Jamie Cox, the managing partner for the Harris Financial Group, may not see a huge move ahead for the tape, but that doesn't mean he's bereft of notions for portfolio management.
Cox thinks Nesto's "sell in May trade has already happened," citing a muted, even bullish, reaction to yet another bad round of economic data on Tuesday morning as evidence of a stock market that's somewhat impervious to the News It Knows (the economy is lousy and not getting much better).
That being the case, Jamie advises picking away on the long side while keeping an eye on the S&P 500 technical levels at 1,331. In a worst case scenario: "Go below 1,300, and definitely pull the rip-cord (by getting out of stocks)," says Cox, who has a year-end target on the S&P of 1,380.
With a 40-points-up, 40-points-down outlook, Cox is looking to make money by rotating sectors. He sees money trickling out of money markets and into utilities as something of a weigh station. The two names he mentioned, Dominion (D) and Duke Energy (DUK) offer attractive yields and compelling valuations, regardless of political headwinds.
Where Cox and I parted ways was over Ma Bell (T). Cox says the wireless transition is largely a done deal for the telcos, leaving them wireless plays able to charge for data. He notes that the average home telephone bill 10 years ago was less than half the average cell phone bill today. That's not a trend likely to change. While I'm willing to concede his point from where I'm sitting, AT&T is a gang who can't shoot straight. The company overbid for German assets and is now caught in FCC hell, it made no money despite having an iPhone monopoly for years, and the industry is an endless game of competing by spending the most on your network and fighting on price.
Rising expenses and lower margins is a bad business deal, even Cox concedes, though he is quick to add that he feels a reduction in the competitive environment would give AT&T and Verizon (VZ) more pricing power (which is pretty much what the FCC is saying).
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