Tags: Smead | US | investor | Paradise

Fund Manager Smead: The US Is an Investor's ‘Paradise’

Monday, 16 July 2012 11:36 AM

The United States is an investor's paradise compared with the world's other major markets, says Bill Smead, CEO of Smead Capital Management.

Housing is improving, which will really drive recovery thanks to changing demographics.

"There are 85 million baby-boomer kids in the United States, now the biggest population group in the United States next to baby boomers, who are 83 million," Smead tells CNBC.

Editor's Note: The Truth About the Economy — Government Documents Lead to Eerie Conclusion

"Most of them have been late to start their married life, late to have kids and therefore late to start buying houses. But now rents are well above what it costs to make a mortgage payment, so (there’s) the natural progression."

Domestic companies will better withstand shocks from abroad, especially from Europe, so investors should look at firms whose revenue comes mostly or entirely from within the United States.

"That is part of why we think it’s a paradise," Smead says.

"In other words, if you are Wells Fargo and you don’t have any financial interest outside the United States, the European debt crisis doesn’t affect you. On the other hand, if you are Citigroup and you’re a huge player in the Far East, it’s a problem."

Walgreens, Bank of America and Gannet are three other companies that are poised to grow.

U.S. companies are poised to release second-quarter earnings, and companies exposed to Europe and even in China, where growth is cooling, have analysts worried.

"It's natural to expect that somehow the U.S. corporate sector, which has been a bright spot in this recovery, is not going to emerge unscathed," says Brian Gendreau, market strategist with Cetera Financial Group in Florida, according to Reuters.

Europe accounts for about 15 percent of S&P 500 sales, Reuters adds.

Editor's Note: The Truth About the Economy — Government Documents Lead to Eerie Conclusion

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Monday, 16 July 2012 11:36 AM
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