Name: Here's the Best Investing Advice for 2017 From Fortune's Experts
Uploaded: 2016-11-30
Duration: 6 min 48 s
Description: Check out what our panelists had to say at this year's Investor's Roundtable.

[ SOUND ] [ BLANK_AUDIO ] Looking ahead at 2017, Heather, where do you see the greatest opportunity and maybe the biggest risk? One thing we haven't talked about today is the significant rise of populism and sort of what that has meant in terms of political outcomes. And two recent examples clearly The Britexit outcome earlier this year. The unexpected Trump victory. And as we look forward to 2017, there are two important elections in France and Germany. And there's been a pretty significant rise In nontraditional parties, who are getting a fairly significant portion of the vote. And so if we continue to see this rise of populism impacting political outcomes, I do think that could be a potential source of volatility in the markets. You asked about our favorite idea. Our favorite idea right now is, we talked about over the course of the discussion, we still believe equities offer the best risk adjusted return in this marketplace. And our favorite strategy is a buy rate strategy, where you stay invested In the market overall. But you right call premiums to generate income, for your portfolio. And in a mid single digit return environment, the Birite will outperform the S & P 500. 80 percent of the time at lower volatility. Good to know. Krishna what about you, where do you see the biggest opportunity and the biggest risk in your head ?>> So I would kind of take off from there where Heather was talking about risk and kind of turn it into an opportunity. That is the fact that monitoring policy couldn't get us to our destination. I think was pretty obvious to everyone. And what changed in late 2016 was the potential of that dialogue changing meaningfully. So, a Brexit, a Donald Trump effectively Brought to the world the notion that we have to do something dramatic on the fiscal side. And if that actually comes about, then we have the potential of breaking out of some of these structural issues that we have been facing for a long time. So I would view that As a political opportunity. It of course has some ensuing risk but it is really a ground breaking turn that we are taking from a political standpoint. And before 2016 it was virtually non existent on a global basis. And the risk is something along the same lines that is While the outlook for growth has improved, there is a potential that the Federal Reserve gets forced into tightening much sooner than the gradual talk that they had been talking for a long time. And as a result, we end up with a recession in 2018. Three eggs and a stumble. Yes. And do I consider that to be a likely outcome, no. But it is a risk scenario that I have to incorporate in my investing. Sure, thanks. Sarah, how about you, best opportunity and biggest risk. Yeah, I'm gonna start with the negative and end with the positive, that's how I was trained. Yes. [ LAUGH ] Risks, the biggest Risk that we face as fundamental value managers, in our developed market strategies, and funds, is that bond yields recede, and that would be because this reflationary environment dissipates, and it looks as if we're going back into a period of economic malaise. That would be bad news for value stocks, in general And opportunities are they current momentum that behind it. They used that word about the values talking so I'm almost hairy see. But behind the price momentum the fact they investor are now seeing that banks, industrial some of this other Interest rate sensitive stocks are moving upward and they continue to buy them that's where we wanna be positioned. Because we think that's the lowest risk trade out there. Owning undervalue companies that are paying increasing amounts of their earnings out in dividends. So their clients are getting paid to wait for future performance Sebastian, how about you? Biggest risk, interest rate risk. We've just been through this environment during which the ten year bond yield, yielded less than dividend yields on stocks. This is very unusual by historical standards. Post election, they've come back. Close to parody. But this has led some commentators to say well, it's an upside down world. Rates keep coming down, people are buying bonds for capital gains. And they're buying stocks for income. Interest rate risk means that this could revert pretty quickly. So, We're worried in particular about interest rate risk outside the US, given how low rates are to begin with, even at the moment following the recent spike in rates. So we've been bringing money back from outside the US into our bonds, into the US. in a sense, that's an opportunity. We take a six to 18 month horizon. And we look at relative valuations between assets classes. So out of U. S bond into U. S bonds to hedge some of that and to recognize that somebody inflation interestingly might not be priced into tips That might be the opportunity at the moment. Tips break even around 1. 9 % up until recently and actual CPI running at 2. 2. So we think there's room for that gap to narrow and taking some positions in tips. Great! And how about you? We've talked a lot say about how innovation and technology here in the US and globally, Is really a driver for lifting mini companies that we thought of is old economy, suddenly leaning into new economy. My biggest concerns are in [ UNKNOWN ] Uh- huh Immigration, the ability to globalize this economies. At the start, with entrepreneurs together. I'm not worried about the entrepreneurs themselves. As you may recall, Apple and Microsoft were started in '75 and '76. We don't want to go back to that economic time or presidency. But, we also have rising education costs and student debt. And that's been left off the table in any discussions, but I think it's a, Impactful issue for the US economy specifically and for the entrepreneurs that are driving the economic force forward. [ SOUND ] [ BLANK_AUDIO ]

Here's the Best Investing Advice for 2017 From Fortune's Experts

Check out what our panelists had to say at this year's Investor's Roundtable.