Tags: morgan | cash | stocks

Morgan: Flight from Cash Driving Stocks

By    |   Friday, 21 Aug 2009 05:12 PM

Morgan Stanley strategists say the flight from cash is steadily overtaking the economic recovery story as the main driver of higher asset prices.

The reason? Even people who are not believers in a robust economic rebound still feel forced to try and get some sort of positive return on assets other than cash.

“The main mispricing in portfolios now is the expensiveness of cash,” a Morgan report noted. “We remain long on credit and equities.”

Among equities, Morgan strategists like small-cap companies that are down more than 50 percent from highs and attractively values compared to the broader market.

Though many investors buy into small caps via an exchange-traded fund, small cap ETFs remain anathema to some.

One of these is Ken Shubin Stein, head of hedge fund Spencer Capital Management.

"The benefit of small-caps is that one can outperform by doing the work, and an ETF doesn't afford you that advantage," says Shubin Stein, adding that investors should conduct their own research rather then rely on brokers or analysts.

Forbes reports that one small-cap firm Shubin Stein especially likes is Greenlight Capital, the reinsurance company headed by David Einhorn.

One of the reasons is that Greenlight pays its employees over a number of years based on the profitability of their closed deals, as opposed to the majority of insurance companies, who give salaries to employees based on the number of deals closed that year.

"The problem, of course, is you can close a lot of really terrible deals and get a bonus," Stein says.

© 2017 Newsmax. All rights reserved.

 
1Like our page
2Share
StreetTalk
Morgan Stanley strategists say the flight from cash is steadily overtaking the economic recovery story as the main driver of higher asset prices.The reason? Even people who are not believers in a robust economic rebound still feel forced to try and get some sort of positive...
morgan,cash,stocks
255
2009-12-21
Friday, 21 Aug 2009 05:12 PM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved