Julie Biel, CFA, Portfolio Manager and Senior Research Analyst, joined CNBC Street Signs Asia, where she shares her perspective as a long-term investor and where she sees areas of opportunities in times of economic uncertainty. Julie emphasizes the importance of long-term investing and staying fully invested. She dismisses the idea of trying to time the market, preferring instead to hold businesses for an extended period, allowing them to compound through market cycles. The discussion then shifts to regional banks, with Julie acknowledging their potential value given their current low prices but expresses caution due to uncertain regulatory repercussions. The conversation also touches upon the ever-evolving nature of mandates and regulations in the U.S. economy. Finally, Julie discusses the intriguing opportunities in international markets, particularly highlighting the Chinese economy and its impact on global supply chains and consumer behavior. While she believes the U.S. market offers better overall stability, she acknowledges the presence of compelling companies abroad with strong competitive advantages. This video invites viewers to reflect on the challenges of market timing, regulatory uncertainties, and the potential opportunities in international markets. Watch the video to learn more.
Julie: At Kayne, we really try to always be fully invested. We’re not paid to hold cash. We don’t try to time the market. I think that’s probably one of the most challenging things to do and frankly, a fool’s errand, right, because if you’re pulling money out, you have to assume that you know when you’re gonna pull money back in. So, for us, we’re long-term investors. We’d rather just own our businesses for a long time and let them compound, you know, through a market cycle, but that requires really knowing that the business is gonna be durable, even if we do hit any kind of recession or air pockets.
Interviewer 1: From a long-term perspective, would you be running rule over some of the regional banks now because you’d have to imagine that, you know, even with all the stress that they’re under, it’s not as though all of them are gonna go bust. Yes, we’ve had the runs, but is there any case to be made considering how cheap they are at the moment to be taking a closer look?
Julie: Yeah, you know, I think there’s something to be said for that, right? If you think about it, there’s no asset that’s so divine that the price doesn’t matter and the same is true for assets that are under pressure. You know, for us, that’s not the type of investing that we do because, for me, my biggest question outstanding is what is going to be the regulatory backlash to what happened at Silicon Valley Bank. And it’s really hard to know, right, because that’s how regulation works in the U.S. We try to fix a problem that happened in the past and then we create new problems coming forward. So, before it was too big to fail, and now, is it too small to save? We don’t know. I think it’s gonna be really tricky to guess what our regulation is gonna be and so, for me, that’s why we’re kind of hands-off on most of these regional banks.
Interviewer 2: Yeah, it’s not like the mandate keeps changing. You just keep getting additional mandates, mandate after mandate, on how to protect different segments of the economy. I just wonder, you know, just because the China markets have come online, how are international markets looking to you as an investor right now from a relative yield perspective?
Julie: I think there are lots of interesting opportunities internationally to be had. You know, it’s fascinating to me seeing how the Chinese economy comes back online and what that means for the rest of the global economy. We could… You know, the knee-jerk reaction is to think about things in terms of commodities and I think that’s true, but understanding how supply chains actually get fully unraveled and how that impacts the Chinese consumer is really compelling and interesting to me too. So, you know, I think on a general basis, risk, I still think a better market is probably the U.S. market, but I think there are lots of compelling companies abroad that have good competitive protections.
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