Klingman & Associates: Seeing Value in Emerging Markets and Energy

NEW YORK - Feb. 24, 2016 - PRLog -- Gerald Klingman, Founder & President of Klingman & Associates, joined Asset TV in the studio to share his insight on the state of the current economic cycle and how similar it is to the cycle of 1998/1999.  During that time, concerns were focused around the Asian currency crisis, a reluctancy to invest in emerging markets, and diversification not yielding the expected results.

Today, investors have been experiencing these same concerns.  Diversification has not really worked, and almost every asset class has gone down except for cash and some large-cap US stocks.  As Gerald explains, it is now more important than ever for investors to have a long-term strategic asset allocation plan and ignore the “noise” around some of the large crowded trades going on in the market, as the true value of many of these stocks that are drawing the most attention are not being accurately portrayed.  Some of these instances, as Gerald points out, are in certain asset classes that tend to get overvalued and undervalued.  He cites 10-year treasuries at 1.6% as one example of an overvalued class while energy and emerging markets he claims are being significantly undervalued.

Of course, these undervalued stocks are the ones that investors should focus on, especially within the emerging markets.   However, not every emerging market is a great investment.  That’s why Gerald insists that active managers are a necessary asset for investors, as they can help pick where to invest, both from a macro standpoint in terms of countries and from the bottom-up in terms of companies within each country.

In the energy complex, Gerald explains that a lot of the current market trepidation stems from how quickly the US has become a manufacturer and exporter of oil, as well as how fast the prices have dropped from $100 a barrel to $30.  However, since it’s not a long-term equilibrium for oil to stay at the prices they are at currently, the fear is entirely short-term based.  As Gerald points out, oil and US stocks are almost correlated on a 1 to 1 basis, with no macro-economic reason for that to happen.  Once oil’s price equilibrium balances out, many of the other stocks will untether from oil’s influence and there will be a shift in expectations, with significant opportunities presenting themselves in energy MLPs and other areas not directly correlated to the price of oil.

To watch this full-length interview, tune into the PULSE channel on Asset TV:  http://bit.ly/1LGtnwO


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