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Why Stocks Are the 'Only Asset Class of Choice'

Stocks retreated Tuesday amid a round of disappointing earnings and economic data. Paul Schatz, president of Heritage Capital, and Phil Orlando, chief equity market strategist at Federated Investors, discussed their insights.

“In the short-term, we’re going higher,” Schatz told CNBC.

“But longer-term, there are so many clouds that haven’t been dealt with yet.” (Scroll down to see Schatz' best plays.)

In the meantime, Orlando said issues that had been hindering the markets over the last few months, such as the Gulf oil disaster, the 'Flash Crash' and the debt crisis in Europe, are beginning to fade and are being replaced with “very powerful” second-quarter earnings.

“Investors are focusing on the fact that stocks are very cheap," he said. "Investors starting to move some of that money off of cash into stocks in the last month or so.”

Orlando said the best place for investors to put their money is in equities.

“Cash is yielding you nothing [and] we think we’re in the midst of a Treasury yield bubble,” he explained. “Stocks are trading at 12 times earnings and we think that number ought to be in the mid to upper teens.”

“So if you’re taking a longer-term perspective, the only asset class of choice is equities, in our view.”

Schatz Favors:


Long-Term Treasurys

High Yield Bond


Scorecard—What They Said:

  • Orlando's Previous Appearance on CNBC (Jul. 21, 2010)
  • Schatz's Previous Appearance on CNBC (Jul. 27, 2010)

Market Views—Across the Board:

CNBC Data Pages:

CNBC Slideshows:


Tuesday's Dow Laggards (as of this writing):

Procter & Gamble


Home Depot

Walt Disney



No immediate information was available for Orlando or Schatz.