Presentation on theme: "Challenges to 15 by 15 Alan Brochstein August 1, 2009."— Presentation transcript:
Challenges to 15 by 15 Alan Brochstein August 1, 2009
AB Analytical Services2 What Kind of Recovery? WUVLJWUVLJ
AB Analytical Services3 Typically, a U or a V
AB Analytical Services4 GDP – The Long View
AB Analytical Services5 The Case for L This time is different (careful!) Deleveraging will continue –Consumers –Banks/REITs/Corporations –Eventually Government (Taxes) Exports and deficit spending could offset
AB Analytical Services6 Unemployment: Here to Stay
AB Analytical Services7 Consumer Spending: Rare Decline
AB Analytical Services8 Housing: Bust to Boom?
AB Analytical Services9 New Cycle of Saving?
AB Analytical Services10 Money Supply: Liquidity Abounds
AB Analytical Services11 Government Getting Squeezed
AB Analytical Services12 Will Interest Rates Stay Low?
AB Analytical Services13 Exports: Recovery Likely
AB Analytical Services14 Stocks Rebound from Hell 666 intraday low represented 49% y-o-y decline 50% rally leaves stocks down 20% y-o-y
AB Analytical Services15 Stocks: The Long View
AB Analytical Services16 Valuing Stocks Key elements – Interest Rates and Earnings Interest Rates: Corporate Bonds not Treasuries Earnings: Sales & Margins
AB Analytical Services17 Treasuries Low, Spreads High
AB Analytical Services18 Margins Depressed, Valuations Fair
AB Analytical Services19 Dow 15K in % annual return Will require earnings growth –Revenues? –Margins? Headwinds: –Rates wont help –Dilution from deleveraging
AB Analytical Services20 Stacking the Deck Go Conservative Financials –Avoid Dilution –Avoid Higher Interest Expense –Avoid Double-Dip Dunk Go Small –Nimble –Better Balance Sheets Go Overseas
AB Analytical Services21 Example National Instruments $2bln market cap $250mm cash/no debt Well managed Growing International Downside Protection SHOULD THE PE BE HIGH OR LOW?
AB Analytical Services22 Conclusions Economy likely to remain challenging (L) Good things in small packages Financial leverage is ugly Focus on companies exposed to exports Bonds may offer more value than Stocks Buy and Hold wont likely work