March 20, 2015

BULLISH GREAT INVESTOR The bull market turned six years old earlier this month. How much of a concern is the market’s age and it’s more than 200% advance? In a rare interview, Artisan International and Global Funds’ Great Investor, Mark Yockey explains why he is still finding plenty of opportunities in the market and why the rising dollar is a financial game changer for many companies.

Mark Yockey Portfolio Manager Artisan International and Artisan Global Equity Funds

CONSUELO MACK: This week on WEALTHTRACK, a rare interview with a great global investor who looks to Winston Churchill for inspiration. Where is Artisan International Fund’s Mark Yockey taking a stand against the crowd now? Award winning and market beating Mark Yockey is next on Consuelo Mack WEALTHTRACK.

Hello and welcome to this edition of WEALTHTRACK, I’m Consuelo Mack. We all know the bull market turned six years old earlier this year and despite endless warnings of its imminent demise along the way it continued to climb that proverbial wall of worry. We’ve come a long way.

The excellent research team at Strategas Research Partners shared some figures that illustrate just how far. We all know that the S&P 500 has tripled since it hit its bottom of 676.53 in March of 2009. But what does that mean in actual dollar terms?

The market capitalization of the S&P 500, the value of its stocks has gone from $5.9 trillion to over $18 trillion. The average price of a stock has risen from about $24 to $85 dollars a share. Those share prices reflect much higher profitability. Operating earnings per share have more than doubled from $49.51 to nearly $113.

The obvious downside to this wealth expansion is that the market has gotten much more expensive. At the 2009 bottom the S&P’s price/earnings multiple on trailing 12 month earnings was just under 14. The P/E is now around 18 times.

And the dividend yield on the S&P which was close to 4% six years ago has fallen to around 2%. What about longevity?

As you can see from this chart, Strategas plotted the magnitude and duration of bull markets since 1928. Though not the longest or strongest this one is getting a bit long in the tooth and has generated impressive returns.

How much of a concern is the market’s age and size of its advance?

This week we have a rare interview with great investor Mark Yockey, Portfolio Manager of the Global Equity Team at Artisan Partners. Yockey is known for his patient, contrarian approach and outstanding long term performance. Among his responsibilities he oversees the flagship Artisan International Fund which he launched in 1995 and for which he was named Morningstar’s International Stock Fund Manager of the Year in 1998 and a finalist in 2012. Yockey also runs the highly regarded Artisan International Small Cap fund, launched in 2001, and the younger Artisan Global Equity Fund started in 2010, which has earned a five star rating from Morningstar. The most recent addition to his mutual fund portfolio is the Artisan Global Small Cap Fund started in 2013.

I began the interview by asking Yockey how concerned he is about the U.S. market’s big, lengthy advance.

MARK YOCKEY: Consuelo, I’m not that concerned about the prices in the United States for stocks. There’s a lot of positives we see for the U.S. economy. The corporations in America are more profitable than they ever have been. They’re generating extremely high levels of cash. They’re using the cash to buy back stock and to pay higher dividends. You just saw this week that all the banks are increasing their payout ratios for example. It’s not a day that doesn’t go by that someone doesn’t seemingly announce a $15 billion share repurchase. So corporations are profitable. Inflation’s low. Interest rates are at zero. We haven’t seen that in the history of mankind. In fact, in some places they’ll pay you to put your money there rather than you get paid.

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