It wasn't that long ago that Gordon Gekko's "greed is good" anthem was the unofficial creed of Wall Street. And yet today, with stocks up 30% in the last year and setting record highs almost daily, at least one investing professional insists those money-lusting ways of yore are gone.
"We are a long way away from greed," says Hank Smith, the chief investment officer at Haverford, in the attached video. "We think we are only half way into this secular bull market," he adds, calling the March 2009 market trough "a generational low."
That's not to say Smith isn't expecting, or even wanting, to see a healthy pullback in what seems like an otherwise unstoppable rally. Even so, this Philadelphia based money manager says people need to be prepared and patient for what he says is an ''inevitable pullback or maybe even a correction." That's Wall Street parlance for a 5-10% retreat or even something more sinister that would shave 10% or more off of the market.
"Confidence is only slowly starting to creep back into the market," he says. "There was fear back in 2009, but we are not even close to exhibiting greed here." It is worth noting that stocks have now risen more than 150% in the four and a half years since the depths of the financial crisis.
As far as advising would-be investors on what they should do now that stocks are at record highs, Smith sticks to his firm's bread and butter philosophy and suggests any sidelined money that's looking to get invested ought to be moved towards blue chip stocks that pay above average dividends.
"There's still plenty of opportunities with high quality, financially strong, blue chip companies," he says, noting numerous opportunities, in every single sector, to own stocks that carry dividend yields that are not only greater than prevailing bond yields, but are growing over time. "That's a win - win in our opinion."
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