"Market Monitor" -Erik Ristuben of Russell Investments
Friday, September 11, 2009PAUL KANGAS: My guest "Market Monitor" this week is Erik Ristuben, chief investment officer for client investment strategies at Russell Investments in Tacoma, Washington. Erik, welcome to NIGHTLY BUSINESS REPORT and your first visit as a "Market Monitor."
ERIK RISTUBEN, CHIEF INVESTMENT OFFICER, RUSSELL INVESTMENTS: Delighted to be here, Paul. Thank you very much.
KANGAS: Now many analysts and investors think the stock market has gotten ahead of itself in relation to the economy's rather mild recovery. What do you think?
RISTUBEN: I don't think it has. Now, obviously, the future is hard to predict incredibly accurately, but what we think the market has really done is recover from a disaster scenario from kind of March to mid-May. Since May it's been really beginning to forecast a recovery economically. Consensus has us at a fairly mild recovery, certainly versus historical standards. So we think the market's got it right. There are a lot of things that we're going to need to see in terms of positive economic data this quarter to confirm that it's got it right, but right now we think it's basically got it right.
KANGAS: Very good. Now what investment strategy are you telling your clients to follow right now?
RISTUBEN: Well, we're -- as you know, we're a well-diversified investor, but when we start looking at equities, we like equities. We think they're an attractive value in general. And there are some sectors within equities we very much like and financials and technology are two of the leading sectors in that area.
KANGAS: Financials and technologies are your favorites, right?
RISTUBEN: Yes, right now.
KANGAS: Yeah, OK, well, of course it changes, but how about some individual stock recommendations right now.
RISTUBEN: Well, in the financials, I'll give you two. I'll start with Goldman Sachs (GS) and Goldman Sachs has had a very good run recently.
KANGAS: Yes, it has, wow.
RISTUBEN: Yeah, very good. Really you look at that story, they have two of their largest competitors from a year and a half ago, Bear Stearns and Lehman Brothers, no longer exist. They have a steep yield on intervening interest rates in the short end. Cash is zero. They can lend and do business at a higher rate than zero. That's a good thing for anybody in the financial services business and they should be able to accumulate market share given the fact that their competitors are not in the space as much as they used to be.
KANGAS: And the New York exchange trading symbol is simply enough GS for Goldman Sachs. How about another one in that financial sector that you like?
RISTUBEN: Sure, same basic area. Another one is Wells Fargo Company; that's WFC. Wells is a beneficiary -- in some ways -- of the worst-case scenario that was priced into the market in March. Really, people were worried that the financial services sector would collapse and these banks would be worth nothing. They also were -- somebody who actually acquired a large bank in Wachovia, they bought that bank at fire sale prices. Since disaster has been averted, there's a lot of upside in terms of their ability to leverage the Wachovia assets on their balance sheet and they're still trading well below their three-year high.
KANGAS: Interesting, OK, we've seen two of your favorite financial stocks. How about that technology group? What do you like there?
RISTUBEN: We like, we'll give you Qualcomm, that's QCOM and Qualcomm is one of the principal hardware providers, chip providers for the mobile technology industry. So you're looking at things like Research in Motion, Blackberries and iPhones.
KANGAS: They get business from them all.
RISTUBEN: They get to sell to them all.
KANGAS: We have time for one more technology favorite.
RISTUBEN: We like Dell. I think everybody knows Dell is DELL. There is going to be a systematic restocking of replacement hardware, both at the consumer level and at the corporate level. We're already seeing that in some of the guidance that Dell is providing and it's going to be positive, we think, for them.
KANGAS: Interesting selection there, financial and technology. Erik, do you personally own any of the stocks you've mentioned or have other disclosure to make?
RISTUBEN: No, I own mutual funds that own these stocks, but I own none of them directly.
KANGAS: But indirectly you do own those four.
RISTUBEN: I do own them indirectly, yes exactly. I invest in our funds and our funds are (INAUDIBLE).
KANGAS: Very interesting. I want to thank you for being with us.
RISTUBEN: Thank you.
KANGAS: My guest Erik Ristuben of Russell Investment.
