Not being invested in equities right now is one of the “most dangerous” things to do, according to Jack Bouroudjian, CEO of Bull and Bear Partners, who believes U.S. companies will beat Wall Street’s estimates for second-quarter earnings.
Corporate America is “richer than ever before” and consumers have more disposable cash because of
“There are a few times in history, the 30s and 40s were one of those few times also, when not being invested (was) one of the most dangerous things to your portfolio,” Bouroudjian said on CNBC Asia’s “Squawk Box”. “I call this the period of accumulation. I think the next few years are going to be when you see the run in the markets.”
Bouroudjian favors U.S. technology firms and said he was advising clients to put money into the biggest firms such as Intel , Microsoft and Oracle , which are going “to come alive” as companies invest in new technologies such as cloud computing.
“Tech spending is almost like a medical bill, it’s hard to plan for it,” Bouroudjian said. “It’s really one of those things where it no longer is a luxury item. It’s becoming a necessity and (part of) survival.”
Bouroudjian is much more positive about global economic growth than noted bears Nouriel Roubini and Nassim Taleb, whom he calls “doom-and-gloomers.”
“The reality is this: The global growth story is not going to go away,” Bouroudjian said. “The hundred-million plus people who are living around Shanghai are not going to move back out into the country side. You and I know that. So all of that has got to be factored in.”
Bouroudjian’s views put him at odds with "Dr. Doom" Nouriel Roubini who said Monday that the "perfect storm" scenario he forecast for the global economy earlier this year is unfolding right now as growth slows in the U.S., Europe as well as China.
In addition, Roubini said that unlike in 2008 when central banks had “policy bullets” left to stimulate the global economy, this time around policymakers are “running out of rabbits to pull out of the hat."
Others are also recommending investors stay defensive because of weak earnings and slowing growth. King Lip, Chief Investment Officer of Baker Avenue Asset Management, said he expects a volatile few weeks during which companies report poor second-quarter earnings. He advises investors to stay in a “risk off” mode during this time and move into defensive sectors like utilities and consumer staples.
“It seems that finally Europe’s woes are showing up in earnings and China‘s slowdown is also showing up in earnings forecasts,” Lip told CNBC Asia’s“The Call”. “So it appears that despite how strong balance sheets are for corporate America, generally speaking, forecasts are not bullish at all. We saw that from companies like Nike , Procter and Gamble , FedEx . We think it’s going to be a tough slog for the earnings season.”
- By CNBC's Jean Chua.