"Market Monitor"-Richard Steinberg, President of Steinberg Global Asset Management
Friday, August 07, 2009SUSIE GHARIB: Our "Market Monitor" guest tonight says the economy is not as good as the markets are reflecting. Joining us now to explain, Richard Steinberg, president of Steinberg Global Asset Management. Hi, Rich. Nice to see you again.
RICHARD STEINBERG, PRES., STEINBERG GLOBAL ASSET MANAGEMENT: Nice to see you Susie.
GHARIB: So the news on the job market was good today. We got a good rally. You're cautious. Tell us why.
STEINBERG: Was it good or was it just less worse? I think there is definitely a difference and I think that's an important component. Earnings estimates are starting to come up for next year. The Street is up like $75. Estimates are at $62. So we're working our way into a perfect storm on valuation which is basically that values are pretty close to full value even by next year's measures.
GHARIB: All right. So what are investors supposed to do? Sell into these rallies?
STEINBERG: I think if you were invested along the way, you were smart enough to buy when the market was very, very weak, you could take money off the table or if you're going to stay in the party maybe you should switch to a soft drink instead of staying at the party for too long.
GHARIB: You said to me earlier today that investors are not feeling enough fear. Tell us what you mean by that and what's your advice?
STEINBERG: The psychology in the March lows was get me out, just complete and utter panic especially for people that are relying for retirement money. Now we're seeing the opposite with greed coming into the market and you have a get me in mentality. Momentum is taking this market up and history has shown and our experience has shown that these momentum trades typically don't end well and we would expect at least a pullback to 950 in the S&P.
GHARIB: Let's look at your stocks that you recommended at the beginning of the year on January 2nd and you have done really well, I've got to say, the performance has been fantastic. Transocean (RIG) and Teva Pharmaceuticals (TEVA) both performed well. Do you still own them?
STEINBERG: We still own both. RIG, which is Transocean, the fundamentals are still excellent as well as in the generic business for Teva. We would continue to hold both of them and we do.
GHARIB: All right. Let's switch the graphic here to Teva so we can take a quick look at that because you have here CRH (CRH) which was your Irish cement company that didn't do as well. Do you still own that?
STEINBERG: We sold that in February. We stopped ourselves out around the 19 level. It's moved better, but there are problems in Ireland and we wanted to just move out of the way.
GHARIB: There is Teva now. That was a good performer. What about Pro Shares (TBT), the ETF of the 20-year Treasuries? Performed nicely, what's your view on that?
STEINBERG: That's actually double short the Treasury and it's a good hedge for clients that have long bond exposure, but it's a speculative vehicle and it should be used only to hedge a portfolio, not on a directional bet.
GHARIB: All right, Rich, let's look at your new picks that you are suggesting tonight. At the top of the list, you have an ETF -- a Brazilian ETF with the ticker symbol EWZ that trades on the New York Stock Exchange. Tell us about that one.
STEINBERG: This is a basket of all Brazilian stocks. Brazil still has fantastic fundamentals going. It's trading at about 10 times next year's earnings with 20 percent earnings growth and there is 180 million people there, very resource driven. We think that Brazil still has great upside.
GHARIB: And it's had a really nice move on that stock. What's your target on it?
STEINBERG: I think you see another 15 percent from here.
GHARIB: OK. Let's move to the next one NLY the ticker symbol, Annaly Capital Management. What's the story there?
STEINBERG: This is a mortgage REIT, very, very conservative management. They invest in triple-A government mortgage paper and then they lend the money out. Credit spreads for them are great. It yields 14 percent. We have a $22 target. It's a very, very well run business.
GHARIB: Moving along, a convertible bond index ETF, CWB on the New York Stock Exchange. What's the attraction?
STEINBERG: The attraction here is you can kind of have your cake and eat it too. You get some interest from the bonds that are underlying that and if the markets continue to do well, you get a convertible kicker into equity and I think you probably have another 10 percent upside to this index. It's also an index that's very hard for people to buy individual bonds in.
GHARIB: We have 45 seconds left. Can you tell us about your last pick, SH? It's an ETF for the S&P 500 index.
STEINBERG: This is the opposite way that the S&P works. I own it personally. We own it in the firm. And if you're concerned about the market, it's a good way to start to take money off the table without creating short-term gains.
GHARIB: Rich, you said you own this one and your firm owns SH. How about the other three stocks you recommended?
STEINBERG: We own all the recommendations. I only own SF personally, though.
GHARIB: All right. Thank you so much for coming on the program. Have a great weekend. Great to see you.
STEINBERG: Take care.
GHARIB: My guest tonight, Richard Steinberg, president of Steinberg Global Asset Management.
