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May 2019 Update - Preserving Capital in Volatile Markets

June 10, 2019

 

Does Opportunity Beckon?

 

Two economists are walking down the street. One spots a $100 bill on the ground.

 

"Hey," he says to his friend, "There's a hundred bucks lying on the ground!"

 

"Don't be silly," the other replies, "If there were a hundred dollars on the ground, someone would have picked it up already!"

 

Academia likes to believe markets are efficient, but after the bond market action last month I am convinced that there are stocks to be bought that are like those $100 bills waiting to be seized.

 

Last month, 10 year government yields around the world declined on average by about a quarter of a percent. That might not sound like a lot, but with the U.S. 10 year Treasury bond only yielding 2.14 percent and the German 10 year yielding NEGATIVE 23 basis points (100ths of a percent) a move of a quarter percent is a lot!

 

Despite this decline in competing yields the S&P 500 declined 6% for the month of May. I get how the cyclical stocks that are most exposed to global trade tensions are down, but there are plenty of stocks in domestic, recession-resistant, recurring revenue businesses that mathematically should have higher valuations as a result of the bond yield decline.

 

Too often speculators are trading the stock market rather than a market of individual stocks.

 

 

About the Author

 

Manny Weintraub, CFA, is the President of Integre Asset Management, a New York-based registered investment adviser, that combines investments in industries benefiting from long-term trends with the use of active management to reduce risk. A former Managing Director of Neuberger Berman, where he co-managed more than $1.5 billion in U.S. equity assets, Manny is an experienced portfolio manager and contrarian investor. A graduate of the University of Pennsylvania, he serves on the boards of The Atlantic Theater, and North Country School – Camp Treetops. To learn more about Integre, please visit www.integream.com.​

 

© 2019 Integre Asset Management, LLC. All Rights Reserved. No part of this document may be reproduced, stored, or transmitted by any means without the express written consent of Integre Asset Management. For further information please see www.integreAM.com or contact the firm by electronic mail at info@integreAM.com.

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