Global business news twenty four hours a day. If Bloomberg dot com the radio plus mobile lab and on your radio. This is a Bloomberg Business flag from Bloomberg World Headquarters. I'm Charlie. Tell us the Dow, the SMP, Nezdak Hall advancing. We've got thirteen minutes to go ahead of the close. The SMP five hundred index very close to a record down. Industrials up three points now at eighteen thousand, five hundred thirty two, a gain of less than point one percent.
SMP five hundred Index also advancing by less than one tenth of one percent. Right now up a point at eight one. The nez Dak Composite indext up twelve to fifty two twenty five, a gain of two tents of one percent. Gold up five seventy the ounce to thirteen forty two, a gain of four tenths of one percent.
The tenure up sixteen thirty seconds, zeal there one point five three percent, and crude oil West Texas Intermediate Crew down eight tens of one percent, falling thirty four cents of barrel forty two six eight right now on West Texas Enemydia Crude. I'm Charlie Pellett, and that's a Bloomberg business flash. You're listening to taking stock with Bimbox and Kathleen Hayes on Bloomberg Radio. Value investing versus growth investing.
Some of those growth stocks we know, such as Alphabet, Facebook, Amazon, and Netflix. Well, that was maybe last year's story. Here to tell us about what might be this year's story and value is Scott Collyer. He is the chief executive officer and the chief investment officer of Advisor's asset management, helping to manage more than sixteen and a half billion dollars of customer assets. Scott, thank you very much for being with us. How do you define a value investor?
I think a value investor looks uh for um intrinsic value or more historical value and rise to to um the spot um asset classes that might be out of favor, but but there's some sort of a catalyst that might bring them back in favor. There. You know, the value investor that got stuck buying buggy whips waited a long time because there was really never a catalyst to to bring those back. So I think what we look for is is we look for not only value, as in
the asset is cheap. But is there a catalyst that would bring it back into vogue. I thought you were going to tell me it's being unpopular because the value investor has been unpopular for quite a while. They have, but sometimes you don't want to admit that about yourself. So it may be unpopular. But but I tried to define it in a nicer way. Well done. Tell us about defining some of the areas that value investors ought
to look for for returns? Well, I think some of the places where where we would we would spot value today a would you know, in the US markets, we continue to look at, you know, energy and materials, even though they've had a good first half of the year. We would submit that after a very long bowl excuse me, bear market, especially for materials, being about four years in length. Generally those trends take a long time to play out
to the upside, just like they do the downside. We think that there's a a global growth uh cycle that's just beginning, and quite frankly, there's been no new deposits of this stuff found over the last few years because, quite frankly, it hasn't been profitable to drill or dig for them. So I you know, we we continue to like those we've seen the catalysts begin to bring prices up that we think there's a long way to go there.
On a more global basis, I think places that right now are are hated the most, maybe like Europe, uh England even in the Brexit vote, as well as Asia, we think those are areas that provide a lot better value than we find in many of the the you know, the US based companies, And we would suggest that there's catalysts there in the fact that there's huge amounts of liquidity available at historically low prices, and generally governments that
are trying to be quite supportive of economic growth. I wonder if you could just expand a little bit on the concept of intrinsic value, because if you buy a stock, it is possible you always run the risk at the coming cope go out of business and you'd be left with nothing. But in the case of an asset such as a barrel of oil or a bar of gold,
you still have that physical asset. Does that change the way you look at the investment, Well, I think it changes the way you look at it at the very fundamental base and that I'm not sure what you do with a barrel of oil. I'm not really sure what you do with a bar of gold, But folks that mind them and folks that drill for them basically bring them up to the surface and sell them, hopefully at
a profit. So at the end of the day, you can buy gold as a currency replacement, or you can buy a gold miner that potentially has an enterprise that would throw off profits and potentially have some growth. I'm not a big fan of trying to to play the commodity itself because quite frankly, um, there's there's a number of things that can happen to the commodity that you would have no control over whatsoever, even though you can buy gold coins and stick them in your mattress and hopefully,
unless you're robbed, they'll still be there tomorrow. I think the way that we look at it is after you've gone through a prolonged time period when depleting assets have not been replaced, such as oil, gold, iron ore, and you have demand that is rising for those which we currently do have, then the scarcity value, the price of that has to rise to the point of where people will go out and try to find more. So once again, it's it's really a traditional cycle. Pan It's not something
that's you know, that's popular right now. These are long dated commodity cycles and they have happened, you know, over the over the years and decades before. It's not really anything new. Well, you mentioned that word popular again, and I just want to pick up on that, because sometimes it's difficult to invest in things that are unpopular. But in your experience, is that where real money is made? Well, I, speaking for me personally, I think that's where real money
is made. I quite frankly, I don't have the ability to understand some of the valuations that might surround things that are that are popular that have no history to them. I do understand what happens when you have economic cycles, and when you have a building cycle or a car buying cycle. Those things tend to happen over and over. So at least speaking for myself, that that is the part of the you know, the investment spectrum that we choose to to exist. And so I think we can
make money here. I'm not sure that I could make money elsewhere, but but we make money in in this fashion. What don't you like, Scott, I think I don't like things that are defensive and expensive, right, and so if you take a look at both of those, um, you know, long dated sovereign debt would be right at the top of my mind. Any time that you have historically high demand for an asset class where the expected returns are the lowest on record, I think we normally call that
a bubble. And I'm not trying to say we're in a bond bubble. I'm just saying that historically were places we've never been before with negative yields, and generally speaking, capital does not sit comfortably in a place where it is going to be destroyed, even if it's just a
little by little over time. The second place are more defensive areas, and we've seen kind of a run up at the last half of two thousand and fifteen the first half of this year in utilities and consumer staples, so you know soap makers and uh, you know, soft drink makers. I think that those valuations on a historical
basis are stretched to their highest. So I think I would want to I would want to be turning down or decreasing my allocation to those areas and try to increase allocations to UH not only UH materials, energy, but also industrials and put costs er or down the consumer discretionary which they've had a hard time over the past twelve months. But I think we're beginning to see a
turn in that we've got a very healthy consumer. Once they decide to start buying a little bit more, I think it will have a huge difference, UH in the price of the consumer discretionary area. How about the price of emerging market assets, well, emerging market many of them UM and if you know, we're talking maybe Eastern Europe, we're talking parts of Asia, mostly Latin America. A lot of those countries, their fortunes are tied to what they produce.
And since commodities that kind of bounced, you know, to the first six months of the year, we've seen emerging markets bounce as well. In the In the case of Latin America, we've seen a number of governments change. We've seen the government in Argentina changed to a very pro business stance. We're seeing Brazil, besides the Olympics, we're seeing President russaf has been impeached. She is out of office
for six months. While she's put on trial. But essentially we're seeing the Brazil at the very end of of a historically long u bear market and a very brutal recession that they've they've uh they're trying to overcome. I would expect them to come out with a much more pro business attitude. Venezuela may collapse any day, but this is changed for the better. This is not changed for the worst. It's actually changed for the better. We would argue it's at the end of a very long bear market,
it's not at the beginning. We would we would continue to put assets there if you're looking for income. We think emerging market debt is in great shape, and I think if you can stand the volatility, emerging market equities are just in the very first innings of their bowl market, where one might argue that the United States is in maybe the latter number of innings in our bowl market.
Scott Collyer he is the chief executive officer and the chief investment officer of Advisor's asset management, helping to manage more than sixteen and a half billion dollars of customer assets. He's staying away from what he describes as the defensive and expensive We're gonna take you through to the clothes on Wall Street. This is taking Stock. I'm pim Fox. This is Bloomberg.