Nov. 21 - Blackrock Chief Equities Strategist Bob Doll discusses how concerns over euro zone debt and the political deadlock over a U.S. budget deal will affect investing in 2012.
Of bobbled a year for the markets that concerns over eurozone debt and political uncertainty in the US. So how does that set the stage for investing in 2012. For more I'm joined by Bob doll chief equity strategist at black rock. But it looks like the super committee is deadlocked on reaching any agreement in spending cuts. That means other -- will take place how does that shape investing strategy for next year. Well those cuts do not take place you know -- until January 1 of 2013. And so investors level long time to prepare for in fact with those cuts will be. If -- across the board spending cut takes place health care and defense of the areas the won't get hurt the most with in the equity market I say if because congress can go back again in do surgery during the course of let the next year in the lame duck session next year. Who knows where and so -- uncertainty exists as well. You know political deadlock in Washington for quite some time and they used to be is saying they gridlock is positive for stocks. Why the markets reacted so much differently this time to what's happened in Washington not just with the super committee but certainly that the talks in the summer. It's a great question around I I think. In the past we've all -- gridlock is good we basically mean that they can't get much done it doesn't mean they can't get nothing done. And I think we've moved from. Not doing anything extreme which most environments of political gridlock provide force to one where. When I've gotten hardly anything done if anything at all. And sold the gridlock is I've gone too much in the direction of but the checks and balances that we electricity. We're already in the early stages of an election cycle how do you see the markets reacting. Heading into the election season will we see anything different on that front in terms of market behavior than what we've seen in the past. Well as you know almost studies show that elections don't affect markets until the conventions are sometimes Labor Day. Of next year so my guess is that the uncertainty surrounding the subjects we've already talked about that is the sequestration process of the that renewal or lack thereof of the unemployment benefits and payroll. -- tax cuts. As well as the European. Problems they are the ones will -- this war about the election we see who's nominated on the Republican side. You mentioned health care and defense potentially at risk. Where the opportunities in the stock market for next year and our investors despite what we're hearing out of Washington or not hearing. -- be too cautious. Yelled let's -- -- don't take the latter part of that first when you look at the price of equities the equity risk premium yield on stocks vs the yield on bonds. I think he's certainly come to the conclusion that's boxer are cheap does that mean investors are being -- cause -- cautious we all know. Cheap things can state cheap or get cheaper. So I don't wanna be just a slave to valuation but. For time horizons the go out in time I think especially on weakness like we've seen of late. That's a good time to be yet nibbling away. If you've got -- time horizon is which is the only time horizon that's appropriate for risk assets and that's three to five years. Like hot spot now thanks for your time bomb. Thanks. I'm Rhonda schaffler mrs. --