an excuse that those who got caught playing with fire are now using," he said. "The banks are being very cautious about to whom they lend. They're doing what they should have been doing in 2005 and '06 and '07."
What happens when "quantitiative easing" ends and the Fed stops buying Treasuries? Other countries' central banks, most likely, said Luschini. But they'll want higher interest rates, which tends to slow the economy.
Will China keep growing? "If China's economy slows" from 10% to 6% that's "bad news for countries that sell China what comes out of the ground, food and rocks" from Brazil, Africa, the Arab countries, says Stovall That means "tactically underweighting emerging markets."
Is Corporate America in trouble? No, "compaines have more than $900 billion in cash on their books, four times what they had 10 years ago, Luschini noted. "Investors are going to say, use this money," pay dividends, buy back shares, finance growth, "or just go out and buy somebody."