Vision 2021 – Hope for the Year Ahead Tempers Disappointing Earnings

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Vision 2021 – Hope for the Year Ahead Tempers Disappointing Earnings

Capital Wealth Chief Investment Officer, Kevin Simpson, joins Yahoo Finance’s On The Move to discuss market outlook and how major corporations are faring amid the coronavirus crisis.

Workaround for Wise Investing

It’s well-known that investors currently have no information as far as earnings are concerned. In response to a direct question about how investors should make decisions when no information is available, Simpson shared that educated guessing is key.

“Our firm is paying more attention to CEOs, and what they are saying about the future. We’re approaching investing decisions by looking at companies that have endured bad times with strong cash flow and good management.”

He went on to say that he’s looking forward to 2021, but for the time being, investing is about quality, balance sheets and dividends.

High-Quality Companies, an Unchanged Standard

When asked what qualities of a company fulfill his investing expectations, Simpson elaborated on the unchanged standard of quality.

“Nothing changes for us. No matter what the market does, we invest in the highest quality companies – those marked by good balance sheets and good dividends. Managing risk is key. If you can manage the downside, the upside will take care of itself.”

Simpson emphasized that getting to the other side in one piece is about having a strong balance sheet with a good company.

Possibility of Reset Across Assets

With demand destruction happening across the board, Simpson was asked about the possibility of a reset across assets, using Verizon as a specific example.

“This situation is not unique to Verizon,” Simpson said. “They are not the only company with a lot of issues they’re going to have to address over the next three to six months. We have names in our portfolio that are thriving, including Johnson & Johnson, Proctor & Gamble and Walmart –these are great companies that are benefiting. Then we have others that are experiencing problems in how they’ll get through this. We own Verizon and we feel strongly about it. But for us, it’s been about a lot of rebalancing, and rotating in and out.

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