2014 Morningstar Investment Conference
Dennis Stattman says,we think the best opportunities in the global markets today are in stocks. And really, stocks outside the US more than stocks inside the US. And in particular, the biggest opportunity we see, is in Japanese equity. With the currency hedged. Well, we like currency hedged, Japanese stocks. For, a bunch of reasons. Let's start with valuation. The Japanese stock market is at a big discount to the US Market. It's at a discount on, price to earnings. It sells at 1.2 times, price to book compared to 2.7 times for the US, it's at one third, of the price to sales ratio of the US market and offers a much more attractive dividend yield, than the bond yield in Japan. But in addition to great value, there're good things going on, on earnings. There's a very positive, monetary policy in Japan and we're seeing Japanese corporate managements. Pursue shareholder value, to a much greater extent than ever before. the, allocation that an investor, should have to cash, varies with the investor. At Blackhawk Global Allocation Fund we have some cash today. Almost 20% of the portfolio. But that's not because we're bearish on stocks, we're not. We think, the stock market looks okay. We are, very concerned about the outlook for the bond market, and so, a lot of that cash, represents what it takes to keep the duration, of our fixed income portfolio low. And to manage the overall risk of our portfolio. Well, we're concerned about the fixed income market. Because quite simply, coupons are low. The yield on government bonds, is low. And it's not very good compared to, the volatility of the bond market. And doesn't protect against the risk of higher interest rate. Nor does it reward, people for taking risk with inflation, which has already running at 2% year after year. Well, we can never be sure what the stock market is going to do. Today, stocks looked more attractive than bonds. And, stocks outside the US looked more attractive than US stocks. The big question mark about the outlook on markets, is what happens to monetary policy. And 18 months from now we could be seeing some tightening of monetary policy, in the U.S. but we think in Japan, monetary policy will remain favorable. And that's another reason, we like the outlook for the Japanese stock market.
Dennis Stattman says,we think the best opportunities in the global markets today are in stocks. And really, stocks outside the US more than stocks inside the US. And in particular, the biggest opportunity we see, is in Japanese equity. With the currency hedged. Well, we like currency hedged, Japanese stocks. For, a bunch of reasons. Let's start with valuation. The Japanese stock market is at a big discount to the US Market. It's at a discount on, price to earnings. It sells at 1.2 times, price to book compared to 2.7 times for the US, it's at one third, of the price to sales ratio of the US market and offers a much more attractive dividend yield, than the bond yield in Japan. But in addition to great value, there're good things going on, on earnings. There's a very positive, monetary policy in Japan and we're seeing Japanese corporate managements. Pursue shareholder value, to a much greater extent than ever before. the, allocation that an investor, should have to cash, varies with the investor. At Blackhawk Global Allocation Fund we have some cash today. Almost 20% of the portfolio. But that's not because we're bearish on stocks, we're not. We think, the stock market looks okay. We are, very concerned about the outlook for the bond market, and so, a lot of that cash, represents what it takes to keep the duration, of our fixed income portfolio low. And to manage the overall risk of our portfolio. Well, we're concerned about the fixed income market. Because quite simply, coupons are low. The yield on government bonds, is low. And it's not very good compared to, the volatility of the bond market. And doesn't protect against the risk of higher interest rate. Nor does it reward, people for taking risk with inflation, which has already running at 2% year after year. Well, we can never be sure what the stock market is going to do. Today, stocks looked more attractive than bonds. And, stocks outside the US looked more attractive than US stocks. The big question mark about the outlook on markets, is what happens to monetary policy. And 18 months from now we could be seeing some tightening of monetary policy, in the U.S. but we think in Japan, monetary policy will remain favorable. And that's another reason, we like the outlook for the Japanese stock market.
The yield on government bonds, is low. And it's not very good compared to, the volatility of the bond market. And doesn't protect against the risk of higher interest rate. Nor does it reward, people for taking risk with inflation, which has already running at 2% year after year.
