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RIA Rising

Singing stocks' praises at Schwab IMPACT

News today that Warren Buffett is sharply increasing his bet on equities recalls Howard Ward’s observations at the Schwab IMPACT conference for financial advisors last week in San Francisco.

Buffett’s Berkshire Hathaway sunk almost $7 billion into equities in the third quarter, nearly twice as much as it had in the second quarter, Bloomberg reported. The purchases were part of $23.9 billion in total investments that the company made last quarter, the biggest spending in at least 15 years. “He sees something, and it’s big,” Thomas Russo, a partner at Berkshire investor Gardner Russo & Gardner, told the news service.

Buffett isn’t alone. Howard Ward, director of growth equities for Gabelli Funds, sees good things in stocks, too. “The new alternative investment is long-only equities,” he told advisors at the IMPACT conference on Thursday.

Ward told advisors why he thought stocks are good investments now:

• Keeping money in cash is a losing game. There’s $2.6 trillion in money market funds that are earning virtually nothing, while losing 3.9 percent in purchasing power in the last 12 months. • Earnings, now at record levels and rising, will drive stock values.

• Inflation poses a bigger long-term investment threat than deflation.

• Based on price/earnings ratios, stocks are the cheapest he’s seen in 20 years.

• Widespread bearish sentiment is a counterintuitive bull signal. Remember 2009?

• Don’t fight the Fed, which is expected to keep interest rates near zero for an extended period of time.

• Next year’s national election will be a referendum on the role of government in society, Ward said, and he expects that referendum will call for shrinking that role. “We’re going to celebrate that,” he said.

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