Discussing Greece’s future, Europe’s woes, and where’s he’s putting his money to work, with Mario Gabelli, GAMCO Investors chairman/CEO.
Gabelli is bullish and is buying stocks.
Video followed by full transcript:
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heavyweight investor mariogabelli has called europe an experiment, quote there. and he says you need a marshall plan for europe. joining us is mario gabelli. great to see you again as always. always a privilege to talk about stocks. i want to get to your strategy of being long for so long. but first let me get your take on what’s going on in greece, what’s going on in the euro zone, all these developments and yet the market’s up 200 points. the markets fluctuate, go up and down, shorts are repositioning themselvesconstantly. what we’re looking to do is what wayne gretzky did and that is figure out where the puck is going to be — where is the market going to be a year and a half from now. it’s not only what we make but what we keep. we’re sensitive about taxes.europe has been a work in progress. clearly the banks are theproblems. the banks have invested in their own country’s debt.it’s been cross-collateralized. and a chain is no stronger than its weakest link. that is the credit default swaps and the american banks have ensured that. chuck schwab made an interesting point earlier. he said we’re talking about a country with 10 million people, a country that has a very small gdp relative to the rest of the world and yet greece is dominating the headlines.well, it’s partly because the press doesn’t go back to thesubstance of the credit default swaps. you pointed it out with regards to the real issue and the transparency and the issue on the banks. but it’s not a major dynamic except for that other element. then the question is, will the speculators go from shorting greek debt to doing something else. you’ve had a strategy in place for 30 years. you have been long only for 30years. how do you stay long only in an environment where you have situations like greece, situations like the ecb andeverything else sort of dictating where this market goes? we buy good businesses that have pricing power that can growassets. for example, this week i was down in las vegas, our 35th annual — in 1977 we started buying for clients genuineparts. if you put $1 million in, they’ve never had a year in which they didn’t raise the dividend since 1948. no debt on the balance sheet. they sell products that if inflation picks up, they’ll do better. if inflation doesn’t pick up, they sell parts for cars –there are going to be 1 billion cars in the world. there’s 240 million in the united states. how do we make money? airplanes are getting older. people except you are getting older. we need to look at body parts. a lot of things we make significant returns on over the next three to five years. you’re a serial stock picker.you look at the big trends. you know the rest of the world is growing. you’re looking at cars, 1 billion cars. what other mega trends are you looking at? they’re not necessarily mega trends.they’re obvious trends. when i went to china in 1981, we went to see car fa we look at the intrinsic value, what’s it worth, what’s it out going to be worth in five years? we are blessed in america with executives that come to work every day to make clients money. and yet we have an environment economicallyspeaking that is fragile. you have the jobs number outtomorrow. do you think we’re going to continue to see sort of rough data in terms of the economy and is that going to drive anything? yeah, look, the whole world is doing through de-leveraging. the united states consumer is being de-leveraged.the state and local governments are being de-leveraged. the united states government itself. we got lazy, we lost our focus.we go back to the core that made this country great, which ismeritocracy. you have to have an electrical fence against those boys from wall street and you have to beat up on them for what they did. and you’re doing that and it’s working. what about financials? is there an area of the market that you want to avoid, mario gabelli is not going to touch at all? we roam everywhere.but where we have our strength and our core competency, money managers, t. rowe price fell off. $50 trillion dollars ofequities, $75 trillion of debt, $125 trillion in the world and even the biggest company, larry fink’s blackrock only manages about 2.5%. so the gaining share of market by coming to work every day, executing, delivering to clients, helping them besuccessful — in addition to money managers, we like the trust banks. bottom line, you see a market like monday and tuesday of this week, down 600 points, that’s not going to faze you?we’re all human and we always say, what can go wrong, what can create that — but i was there in 1987. and i knew what was happening and it was interesting times. you couldn’t put trades through. i was there in 1928. i was there in 1893. you have these dynamics. but over the next 50 years, we’ll do quite well.over the next 30, 20, quite well. over the next ten weeks, i don’tknow. always a privilege to talk about stocks. mario gabelli, thank you very much. mario was not there in 1893. he looks better than that.
