In his recent feature on CNBC’s “Market Watch”, Harry discussed the increasing stock unpredictability. This is one of the many times Harry was invited to talk about his market insight and as always, he never fails to deliver. Read on for the short transcription of the interview.
Transcription:
Larry: Can stocks break out of the current negative trend? Joining us to discuss, Harry Rady, fund manager at Rady Asset Management, and Brett D'Arcy, chief investment officer at CBIZ Wealth Management. Brett, start with you. Stocks are pricing in an economic stall, as Melissa read at the top of the show. What about the profit stall? I want to know if that's priced in, and is that the next hurdle ‑‑ profits?
Brett D'Arcy: Definitely, profits are a hurdle, but with the second‑quarter earnings that have come out, we have a good indication that we're going to get through that hurdle. As costs were cut from companies as long ago as a year ago, we've seen the margins expand.
I think that we're in a consolidation phase. If this August was any other August, we would blame it on the traders not being at their desks, but because it's coming off of a market correction of a year‑and‑a‑half ago, I think people are more sensitive to it.
What's going on in the market today isn't particularly troubling. If you were to give investors the chance in April of '09 to have a 50 percent return, and then a period of time that it consolidated, I think we would all take that. That's exactly what we've seen to this point.
Woman: Harry, is that true? The profits that Brett is talking about, are they backward looking and we're slowing further from here?
Harry Rady: I largely agree with Brett. This push‑pull between macroeconomics and the geopolitical issues up against positive earnings in general, frankly, I think it's healthy. It allows a shakeout for the lower quality companies to trade at lower valuations, where they should be. It'll take some of the higher‑quality companies with them, which is creating opportunity for long‑short investors like us. In an increasingly volatile, sideways trading environment, long‑short is the place to be.
Woman: Tell us what your picks are, then.
Harry: We're long some of the cheaper technology companies. I was going to talk about McAffee. We own it, and the stock got taken out. We own stocks like that. One of them is RIM. RIM is trading at nine times earnings. Everybody hates it. We think that they're not getting credit for the market position they have and the franchise they have.
About the Author: Mark Andrews is a business consultant and a writer. Often, he is interested with the latest trends, updates, news, and strategies related to business. Connect with Rady Asset Management at https://twitter.com/radyasset.Transcription:
Larry: Can stocks break out of the current negative trend? Joining us to discuss, Harry Rady, fund manager at Rady Asset Management, and Brett D'Arcy, chief investment officer at CBIZ Wealth Management. Brett, start with you. Stocks are pricing in an economic stall, as Melissa read at the top of the show. What about the profit stall? I want to know if that's priced in, and is that the next hurdle ‑‑ profits?
Brett D'Arcy: Definitely, profits are a hurdle, but with the second‑quarter earnings that have come out, we have a good indication that we're going to get through that hurdle. As costs were cut from companies as long ago as a year ago, we've seen the margins expand.
I think that we're in a consolidation phase. If this August was any other August, we would blame it on the traders not being at their desks, but because it's coming off of a market correction of a year‑and‑a‑half ago, I think people are more sensitive to it.
What's going on in the market today isn't particularly troubling. If you were to give investors the chance in April of '09 to have a 50 percent return, and then a period of time that it consolidated, I think we would all take that. That's exactly what we've seen to this point.
Woman: Harry, is that true? The profits that Brett is talking about, are they backward looking and we're slowing further from here?
Harry Rady: I largely agree with Brett. This push‑pull between macroeconomics and the geopolitical issues up against positive earnings in general, frankly, I think it's healthy. It allows a shakeout for the lower quality companies to trade at lower valuations, where they should be. It'll take some of the higher‑quality companies with them, which is creating opportunity for long‑short investors like us. In an increasingly volatile, sideways trading environment, long‑short is the place to be.
Woman: Tell us what your picks are, then.
Harry: We're long some of the cheaper technology companies. I was going to talk about McAffee. We own it, and the stock got taken out. We own stocks like that. One of them is RIM. RIM is trading at nine times earnings. Everybody hates it. We think that they're not getting credit for the market position they have and the franchise they have.
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