In the meantime, however, the Schwab asset-gathering machine just hums along, bringing in billions every month. So you have a company that is growing, but you're not seeing the revenues drop to the bottom line because of the interest rate environment. It's our belief that 0% rates won't last forever, and when there are signs that they may increase, the stock should do very well, as investors look ahead to the spike in earnings.
What stocks or sector would your sell or avoid right now?
Oelschlager: We would avoid the defensive sectors, such as staples and utilities. Investors are frustrated with low bond yields, so they're seeking income by venturing into high-yielding areas of the stock market, which has pushed relative valuations to high levels. The general concern about the macro picture and the memory of the 2008 financial crisis are also contributing to the skewed valuations in these sectors.
What is your outlook for 2013?Oelschlager: Everyone is focused on the fiscal cliff, but generally when everyone is focused on something for this long, its impact is less than what was feared. That could be the case again this time. We expect housing and employment to continue to improve, but it will be important to watch inflation given the global easing cycle. -- Written by Gregg Greenberg in New York.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV