Here's a (shameless) plug for an investment that will deliver high returns and buckets of fun and comradeship: a Forbes Cruise for Investors. We recently completed our best one ever: From Sydney to Auckland, and included a wild bike ride down Tasmania's Mt. Wellington and passage through the waterfall capital of the world, Milford Sound.
While at sea, guests heard talks and panels from Steve Forbes, fund managers Hilary Kramer, John Buckingham and Joe Battipaglia, and longtime Forbes columnists David Dreman and Ken Fisher. Since opposing viewpoints were represented--e.g., Fisher is bullish and Battapaglia is bearish--there was no consensus. But more than one speaker liked large and megacap U.S. stocks of companies positioned for global growth.
-- Joe Battipaglia is bearish for these reasons: Taxes, trade, regulation and dollar strength are all trending in the wrong direction. Nevertheless, Battipaglia is 70% in equities right now, choosing to not fight the tape. He thinks any stock trading for more than 11x cash flow is too expensive. His holdings include Cisco and HP. He expects to reduce the equity percentage to 30% to 40% later this year and move more into high-grade corporate bonds.
-- John Buckingham is market neutral but his Al Frank fund is all long, all the time, and has historically preferred small-cap value stocks. However, Buckingham thinks small-caps have had their run over the last 12 months and now finds bargains in large and megacaps such as Microsoft.
--David Dreman called the 2008-09 meltdown a depression but compared it to 1907, not 1929-32. He likes dividend-paying stocks that will benefit from coming inflation, such as BHP and Altria. Ever the contrarian, Dreman likes U.S. real estate, "the most despised asset class of all." Where? High-priced properties on the coasts and in the mountains.
--Ken Fisher says history favors a continued run of the now nearly 13-month-old bull. Fisher's methodology is to start with MSCI World Index and tinker with its country and industry weightings based on his own research. His goal is to beat the MSCI Index by two to three points a year on average, and mostly he has.
--Hilary Kramer recommends self-investing 1% to 5% of your portfolio if for no other reason than it makes you smarter about investments and more skeptical about the pros who manage your money. Unlike value investors Battipaglia, Buckingham and Dreman, Kramer is all about heat and momentum. It works for her, but then she lives in New York, is highly networked and has an intuitive feel for the market most of us will never possess. Kramer likes Goldman Sachs and Apple.
Beyond stocks, bonds and real estate, the trip to Australia and New Zealand was revealing for another reason. Australia's economy is doing well. The global recession only nicked Australia and, in a show of strength, Oz led the world in raising interest rates last year. New Zealand, on the other hand, is mired in malaise. The country's generous public welfare has caught up with it. Youth employment and suicide rates are at scandalous levels. The best and brightest young people light out for Australia and parts further--a crippling brain drain.
Australia is a daddy country; New Zealand a mommy country. Australians don't like having Aussies on the dole and the country's record with Aborigines is not great. In New Zealand there is no particular shame living on the dole. The country has tried hard, and fairly successfully, to bring the native Maoris to the table and strive for consensus. But this comes at the cost of the economic dynamism.
So which country--harder Australia or softer New Zealand--is doing the right thing for its citizens? You can guess my answer. I'd like to hear yours.
Post your comments below on any topics raised by today's blog. Fire away.
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