This is the second part of a two-part transcript in which Fool.co.uk's David Kuo chats with Elissa Bayer, investment director at asset manager Williams de Broe, about the concerns of wealthy investors. Elissa also reveals some of her favorite shares and why she likes them.
You can read the first part of the transcript here. You can listen to or download the full podcast here.
EDITOR'S NOTE: What follows is a lightly edited transcript of David Kuo's conversation with Elissa Bayer.
David Kuo: OK. So, which country equities do you like then?
Elissa Bayer: I do like...I've got a problem at the moment with the Far East because I think growth projections are not going to be...
David: You do?
Elissa: Yeah.
David: Everybody loves the Far East.
Elissa: And I love the Far East and we've made a lot of...
David: I'm from the Far East, by the way!
Elissa: And we've made a lot of money, but clearly the growth projections are going down. So, you know, your China 8% might be 4% and it could be lower, so I think that's got to be factored in, and I also think people have money in the Far East, certainly on the Far Eastern funds, it's not wrong to bank some of the profit. Again, it's not going up in a complete straight line, also there's more pressure on countries like China, in the way they run their economy, the amount of information they give out is going to get more difficult. In many cases, one might have seen the best, so you're going to see positive growth, which is certainly better than if you look at Europe, but it's going to be more difficult. So, I think one needs to remember it. Also, looking at the countries like India and Brazil, fantastic growth stories again, but it's very hard for a private investor to get in other than through the funds and the funds haven't made money so you've got a difficult environment. So, going back to the stocks, I think your growth stories, United States still remains a great area with fantastic companies, because it's such a big area, because of consumer power, because of companies that are innovative, I think they do very well. They're also very good -- very good at showing you their figures, so somebody like Walmart presents figures in a way, weekly figures so you can see what's going on, and also they do what they do. They don't try and do other things, you know, and that I think is good. So I think you want companies that are good at what they're doing, stick to what they know and don't try and innovate too much.
David:
OK. So, another area that people are interested in right now are income stocks. You've already mentioned Glaxo as a...
Elissa: A yielder.
David: As a yielder, that's right. So, do you think people should be focusing on yield at the moment?
Elissa: I think if you're not going to get "shoot the lights out" growth, which clearly you aren't, you want companies that grow, but are also growing their dividends. So that would go to the Vodafones, to the BTs, Unilever, utilities.
David: They're boring companies, aren't they.
Elissa: Exactly, but boring may not be bad in the current environment. I mean a company that keeps on throwing off profits, or does what it does consistently without too many surprises. I think investors will be quite happy.
David: OK. So I'm going to pick your brain now, Elissa, about some of your favorite stocks at the moment. Can you sort of give me a handful of your favorite shares that maybe some of our listeners might be interested researching a little bit more closely?
Elissa: Well, most of my shares, I mean some of them, I've had for a long time. So I still buy Bunzl
David: Bunzl.
Elissa: Bunzl, yes.
David. They also make those...no, I don't think they make the filters for cigarettes anymore, do they?
Elissa: Now cigarettes, though, I think is a good market. I mean BAT, Imperial Group -- you can have reservations about them, but I mean it's a consistent, goes up in a straight line, and it has yield, and they're going to probably keep increasing their dividends. So, you know, that sort of thing, and drinks companies on the same basis, SABMiller, Diageo, all those things, dreadful things that people do. I think food stocks yes, I still think Tesco
David: You like Tesco?
Elissa: I think Tesco can turn itself around, yes. I think it took its eye off the ball, I think it took its eye off the U.K. market, but I think that has potential.
David: Is Philip Clarke the man to do it?
Elissa: Yeah, I think he can do it if you go back to far more basics. Supermarket shopping, for those who do it regularly, it's not attractive is the answer. People don't like it, you never meet people, it's a bit like going into your bank, you know, you don't get excited about it, but people do like it and I think the supermarkets are offering different things, but I think Tesco could come back and get it right again.
David: Do you think Tesco Bank will make a change to Tesco's bottom line?
Elissa: I think this banking thing, Marks and Spencer started a few weeks ago at going into banking.
David: Asda is doing it now as well.
Elissa: I know, I just think that is potty. Again, I think that's taking your mind off the ball, just be...when you're in the supermarket you're not banking, you're supermarket, and they should stick to each other. I think also, when you confuse your trust that people have or the belief in their supermarket, I think people are much savvier than that, they go to a supermarket because it's either near them or it is competitively priced, and I don't think you want to confuse that with banking. Stick to what you know!
David: You're one of the very few people who don't like the idea of Tesco moving into financial services and providing an across-the-board banking service.
Elissa: I don't think across the board is good. In my world it used to be -- I remember Mark Weinberg -- you should be a financial advisor, you should do pensions, and you should do whatever. The answer is each field requires something separate. If you sell food well it is not the same as being a banker, you know, they shouldn't try to sell product to their customers. I don't think it's the right way to go and I think when customers are confused as to what they're going in, that's why Woolworths lost it, you'd go into Woolworths and think, "Oh, isn't that exciting?" You never knew that they sold, that is not a good retail...way to retail.
David: Formula, is it?
Elissa: No, I think it's terrible and I think again with Marks, you know, now that they've got their own food, they've got other peoples food, they want their toiletries, their cards, their luggage, it's all sorts of things, when people don't know what they're going for and I think banking adds a dimension that you just don't need.
David: OK. So what about high technology, is there anything you...?
Elissa: Technology I think is good. I mean, I still love the Amazon
David: Apple
Elissa: Apple are now paying a dividend.
David: Does that not tell you something, the fact that it's paying a dividend?
Elissa: That's unusual I think, but they're throwing off so much money again, so returning money to shareholders is not a bad thing, but that's not really why you went into Apple. Amazon I think is an interesting case in point. Clearly there are worries about the way they're going their selling, and they're doing a lot more than people can just see. It's not just about books; it's a huge empire behind Amazon. There was a very good article about it in this week's FT, so it's really a huge growth company, but companies like that I think are interesting, and you don't get them in anywhere, really, but the States.
David: OK. So, some of the stocks you like are Apple because of its growth story.
Elissa: Yeah, I do like Amazon still.
David: Amazon, yeah, British American Tobacco, Imperial Tobacco, Glaxo because of its yield, Vodafone.
Elissa: I don't have much Glaxo. I can't bring myself to buy it, but the yield is good, and I appreciate the yield is good.
David: You've almost described my entire portfolio.
Elissa: Well that's alright, then. We're along the same lines.
David: OK. Now, Elissa, when I speak to you in a year's time, do you think the stock market will be higher or lower than it is today?
Elissa: I hope you speak to me in a year's time.
David:
I will definitely speak to you in a year's time.
Elissa: I mean if you're in the stock market, you're always optimistic it's going to do better. I think if we keep around this level, I think we may be very lucky and I think you're going to continue to get this volatility. I mean the eurozone crisis, which we haven't mentioned much, is not going to go away and you've got more elections. You've got an election in Germany, you've got an election in U.S., which is always a problem for markets because the U.S. just forget about everything else for months and months after the Maryland primary, so that's a bad thing. I think if they form some of the ways these elections are done that might be better because they're too short-term, you know. The process of two, three, four years on electionitis is really bad for markets so I think that's unattractive, but that's not going to change. So to say do I think...I don't think it's going to be much higher than it is now.
David: Really?
Elissa: No.
David: But the fact that you're going to be getting somewhere like a 5% or 7% yield on some of the shares…
Elissa: Is good.
David: You're going to be happy with that.
Elissa: Yes.
David: It's better than a kick in the teeth, isn't it.
Elissa: Absolutely.
David: OK. Well, it's been an absolute delight chatting to you, Elissa. I enjoy these chats we have every year, and I look forward to speaking to you next year.
Elissa: Thank you very much.
David: Now, I have one more chore to perform, and that is to sum up today's podcast with a suitable quote, and the quote comes from a Chinese author called Anchee Min, who said, "If you want a boat ride, you must be near a river," and I think what she's saying is that if you want to have some exposure to shares, you're going to have to go out and buy some.
Elissa: Absolutely.
David: This has been Money Talk, I have been David Kuo, and my guest has been Elissa Bayer from Williams de Broe. If you have a comment about today's show, please post it on the Money Talk webpage, which you can find at fool.co.uk/podcast.
Until next week, happy investing.
That was the second part of a two-part transcript in which Fool.co.uk's David Kuo chats with Elissa Bayer, investment director at asset manager Williams de Broe, about the concerns of wealthy investors.
In the first part of the transcript, they look at the potential of government and corporate bonds and the likely impact of quantitative easing. Just click here to continue reading.
David Kuo challenged his Motley Fool analysts to pinpoint the attractive sectors of 2012 -- and they delivered! Discover the industries they selected in this new Motley Fool guide -- "Top Sectors for 2012" -- while it's still free!
