Discussing how to buy in volatile market conditions and the investment banking market, David Katz, Matrix Asset Advisors CIO, and Charles Bobrinskoy, Ariel Investments vice chairman & portfolio manager.
David Katz and Charles Bobrinskoy: Psychology of market better
i think the market has demonstrated over the last week or two it really is impossible to try to time this market. it’s impossible on a day-to-day basis to figure out what’s going on. and we would definitely try to focus on a longer term view, at least six to 12 months, set that time frame, not chase up days like today and do your buying on the days it looks like everything is coming to an end in the market selling off a lot. it does seem, though, david, like we have some stimulus talk in the market. you have inflation data in the eurozone looking like the ecb may be pressured to act and headlines yesterday on the nikkei about the japan economy being weaker and maybe the japanese need to do more stimulus. do you think the buying is on more money coming into the market from central banks? again, difficult to look at. we think the market sold off last week on geopolitical fears. even though the geopolitical news has not been good it raling in spite of that. we don’t know how much psychology is getting better after last week’s sell-off. now three data points from the banking sector, loan growth weak, the consumer isn’t borrowing a whole lot and corporate activity is lack luster as well, but when you look at bank of america you see a strong investment bank and i’m wondering if you think that there are signs of life in the investment banking market? actually absolutely. here in chicago we had two multibillion deals, novene got sold, Zebra Technologies Corp. (NASDAQ:ZBRA) buying Motorola Solutions Inc (NYSE:MSI)’s business for $3.5 billion. we think m and a activity will pick up, ipo activity is excellent. we have a lot of companies thinking about stock issuance, the investment banking part of the business is great and why we like Goldman Sachs Group Inc (NYSE:GS) and Morgan Stanley (NYSE:MS) and Lazard Ltd (NYSE:LAZ). one of those boutique banks went public today, Moelis & Co (NYSE:MC), up strongly in its debut, even though it priced below the range. would you be a buyer of moelis in today’s market? it is a great name. i do have to say when ken moelis is selling i don’t like to be a buyer because he is a very good timer of sales. so we like morgan stanley, lazard and goldman a little better at this level.