Stocks struggled to gain Thursday, as a handful of positive economic news barely budged the market after FedEx posted disappointing results—but raised its outlook. John Morris, managing partner at Crestwood Advisors and Sarat Sethi, partner and portfolio manager at Douglas C. Lane & Associates shared their insights.
“We’d say we wouldn’t want to own the broad market because we think operating margins right now, which are at around 9 percent, will decline to a historic norm, which is closer to 7 percent,” Morris told CNBC.
“So we’re looking at below-trend earnings growth across the broad market.”
Instead, Morris advised investors to look at industries and companies with "unique models, good pricing power and good dynamics" that will lead them higher for the next five years.
In the meantime, Sethi recommended that investors be “all about diversification.”
McCormick —“They’ve got pricing power, oligopoly business, pays 2.5 percent dividend and has a shareholder-friendly management.”
WisdomTree Emerging Market Local Debt ETF—“We can earn a 4 percent current income…and it gives us foreign currency exposures.”
HSBC —“I want to play a company that did not have to go to the capital markets, that has its headquarters in London but its CEO in Hong Kong,” said Sethi. “[The firm] gets 50 percent of its income from developing markets and we know that’s where the growth is going to be for the next few years.”
Scorecard—What They Said:
- Morris' Previous Appearance on CNBC (Dec. 1, 2010)
- Sethi's Previous Appearance on CNBC (Nov. 18, 2010)
Market Views—Across the Board:
- Stocks Likely to See 8-12% Upside Next Year: Chief Investor
- 10 Winning Tech Stocks You Need to Own: Strategists
- Expect Stock Downside Move in Next 3 Months: Pro
CNBC Data Pages:
No immediate information was available for Morris and Sethi.