Skip to main content
MENU
Subscribe
  • Sign Up Free
  • LOGIN
  • Subscribe
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Face to Face
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2023 Defined Contribution East
    • 2023 ESG Investing
Breadcrumb
  1. Home
  2. INVESTING & PORTFOLIO STRATEGIES
November 21, 2016 12:00 AM

Market's post-election moves leave little room for bargain hunting

Investment veterans discuss that, and other investment trends

Barry B. Burr
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    John W. Rogers Jr.

    Longtime portfolio managers making up a roundtable assembled by Ariel Investments LLC expressed disappointment that the stock market downturn following Donald J. Trump’s victory was short-lived before a rebound the day after the presidential election, leaving little time for the bargain buying opportunities they had expected.

    “This morning, I was somewhat disappointed the market didn’t collapse … when I got in,” said Robert S. Bacarella, chairman and president of Monetta Financial Services Inc., Wheaton, Ill., at the panel discussion Nov. 9 in Chicago. “By the end of the day, the (Dow Jones industrial average) was up 200 points.”

    John W. Carey, executive vice president of Pioneer Investment Management USA Inc., the Boston-based unit of UniCredit SpA, Milan, said: “That was one of the most fleeting opportunities to buy stocks at a bargain I’ve ever seen.”

    John W. Rogers Jr., Chicago-based Ariel chairman, CEO and chief investment officer, said, “We had this opinion that there could be a significant downturn. … So we prepared for it. Our thinking was we’d be coming in today (to work) having a chance to buy bargains and buy wonderful companies that would be on sale because of the temporary downturn in the marketplace.”

    The discussion by four panelists, brought together because they have been portfolio managers of their flagship mutual funds for 30 years, drew an audience of some 250, including asset owners, investment consultants and other investment managers.

    Health care and beer

    Investment trends they discussed included:

    • market opportunities and risks of Trump administration polices;

    •the shift toward more active portfolio management from index funds; and

    • rules for proxy access, enabling long-term shareholders to use corporate proxy materials to nominate corporate directors.

    On market opportunities and risks from the new administration, Mr. Carey, referring to Mr. Trump’s platform to rewrite trade agreements, said, “If there are changes in trade policy over here, there will be responses overseas.”

    In an analogy, Mr. Carey recounted a “story about a French general, who was said to have taken into account everything except the presence of the enemy in planning. So we just don’t know what kinds of responses some of the changes in trade policy could have and what the implications could be for companies” as investments.

    Mr. Bacarella said, “It’s a little too early to tell … what the new president will do in terms of his Cabinet and direction … and how to adjust an investment strategy. … America has voted and they basically want change, and when you get change in the mix, it concerns Wall Street. We get a lot of volatility.”

    Mr. Rogers said: “We have changes in leadership, changes in presidents, changes all over the world. … We have this upward bias to the market. The economy recovers. We recover and have a very good experience in the long run. If you are thinking long term, you aren’t going to get swept up with this short-term noise. … The economy is recovering … and it’s not based on who happens to win the presidency in the short tem.”

    The Trump presidency will bolster fiscal policy, Mario J. Gabelli, chairman, CEO and chief investment officer, value portfolio, at GAMCO Investors Inc., Rye, N.Y., said, leading Mr. Gabelli to “want to own anything to do with infrastructure” and buying military-related stocks.

    Looking at longer-term investment trends, Mr. Gabelli said he favors health care and beer. Mentioning the aging of the populations in America and around the world, Mr. Gabelli said, “We have to do preventive medicine” and recognize “the notion of health and wellness.” In addition, Mr. Gabelli said, “There is a high probability we will continue to consume liquid products like beer, wine, soda.” Also, he sees cybersecurity, robotics and artificial intelligence as potential investment trends. He didn’t mention any companies.

    On the economy, Mr. Carey said, “The jury is out whether the low interest rates have enhanced growth. Somewhat higher interest rates would encourage companies to work harder making investments to provide better returns. … Rates have been too low for too long.”

    'The decade for stock pickers'

    On active vs. passive management, Mr. Rogers said, “This is going to be the decade for stock pickers. … It’s been a long trend we’ve gone through where active mangers have underperformed. We know in 30 years of doing this … we have gone through these waves. Things become very popular, very hot and everyone follows that concept. What’s worked yesterday gets everyone excited and people give up on what’s not working and often that’s where the opportunities are.”

    “When the market finally turns, people (will) realize a lot of companies are mispriced and (bought) for non-fundamental reasons,” Mr. Rogers continued. “They are buying them because they are part of an index fund. Those of us who are buying true businesses and true cash flows and (at) the right price will be rewarded. … So this is going to be a great period for the next 10 years for those who stand away from the crowd and not follow the indexing herd.”

    But Mr. Rogers also said, “I’m a believer … the markets are extraordinarily efficient. … After 30 years of doing this, I’m more convinced very few active manages can outperform. For most people, putting money into indexes makes sense or having a satellite of index funds makes sense with some active managers around the satellite. But trends go in waves. … You have a 10-year period where 80% plus of (active) managers underperform. Everyone gets convinced active management is dead. … This has gone way too far. … More of us (active managers) will have our day in the sun. But over the long run, indexing is going to have a place in most core portfolios because this is a very difficult business to outperform in.”

    Mr. Gabelli said index fund mangers “don’t know the companies they are investing in. We are buying a business. We’re buying a CEO … and we try to dig into what is (a) business worth and where it is going. … They are not doing that. … It gives me an edge when the markets give us these opportunities.”

    On corporate governance, Mr. Carey raised concerns about index funds being eligible to nominate directors under proxy access at lots of companies “that they really haven’t studied or learned about. They bought (the companies) because they were in an index.”

    Mr. Gabelli called proxy access “one of the dumbest new rules I’ve seen. … When I talk with the guys at (an index fund), they don’t have anybody focused (on companies).” They rely on corporate governance research firms, he said.

    In addition, Mr. Gabelli criticized the Sarbanes-Oxley Act of 2002, aimed at stopping fraudulent corporate accounting, for adding to the cost of accounting and internal compliance at his company, which is publicly traded. ”When we go to board meetings, instead of talking about risks, we talk about process and checking the boxes.”

    Related Articles
    Investment pros share lessons learned in 30 years of work
    Investment pros share lessons learned in 30 years of work
    Recommended for You
    More funds testing water on crypto-related assets
    More funds testing water on crypto-related assets
    Money managers eager to make leap to opportunity zone investing
    Money managers eager to make leap to opportunity zone investing
    Index investing: Not as passive as you might think
    Index investing: Not as passive as you might think
    The Institutional Investor's Guide to ESG Investing
    Sponsored Content: The Institutional Investor's Guide to ESG Investing

    Reader Poll

    January 25, 2023
    SEE MORE POLLS >
    Sponsored
    White Papers
    Show Me the Income: Discovering plan sponsor and participant preferences for cr…
    Morningstar Indexes' Annual ESG Risk/Return Analysis
    The Future of Infrastructure: Building a Better Tomorrow
    Outlook 2023: Opportunity in a volatile world
    Research for Institutional Money Management
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    December 12, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Face to Face
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2023 Defined Contribution East
      • 2023 ESG Investing