I just got off the phone with Joe Battipaglia, chief investment officer of Ryan Beck, who is a great guy to chat with when the stock market is plunging. That's because Joe, who isn't always 100% bullish, is usually bullish and is bullish now. He isn't at all perturbed by the now 220 point drop in the Dow (yikes! I'm almost afraid to look at it).
Here's a recap of our interview:
Amey: Joe, why is the slide today so steep?
Joe: Investors thought the Fed was done raising rates. Now the CPI is rising, so that has set investors back. That doesn't mean there will be more rate hikes. But the market has done well this year on the notion that the Fed had completed its work and now that has been taken away. So the correction is swift and it's not surprising it would be fierce.
Amey: Are you rethinking your market outlook as a result?
Joe: We're not put off by this correction. In fact we think it makes the kind of stocks we like more attractive. We've been positioned with 75% in equities, 20% in short-term fixed income (basically cash), and 5% in gold (that's been a very strong investment for us). We are betting on global growth and are more in large and mid-cap than in small-cap.
If you think about the future, it is about global growth and companies that that are going to pick up marketshare around the world. Larger companies may benefit.
Amey: I know you are a market strategist, not a stock picker, but what sectors do you like?
Joe: We like growth over value.Since we are emphasizing growth, we like consumer, healthcare, industrial and tech. We aren't as interested in financials and energy.
If you like Joe's line of reasoning, sounds like today could be a good one to add to your favorite big caps as they get cheaper. Blogging Stock names that seem to fit in with his thought process: Wal-Mart, General Electric, Microsoft, and Time Warner.
Write your questions for Joe in the comments section and we'll bring him back on Friday for an update.
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Reader Comments (Page 1 of 4)
5-17-2006 @ 3:52PM
herbert singer said...
My opinion is that a major monetary crisis has started.
I believe that the price increase in GOLD is the clue. Further the declining DOLLAR is another hint of a major shift in the global economy.
Fasten your seatbelts.
5-17-2006 @ 4:13PM
Dennis Wiegand said...
You do not like energy now for the long term do you think that it is a good sector to hold on to?
5-17-2006 @ 4:21PM
A.Albertus said...
I am listening to Joe and sticking with large caps in tech, consumer & industrial.
5-17-2006 @ 5:33PM
David W. Huston said...
Trouble is: it's not just a one-day plunge. It's a 4 out of 5 day fade and is consistent with annual reversals of the market. "Sell in May and go away" seems to fit.
5-17-2006 @ 5:48PM
randy said...
Is this the same guy that said "keep buying" when the market started going down in 2000? If I recall, he never stopped being a bull when the nasdaq was over 5,000 and watched it go to below 2,000. Am I missing something here?
5-17-2006 @ 5:49PM
Irving Hersh said...
Do you think that the riseing energy cost and the
and the increase of intrest rates if contiued.Will
bring the economy to its knees.Cause a strong recesion and rock the market.Like never before.
5-17-2006 @ 6:44PM
R.T. said...
You are absolutely right,randy!!This talking head knows nothing but buy,buy,buy!He is worthless as an analyst.
5-17-2006 @ 6:45PM
Glenn Walker said...
Joe, is a nice guy and allways bullish, i have followed him for over 20 years and never has had a bear day, as for the market, I think this is a correction but i am concerned about some issues like the dollar decline 5-6% in last month, may be the beginning of a 1987 type $ sell off, the world is getting tired of the usa deficits and wars .
5-17-2006 @ 6:52PM
Harry brown said...
Gold is a strong deterrent to Economic growth and once it is watched closely like Crude Oil the Dow will continue to struggle.
5-17-2006 @ 7:35PM
M Resnik said...
I have spent much time regarding DD on Apple Computer. Its product line, management, cash on hand, its growing favor with computer buyers, earnings . Growing favorable reviews by P.C analysts. If so why dramatic drop in price since first of year? Should I buy?
5-18-2006 @ 12:34AM
JC said...
I see a major shift. Oil is sky high and naturally pushing inflation, USD is sinking, deficits in the trilliosn, trade balance set to hit $1T for the first time in US history, a senseless war with a hard headed president, political uncertainty approaching Nov. election, negative view of the US worldwide. What's to like?
5-18-2006 @ 1:30AM
Jeffrey Tuck said...
Joe, Joe, Joe,
History does and WILL repeat itself. The stock market will crash again but this time, the newest,latest,and greatest Great Depression will ultimately erase the existence of the middle class. Say goodbye to 401s, jobs, cars, homes, etc. Multi-generational households will not be a matter of choice, but a matter of survival. Joe, be ready to explain yourself to your investors, when you lead them to the path of financial and emotional ruin. I wouldn't give you five cents of my money to manage. You are obviously driven by your own agenda. Lots of luck!
5-18-2006 @ 10:02AM
charles wasserman said...
It is a market correction as Joe says. As to the investment sectors he has chosen, I strongly disagree
because the consumer interest index is sliding down
and the price of oil and other consumer staples and
inflation is going up squeezing the consumer's ability to buy.
5-18-2006 @ 12:14PM
Judy Pratt said...
Joe, do ETF's hurt the stock market in any way? They don't have "buy backs" so are they a drag on the DOW?
5-18-2006 @ 12:35PM
Joe Lewis said...
Joe, your head is in the sand. Why would investors want to continue to buy DEBT? You should be 50% GOLD and 30% SILVER , then you would have a chance of survival. As it sits, you have 3 chances, slim, none, and fat.
J. Lewis
5-18-2006 @ 1:05PM
Michael Magri said...
Optimism is not a bad thing. My view is to get into the market, and stay in the market. I also agree with Joe that in a mature bull market, it makes good sense to focus on large cap value securities. There are many people that subscribe to this asset allocation. Market timing has never worked well, but a proper asset allocation with minor adjustments always works.
5-18-2006 @ 2:19PM
Haran said...
Joe Battipaglia said the same before the 2000 crash. Can we trust him this time? Investors should be careful and not take such comments seriously.
5-18-2006 @ 2:47PM
Sandee said...
Where does Joe think the metals market is going? He said gold was "good" for them; what about titanium
5-18-2006 @ 3:05PM
Ed Bohrer said...
Joe is very interesting, butusually too much skewed to the positive. What I see is the beginning of a recession driven by excessive credit, especially in mortgages. The real estate market is about to begin the biggest slide seen in the last 40 years due primarily to unrealistic prices fueled by absurd financing products
5-18-2006 @ 3:58PM
David Moyer said...
Hi Joe. I see the gas prices rising which is inflationay. In turn, the Fed will raise interest rates and many home owners will default on house payments and foreclosures will escilate. Why can't the Government put a ceiling on gas prices (oil companies may have to sell petroleum at a loss but they have heafty profits and can carry this). This would curb inflation, lower gas prices and (hopefully) end the gas price gouging that none of us like. Your comments?