July 25, 2014

Two veteran global investors, private investor Bill Wilby, formerly of number one ranked Oppenheimer Global Fund and Fort Washington Investment Advisors’ Chief Economist and Senior Investment Advisor Nick Sargen share their perspective and strategies on today’s market.

CONSUELO MACK: This week on WealthTrack, storm warnings! Two veteran global investors Bill Wilby and Nick Sargen are tracking rising geopolitical conflicts, central banks in uncharted territory and markets at record levels. What are their financial life saving skills telling them about the dangers ahead? Great Investor Bill Wilby and Fort Washington Investment Advisors’ Nick Sargen are next on Consuelo Mack WealthTrack.

Hello and welcome to this edition of WealthTrack, I’m Consuelo Mack. Markets are famously supposed to climb a wall of worry. And there are plenty of worries to go around right now. There are several geopolitical hotspots of strategic significance: Ukraine’s battle with Russian separatists, Israel’s battle with Hamas, Syria’s civil war, the terrorist group ISIS’ campaign in Iraq and Iran’s ongoing efforts to build nuclear bombs.

On the economic front: the uncertainty surrounding the Federal Reserve’s exit plan from its unprecedented monetary expansion of the past five years. The U.S. economy’s subpar growth during this recovery, and the struggling economies of Europe and Japan.

There are serious market concerns. Stock markets, particularly in the U.S. have been trading at record levels and bond prices are elevated. Despite all of these worries the markets have been relatively sanguine, with a few notable exceptions, since the height of the financial crisis five years ago. As you can see from this chart the widely followed Market Volatility Index, the VIX has been subdued for the last couple of years. Has this been the calm before the proverbial storm? We have two investment veterans with us who have kept their heads and portfolios through many market cycles and economic booms and busts.

Great Investor Bill Wilby is with us exclusively on WealthTrack. Now a Private Investor Wilby retired at the market’s peak in 2007- talk about timing- because he was distressed and concerned about the state of the financial markets. Until his retirement, Wilby was the former Portfolio Manager of the award winning Oppenheimer Global Fund which was ranked number one in its category for the 12 years he ran it. He also headed up the entire equity division of OppenheimerFunds. A graduate of West Point, Wilby also has a PhD in International Monetary Economics and has been a global investor for his entire professional life. He has held various international finance and investment positions at several top financial institutions including the Federal Reserve Bank of Chicago.

Nick Sargen is another lifelong global investor and was recently named Chief Economist and Senior Investment Advisor at Fort Washington Investment Advisors, the asset management arm of Western & Southern Financial Group. Sargen wanted to scale back from his previous position as the firm’s Chief Investment Officer. Sargen also has a PhD in economics and has been International Economist, Global Money Manager, Chief Investment Officer for several firms, as well as working at the Federal Reserve Bank of San Francisco.

I began the discussion with a Federal Reserve question: how is the great monetary experiment going to end?

NICK SARGEN: Thanks for such an easy question. I mean, that’s the one every investor wants to know the answer, and I would say, Consuelo, that the Fed is trying to reassure people and say, “Don’t you worry. We have all the tools that we need to handle this exit strategy, but I believe that this is unprecedented, and at the end of the day you have to make a choice as an investors, and it’s will the Fed begin tightening early or will it wait and be late? And my view is with this Fed it will err on the side of being later. So I think that the risk would be not immediately, but there would be a risk that if it waits too long and then inflation does come into the picture, then we might see some spike in bond yields, but that’ll probably be at least a couple of years away.

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