Sean Naughton, Rbc Wealth, Financial Analyst discussed on Wealth Without Risk
Morning joined by special guests and colleague at RBC wealth management Sean Naughton. Who's a chartered financial analyst part of our portfolio advisory group bringing a wealth of knowledge here today hopefully this has been very informative. And insightful for many of, you all the listeners that tune into my show each and every week, and as I said before if you would like to see some of the research that we published this is one of the value added things that I believe a large firm such as RV wealth management can. Provide are the experts in their relative Field and individuals like Sean who provides so much clarity and, perspective on the markets providing data real information and so if you want to see this these, reports and you'd like me to Email them to you again feel free to call our office my team four one zero three one six five three two zero or Email me at Tim dot herb at RBC dot com we're always, glad to, help the community here if. You have some questions so let's get down hopefully to brass tacks here. On what we've all been waiting for we've got two segments left here in the program this show this morning and I want to. Talk about specifically people probably, who've been listening to the weekly wealth reporter wondering where do we put, our money what do we do and I know we can't grant specific stock recommendations on the program live is one of the things I cannot do And you know. That of course Sean but let's talk about growth. Versus value and how, investor would allocate their current portfolio given that growth stocks we hear about the FANG stocks the technology, stocks given the growth stocks have? Been so strong should? Investors stick with growth or should they now maybe look to change. Their tune a little bit and focus on value Yeah it's a great question, and one we get periodically as well and just to set the stage here for you know the growth versus value conversation Growth has been really outperforming value at it hasn't been a one two, three year trend but this is really been. A decade, long trend so if you look, at growth stocks versus value stocks, over the, last ten years actually. Eleven years growth, has really been outperforming so unfortunately for a value guy, like myself that can be a little bit you know disheartening to hear sometimes but, you know I do think that in a rising interest rate environment I think that you know there can be some opportunities on the value side now just to give you an incremental perspective because you mentioned the FANG stocks and. I'm, gonna term them as FANG 'em and I've got to as. An m. so I've got six stocks in this four letter acronym that everybody knows And this would be you know. Facebook apple, Amazon Microsoft and Google as a as a basket of stocks and so he just look at the. Performance of these names it's really quite incredible even in twenty eighteen if we look at their total weight so that, would, be their market. Capitalisation weight within the s. and p. five hundred. It's only fifteen percent for these six companies that that's pretty high companies on five, hundred, but if I start to look at. The percent, of the return it's being driven, by these six stocks within the, s. and, p. five hundred it's. Over half of, the return happened this year year to date in two, thousand eighteen so again that's pretty powerful any good perspective to understand you know last, year was twenty four percent and they were only about thirteen percent so again they're punching well above their weight in terms of their contributions in their overall waiting in the index so it's very important to understand that if you're Comparing yourself with that benchmark you have to have had some. Of these names within your portfolio to keep up You. Know I would say right now you, know we are in a little bit of a rising interest rate environment I would say the the view is is. That in a rising interest, rate environment, that we should that values should start to. Outperform a, little bit more we haven't seen that yet but again that's something that I would, be looking for so again I wouldn't. Look to go out and dramatically change your allocations on growth versus value but just understand that that dynamic exists and if you are of the opinion that we are going to that interest rates are, going to be moving up and we're not in the first and second ending of a of an economic expansion then maybe you do want to shift some of your allocation on your US equities a little bit more value focused and value focused also? Can. Some people, may look to value oriented positions or stocks Sean for those that are paying, solid dividend yields correct I mean you mentioned the retiree people focusing. On needing to collect income at some point dividend yielding companies perhaps may be one Of, the many, options that perhaps could provide some income and that's typically the value. Oriented stocks are those that are paying, the nice handsome dividends I think that that's exactly right I mean the the research shows that over time you know. A lot of these dividend, paying stocks, do do outperformed the market and the reason. For that, I believe is that you know one is they are shareholder friendly and so they're, returning capital dollars back to the people. That own the securities and then Secondly you know they will perform well not not great in a you know a big bull market you know they'll they'll get most of a lot of the upside, capture that's happening within some of the indices and the other names that are out there that are growth oriented but they do also provide some nice downside protection in in sort of a draw down or a bear market so that's really the you? Know. The goal, is to to minimize the volatility a little bit with some of those dividend, paying stocks okay well we've got another Segment here of the, show to, cover, where we're going gonna get down to the million dollar question so to speak as far as the sectors which sectors Sean you may feel more inclined to invest. In or to be overweight in again we're being joined by Sean Naughton charter financial analyst with RV see wealth. Management and a colleague, of mine, you're listening to Tim herb of wealth management for the weekly wealth.