"Market Monitor" -Robert Doll, Vice Chairman & Global Chief Investment Officer at Blackrock
Friday, November 07, 2008SUSIE GHARIB: Our "Market Monitor" guest tonight says even though the nation has a new president, the stock market is facing the same old problems. Joining us now, Robert Doll, vice chairman and global chief investment officer at Blackrock. Hi, Bob.
ROBERT DOLL, VICE CHMN. & GLOBAL CHIEF INVESTMENT OFFICER, BLACKROCK: Good evening, Susie.
GHARIB: Bob, what did you get out of the speech and press conference of President-Elect Obama today? Did he say anything that will make you rethink your investing strategy?
DOLL: Not really, Susie. I think he said a lot of the things that we would have expected him to say. That is, we've got problems. I've got faith in the American system to get things fixed, but we've got a lot of work to get there. We need some stimulus. They are the things he talked about and we would have expected had we scripted him that that's what he would have said so no big change.
GHARIB: It was a volatile week for stocks since the election. How do you think the market is going to perform during the first presidential term of Barack Obama?
DOLL: Well, I think it a lot depends on what happens in the early days. Can we dig ourselves out of the mess we've put ourselves in and that starts with a healing of the financial system so it operates normally. Good progress there. I don't think the new administration has to do a whole lot there. The issue is going to be the recession -- how long, how deep and then past that, what about the deficit, what about tax policy? And the markets will be watching closely to see Barack Obama's moves on those issues.
GHARIB: And still you're saying that this is a good time for investors to put new money into the markets. Why are you saying that and what advice do you have for investors?
DOLL: I think, Susie, that I'd start by saying we still think you need to keep your seat belt on, but maybe it's safe to take your shoulder harness off. What we mean by that is the biggest problem we had is the system just wasn't operating normally. You reported in some of your shows about corporate treasures not able to roll their commercial paper as an example of that. I think we're past the worst of that and that's what causes us to say there's a ray of hope here. The problem we still have is the recession. But from the peak last year to the trough on October 10th, the U.S. stock market fell almost 50 percent. That's discounting a lot of bad news and a pretty deep recession. We think we'll get a tough recession, but our view is with the yields having moved up on stocks, with a return on cash near zero, investors are very risk averse. That's usually a good time to slowly but surely dollar cost average back into the market.
GHARIB: So let's get some of your recommendations for tonight. You have Johnson & Johnson as your first pick. It was up nicely today, ticker symbol JNJ. Tell us why you like it.
DOLL: First of all, we like health care, Susie. We think it's one of the defensive areas that should do reasonably well in a difficult economic environment. Why JNJ? Their product pipeline is better than most pharmaceutical companies. They have a breadth of products aligned and services. It's not just a pharmaceutical company. It's not just a health care services company. The company has also done a great job over the years getting a good return on capital, return on equity, we would argue one of the best managed large health care companies. We like its diversification. We like its valuation.
GHARIB: All right. Let's talk about Hewlett-Packard (HPQ). Why do you like that?
DOLL: Technology is an interesting concept. We think a lot of technology companies learned lessons the hard way after the bursting of the tech bubble in 2000 and many, like Hewlett-Packard are running their businesses we would argue far more conservatively. You see that in their balance sheet and their income statement. This company, Hewlett-Packard, does a great job at growing its revenue in difficult times in a globally diversified book of business. It's very attentive to their cost lines and we think doing a better job than most in this difficult environment and they've also shown that they can make acquisitions, Electronic Data Systems the most recent one. We think there will be good news coming there.
GHARIB: We have time for just one more, ExxonMobil, which by the way, on our chart here, it's mistaken. It was up $4.39 today. XOM is the ticker symbol. Quickly, can you tell us why you like ExxonMobil?
DOLL: Sure, we think ExxonMobil has almost as much cash on its balance sheet as there is in Fort Knox. A very conservatively managed company, a powerful mix of businesses, well managed. And at these oil prices and at this stock price, we think Exxon's a good place to be, good yield, good cash flow.
GHARIB: All right. And can you tell us for disclosure reasons, do you have any -- do you own any of these stocks?
DOLL: None personally but all in the accounts that we manage.
GHARIB: All right. Bob, thank you so much. Thanks for coming on the program. Have a good weekend. My "Market Monitor" guest Robert Doll, vice chairman and global chief investment officer at Blackrock.
