Second Quarter Investment Pulse

Contributed by: Angela Palacios, CFP® Angela Palacios

We’ve been busy meeting with investment managers this past quarter.  It’s always great to dig into the latest research and get a fresh perspective and some new ideas.  Angela Palacios shares some of the most notable take-aways from our second quarter meetings:

Scott Davis, Portfolio Manager Columbia Dividend Income

It is always a pleasure to receive a visit from Scott.  We have had the privilege to meet with him several times over the past years and each time we seem to glean interesting information.  He was pleased and flattered to be recently named by Morningstar as one of their “Ultimate Stock pickers.”  We discussed several top of mind topics, starting with the potential upcoming interest rate increase by the Federal Reserve.  Scott told us he wished they would just get it over with and do the first one soon.  He stated that markets move so quickly these days you want to be positioned for this happening well in advance.

Scott is also growing increasingly concerned over companies that are issuing debt at low rates today to buy back stock.  The concern isn’t necessarily for now, but in the future when they become dependent on this debt and need to refinance that debt at much higher rates.  Some companies could be in a lot of trouble at that point.

Heidi Richardson, Head of Investment Strategy for US iShares

Heidi was also talking about a rate hike, among other things.  She gave her list of things to know and do.

5 things to know:

  1. Federal reserve should hike rates soon but she expects rates to remain low
  2. Central Bank divergences (while US and England are raising interest rates, Japan, Canada and Europe are lowering rates)
  3. She expects stocks to be a bumpy ride (low volatility of the past 5 years is over)
  4. US economy is only inching upward slowly (they expect GDP growth of 2.5% this year)
  5. Inflation is still very low and Europe will see deflation

5 things to do:

  1. Prefer stocks over bonds (although bonds are still an important part of diversification)
  2. Look overseas for investment opportunities
  3. Watch your step in bonds (be choosy as many look fully to overvalued and liquidity may be sketchy)
  4. Resist the urge to exit (fear of a bubble leads many to sit on the sidelines and wait to invest, but over time they expect the market to move higher)
  5. Seek growth in a low growth world (low rates on cash continue to hurt those holding it)

Jeff Saut, Chief Investment Strategist and Managing Director of Equity Research for Raymond James

Jeff presented at the Raymond James conference in April and gave us his stages of a secular bull market (which he believes we are in now): 

  1. Aftershock and rebuilding: this is the realization that you survived a bear market. Rebuilding is a sea change where stocks no longer react to negative news.
  2. Guarded optimism: bear markets redistribute stocks to the rightful owners (this is the stage he thinks we are in).
  3. Enthusiasm: fun stage of the bull market where generally everything you touch makes a profit.
  4. Exuberance: feelings grow as nothing can go wrong, he feels we have a long way to go before we get to this stage.
  5. Unreality: advanced stage of exuberance, frantic and chaotic, volumes pick up and there is a lot of turnover.
  6. Cold Water and disillusionment: bursting of the bubble.

Angela Palacios, CFP® is the Portfolio Manager at Center for Financial Planning, Inc. Angela specializes in Investment and Macro economic research. She is a frequent contributor to Money Centered as well as investment updates at The Center.


Raymond James is not affiliated with and does not endorse the opinions or services of Scott Davis, Heidi Richardson or the companies they represent. This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Angela Palacios and not necessarily those of Raymond James. The information has been obtained from sources considered reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Investing involves risk and investors may incur a profit or a loss regardless of strategy selected. Investments mentioned may not be suitable for all investors. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Past performance is not a guarantee of future results.

Raymond James is not affiliated with and does not endorse the opinions or services of Scott Davis, Heidi Richardson or the companies they represent.  This material is being provided for information purposes only and is not a complete description, nor is it a recommendation.  Any opinions are those of Angela Palacios and not necessarily those of Raymond James.  The information has been obtained from sources considered reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete.  Investing involves risk and investors may incur a profit or a loss regardless of strategy selected. Investments mentioned may not be suitable for all investors.  Prior to making an investment decision, please consult with your financial advisor about your individual situation. Past performance is  not a guarantee of future results.