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Source: Yahoo Finance

Yahoo Finance:

Ritholtz says one major reason stocks will continue to advance is the fact that there is an “enormous amount of professionals who are underinvested.” They will be “forced into the market” if they want to keep their jobs, says Ritholtz.

Ritholtz advises individual investors to have their own investment plan in order to avoid the pitfalls of an emotional response to market gyrations. Don’t “let your own emotions be your worst enemy,” Ritholtz warns.

He also recommends a diversification strategy that includes “non-correlated” assets so investors can limit their loses and not become a slave to what the market does “tick by tick.”

Ritholtz himself is overweight health care and dividend-paying stocks. He discounts concerns about a bubble forming in defensive dividend-payers.

“I’ve been hearing that for two years…the problem is your alternative is 1.8% in the 10-year Treasury,” he notes.

Ritholtz’s top picks include Berkshire Hathaway (BRK-B), Pfizer (PFE), DuPont (DD) and Visa (V), which has been a “runaway house.” He bought Visa between $85 and $120 a share and it’s now trading at just under $180.

“I wouldn’t tell you to jump in now,” says Ritholtz.

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9 Responses to “Ritholtz: “Give the Market the Benefit of the Doubt””

  1. Concerned Neighbour says:

    I always enjoy watching these snippets, but I take issue with two of your quotes:

    “You can’t go up 20% every four months.”

    Yes, you most certainly can. That $150+ in monthly central bank money (leveraged to the hilt by recipients, no doubt) has to go somewhere.

    “I’ve been hearing that for two years…the problem is your alternative is 1.8% in the 10-year Treasury,”

    True, but just because alternatives are crappy doesn’t make the remaining option any less crappy. My view is that being in equities in this environment means participating in a massive and ever growing bubble. You are betting that the central banks will keep the bubble inflated forever, or until fundamentals catch up.

  2. mrflash818 says:

    Appreciated the words about a 2055 investment goal to have funds for the grand kids, because that resonated with me.

    I am a long-term investor, in the sense I am doing the 17% to my 401k in a conservative growth fund with a retirement goal of US$1million.

  3. ZevCapital says:

    Congrats, Yahoo. Headlines are supposed to get you to read the article so I guess this would be defined as a good one. It does feel a little strange that the headline implies one thing while Barry actually recommends the opposite. If you sold early, emotions are begging you to buy here. The headline feeds on that emotion and so what if the last line is “i wouldn’t tell you to jump in now”.

    • I thought that headline was kinda funky — note my assistant Caitlyn posted this while I was traveling — I’ll change it to something more circumspect

  4. Peter Pan says:

    I’m not sure that relying on the words of assets managers (except BR of course) is any more reliable than the infotainment types. Won’t most asset managers just talk their book? Is that really good information for an investor?

    Then these asset managers don’t always agree. This conversation would’ve been a little more interesting if Doug Kass was at the table with BR. Don’t you think?

  5. Pantmaker says:

    Oooops…Yahoo may have just screwed your pooch with that misquote/title thingee. Barry Ritholtz just told everyone to “Invest in Stocks”. Sheeeesh. You look good by the way.

  6. ConscienceofaConservative says:

    I’m sure you’ve described many money managers and investors here, but I would not want my money with someone who is forced to chase the market. Investors an managers should be more focused on longer term records and risk adjusted returns.
    And food for thought, I checked out the current dividend yield on the s&p today on Bloomberg(close to 2%). The only way one could think it looks good is by comparing to the ten year which have their own issues considering Fed Q.E. and the duration mismatch. Stocks are not historically cheap.
    Buying into a long that is only occurring due to Fed action beckons the question if all these forced to buy managers will be smart enough to sell before everyone else does.