Photo: Bloomberg TV
Barry Ritholtz, CEO of Fusion IQ and author of The Big Picture blog, was on Bloomberg Surveillance with Tom Keene and Ken Prewitt this morning.The hosts asked Ritholtz what he thought about rates, given record low yield levels. Here is what he had to say:
Rates at this level are likely to be as attractive as it gets. You’re always thinking about these things in terms of probabilities. Is there a probability that rates tick down? Well, maybe they could go a little lower if we see QE5 and Operation Twist 2 and who knows what else.
But, statistically, at this level, at unprecedented low levels of mortgage rates, the risk of rates moving higher — and they actually did tick up this week for the first time in seven weeks — are better than seeing an appreciable move down. I mean, how much lower can mortgage rates go? Are you going to go to 3.7 or 3.6 [per cent]? That’s a possibility, but sliding higher is a greater risk at these levels.
Ritholtz weighed in on stocks as well. Here is what he told Bloomberg Radio about exposure to stocks:
You want to own the broad market. You want to own some emerging markets, some small caps, some tech, and some fixed income. All you can do is look forward and say, “Statistically, rather than trying to beat the market, if I am the market over the long haul, I’ll do well.”
That doesn’t mean you set it and forget it. That doesn’t mean during a secular bear market, you just buy and hold and close your eyes. We lowered our equity exposure about two months ago, and we’ve been slowly over the past four weeks bringing it back up.
And here are two stocks worth looking at.
We recently added Wal-Mart, which is now back at levels it hasn’t seen since January 2006. If the boys at ECRI actually are right and we do see a recession in 2013-2014, Wal-Mart is where the American consumer tends to end up when things get tight. You can look at Target also; Target is doing well as well.