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Stocks Will Rise — Unless D.C. Cripples Markets: Kotok

Wednesday, 27 Jan 2010 | 3:20 PM ET

Markets opened lower on Wednesday as investors were disappointed with some earnings outlooks—but edged up after the Federal Reserve said it would leave key interest rates near zero for a long time to come. What should investors expect from stocks going forward? David Kotok, chairman and chief investment officer of Cumberland Advisors, and John Burns, founder and chief executive of Burns Advisory Group, shared their views.

Market Edge
John Burns, of the Burns Advisory Group, and David Kotok, of Cumberland Advisors, share their investment strategies.

“We’re having a little bit of turbulence, maybe a little bit of a pullback—not to be unexpected in the midst of an overall economic recovery,” Burns told CNBC.

“We think we’re in a 3- to 5-year recovery period and we’re about a year into that.”

Burns said he is bullish on the markets overall and said areas such as the U.S. and international small-cap value stocks are trading under book value, making them an attractive investment.

“Additionally, international real estate as a whole is trading under book value, so we like that in general,” he said.

In the meantime, Kotok said there is bound to be upward growth and movement in share prices, with interest rates at zero percent and no expected inflation for "several years."

However, he remains concerned about the following factor:

“The biggest risk I believe to U.S. markets is taking place in Washington, with behaviors coming from the administration, with one revelation after another, questions about the Fed chief, with the changes in Obama’s policy, vilification of banks," Kotok said.

"None of this helps markets and none of it helps the economy.”

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Disclosures:

No immediate information was available for Burns or Kotok.

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Disclaimer

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