HOW ABOUT THAT.
>>> STAYING ON YOUR MONEY, LOOK
WHO'S HERE.
A MAN THAT I HAVE KNOWN FOR 35
YEARS, IF NOT 40 YEARS.
ED, IT'S GREAT TO SEE YOU AGAIN.
>> MY PLEASURE INDEED.
STUART: AFTER ALL THESE YEARS, I
READ YOUR STUFF AND YOU WERE
SAYING LOOK, THIS MARKET IS DUE
FOR A BREATHER.
IS THIS THE BREATHER?
>> I DON'T KNOW.
TO TELL YOU THE TRUTH, I DO HOPE
THAT THE MARKET JUST KIND OF
STALLS FOR AWHILE, BECAUSE IT'S
WELL AHEAD OF THE EARNINGS
FUNDAMENTALS, ABOUT 18, 18.5
FORWARD PE AND 15 IS KIND OF
AVERAGE HISTORICALLY BUT 18,
18.5 MAKES SENSE WITH INTEREST
RATES AND INFLATION RATES SO
LOW.
MY CONCERN IS WE JUST KIND OF
KEEP GOING HERE AND GET UP TO 20
OR 22 KIND OF MULTIPLE.
STUART: THAT'S WHAT IT LOOKS
LIKE.
OKAY.
LOOK AT WHAT HAPPENED OVERNIGHT.
>> YESTERDAY IT LOOKED LIKE IT
WAS JUST GOING TO KEEP GOING.
STUART: A MELT-UP SITUATION
YESTERDAY.
>> I'M WORRIED ABOUT A MELT-UP,
ACTUALLY.
STUART: THIS DOESN'T LOOK LIKE
MUCH OF A CONSTRAINT --
>> NO.
I HAVE BEEN KEEPING A DIARY OF
SELLOFFS IN THIS BULL MARKET.
I COUNTED 65 WHAT I CALL PANIC
ATTACKS AND SIX OF THEM WERE
ACTUALLY OUTRIGHT CORRECTIONS OF
10% TO 20%.
STUART: THAT'S IN THE LAST,
WHAT, 11 YEARS?
>> SINCE MARCH 2009.
STUART: OKAY.
THAT WAS THE LOW.
>> WE HAVE HAD A LOT OF THESE
SELL-OFFS AND THEY HAVE ALL BEEN
BUYING OPPORTUNITIES.
MAYBE WE JUST KIND OF GOT THIS
KNEE-JERK PAVLOVIAN REACTION IN
THE MARKET WHERE ANY TIME THIS
THING GOES DOWN FOR ANY REASON
WHATSOEVER, PEOPLE COME IN AND
BUY THIS THING.
PART OF THAT IS BECAUSE FED
CHAIRMAN POWELL HAS TOLD US THAT
HE'S NOT GOING TO BE RAISING
INTEREST RATES THIS YEAR UNLESS
INFLATION REALLY MAKES A BIG
COMEBACK.
STUART: AND BEARING IN MIND WHAT
HAPPENED OVERNIGHT, THE KILLING
OF SULEIMANI, I DOUBT THAT THE
FED IS GOING TO BE ENTHUSIASTIC
ABOUT RAISING RATES NOW.
>> NO.
ABSOLUTELY.
I THINK THE MARKET'S STARTING TO
KIND OF THINK WELL, HOW DOES
THIS PLAY OUT WITH FED POLICY.
STUART: WHAT DO YOU THINK OF THE
ODDS, WE ARE DOWN 182 AT THE
MOMENT, 179.
THERE YOU GO.
WHAT ARE THE ODDS THAT WE END
THE DAY HIGHER?
>> I DON'T KNOW.
I DON'T DO DAY TRADING, QUITE
HONESTLY.
I DEAL WITH THE TREND.
BUT I THINK IT'S REALLY QUITE
POSSIBLE, IF IT IS, I WOULD BE
WORRYING AGAIN ABOUT A MELT-UP.
I LIKE TO HAVE SORT OF A
CIVILIZED, LEISURELY BULL MARKET
HERE.
I HAVE BEEN FORECASTING 3500 ON
THE S&P 500 BY YEAR END.
I JUST HOPE WE DON'T GET THERE
IN THE NEXT FEW WEEKS.
STUART: BUT THE MARKET WANTS TO
GO UP.
>> THE MARKET WANTS TO GO UP.
STUART: I MEAN, YOU CAN JUST
FEEL IT.
EVERY TIME YOU GET A PULLBACK --
>> LOOK AT WHAT YOU ARE GETTING
IN FIXED INCOME.
YOU ARE GETTING VERY LITTLE
RETURN.
YOU GOT DIVIDEND YIELDS THAT ARE
ABOVE THE BOND YIELDS AND SO
PEOPLE ARE CONTINUING TO BUY THE
MARKET.
STUART: HELP ME OUT.
>> HAPPY TO.
STUART: YOU HAVE KNOWN ME FOR
MANY, MANY YEARS.
>> RIGHT.
STUART: I OWNED MICROSOFT FOR
YEARS AND YEARS AND YEARS.
LATE LAST YEAR, LITERALLY LAST
WEEK, I SOLD A CHUNK OF THE
MICROSOFT THAT I HAVE BEEN
HOLDING FOR YEARS.
>> MY CONDOLENCES.
STUART: I TOOK A LOT OF PROFIT
AND I'M A HAPPY GUY.
WHAT SHOULD I DO WITH THE CASH?
>> WELL, MAYBE PUT IT BACK IN
MICROSOFT.
DON'T YOU HAVE SOME, YOU KNOW,
SELLER'S REMORSE ALREADY?
STUART: I DO.
I DO.
>> SEE?
THERE YOU GO.
I DON'T DO INDIVIDUAL STOCKS,
BUT IT IS A GREAT COMPANY.
THAT'S A WONDERFUL THING ABOUT
THE U.S. AND OUR STOCK MARKET,
THERE'S A LOT OF REALLY GREAT
COMPANIES THAT ARE EXTREMELY
WELL MANAGED THAT ARE WORLD
CLASS.
STUART: YOU AND I HAVE BEEN
AROUND FOR MANY, MANY YEARS.
>> YOU HAVE BEEN AROUND FOR MANY
YEARS.
SPEAK FOR YOURSELF.
STUART: OKAY.
OKAY.
>> BUT GO AHEAD.
STUART: YOU EVER SEEN A BULL
MARKET LIKE THIS ONE?
BECAUSE I HAVEN'T.
>> WELL, I MEAN, THE 1990s WAS
AN EXTRAORDINARY BULL MARKET,
PARTICULARLY IN THE TECH SECTOR.
BUT IT WAS ALL TECH ALL THE
TIME.
THIS ONE HAS BEEN ACTUALLY VERY
BROAD.
EVERY NOW AND THEN PEOPLE TAKE A
SNAPSHOT AND SAY IT'S TOO NARROW
BUT IF YOU LOOK AT THE DYNAMICS
OF IT, IT KEEPS BROADENING OUT.
MAYBE WHAT THIS EVENT IN
IRAQ/IRAN CAUSES IS FOR THE
LAGGARDS LIKE ENERGY STOCKS TO
START TO DO SOME CATCH-UP HERE
AND AS WE SAID, THE DEFENSE
STOCKS ARE LOOKING AWFULLY GOOD.
INSTEAD OF THINKING OF WHAT'S
GOING TO GO DOWN, THINK ABOUT
WHAT MIGHT ACTUALLY GO UP AS A
RESULT OF THIS.
STUART: I'M THINKING.
I'VE GOT MICROSOFT CASH ON MY
HANDS HERE.
>> SO THE ENERGY SECTOR MAY BE A
GOOD PLACE TO LOOK FOR SOME
VALUE.
STUART: I JUST CAN'T SEE IT.
BUT WHO KNOWS.
WHO KNOWS.
AFTER ALL THESE YEARS, IT WAS
GREAT TO SEE YOU AGAIN.
