U.S. Markets closed

Valuations & Mood Down: Of Course It’s Time to Get in the Market Says Haverford’s Smith


In an industry filled with nuance, conditions and measured responses, it's not very often that we get such an unambiguous answer. With stocks rushing towards an annual high, many have wondered whether it's too late to participate in the rally. For Hank Smith, the Chief Investment Officer at Haverford, the answer is a ''no-brainer''. Of course you get in.

"The economy is expanding, not contracting. Corporate profits are rising, not falling. Balance sheets are fortress-like with record amounts of cash. Valuations are attractive, dare I say cheap, and sentiment is extraordinarily negative," Smith rattles off in the attached video. "People are afraid. They're panicked. Look at what they're doing. They're will to accept a zero return on fixed assets just so they get they principal back."

Clearly the flight to safety and appetite for more defensive sectors and stocks has been well pronounced, as concerns about Europe and China led to concerns about our own economy. It's a scenario Smith characterizes as ''unrelenting negative news" and one of the main reasons why he's not shying away from the stock market right now.

Another reason he's in, so to speak, is because of the explicit promises - and actions - of the Federal Reserve, an institution he sees as ''heroes" for their role in supporting the economy.

Of course that's not to say he's without fear. He's concerned about the looming fiscal crunch and budgetary imbalance that face Washington in next year and for many years to come. But even there, he takes an optimistic stance, predicting a mid-year, comprehensive tax and spending compromise (along the lines of those proposed under the Simpson-Bowles Report).

"I think that will be extraordinarily bullish for the economy and for the markets," he says, particularly on the jobs front, which he says has seen companies large and small ''hunkering down'' on hiring just in case things truly take a turn for the worse.