Beginning tomorrow, April 25 at 7:30 p.m.(ET) on WLIW21 (New York) and nationwide on public television (check local listings**), “Consuelo Mack WealthTrack” features an exclusive TV interview with “Great Investor” and small cap pioneer Chuck Royce, Director of Investments & Portfolio Manager at The Royce Funds. He explains why a market correction is in our future and why quality companies will lead coming out of it.
“WealthTrack” Anchor & Executive Producer Consuelo Mack says, “This has been an unusual five-year period in the markets — it’s been a “straight-line” from the 2009 bottom up — making returns look spectacular in an “artificial” slice of time. Royce says this won’t continue forever, the markets are cyclical.”
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Watch a preview of Consuelo Mack WealthTrack’s exclusive TV interview with Chuck Royce:
Mack explains: “Since the market lows, more speculative stocks have done well, fueled by the extraordinary easy money policies and low interest rates of the Federal Reserve. Companies that were losing money were able to refinance and their stock made big gains, while quality companies, which did not need to refinance, lagged. With the Fed tapering its policies, we have now reached a turning point where quality is taking the lead.”
Chuck Royce on index funds and ETFs:
“They are the new kid on the block. They work well in markets of exactly the kind of market we’ve had, a straight-up market. A straight-up market is ideal for passive investment. There is no corrections to worry about. There is no cash to worry about. You just stay fully invested and you do very well because the market does very well. Now, that market is over. That particular phase of markets are over, and I believe the glamour around ETFs will fade as we move into a more normal volatile market environment.”
Chuck Royce on how to protect principal as an active manager:
“Active managers perform a wonderful role. They should be risk managers. They should be taking into consideration at all times the risk/reward of the investments they make. They should think about how much cash position is appropriate for the market cycle. Obviously a passive system doesn’t do that, so I very much believe that active management, especially in the small cap universe, is the only way to go. There are many, many active managers. We’re one of them. I expect them to do a lot better in a lower return environment.”
The full interview will be available after tomorrow’s broadcast premiere at wealthtrack.com.