INVESTMENT Q&A

Editor’s note: The Investment Q&A feature appears regularly in the Banking & Wealth Management special reports of The Central New York Business Journal, spotlighting area investment professionals and their views on the financial markets and investments. In this issue, Ted Sarenski provides his outlook.

Theodore (Ted) J. Sarenski, CPA, CFP, president and CEO of Blue Ocean Strategic Capital, LLC in Syracuse

CNYBJ: What is your view on where the financial markets are headed in the coming months?

Sarenski: We have had a shaky start to the financial markets this calendar year. Often we look at markets and ask what will happen this year when in reality they are a continuum with no beginning or end. I believe U.S. markets are looking strong for the months ahead based on the Federal Reserve’s moves recently to reduce the bond buying they started on 2008, the reduction in the unemployment rate, the gaining strength of the dollar, and the passing recently of a budget by the folks in Washington.

Europe is stabilizing and should not be a drag on markets. The emerging-market countries did not have a great 2013 and it appears they will not be robust in 2014 either. Many investors had moved fixed-income investments to foreign markets because of the very low interest rates domestically over the past few years. The 10-year U.S. treasury is approaching 3 percent, which will cause fixed-income investors to bring some of their funds back to the U.S. and hurt the emerging-market economies. The U.S. Treasury is still the safest place in the world to have investments.

CNYBJ: Provide specific recommendations for investments that clients should be making right now.

Sarenski: Clients should be cutting back on emerging-market investments — on both the fixed-income and equity sides. Large multi-national U.S. based companies should continue to fare well in the New Year. Small U.S. manufacturing companies will be stronger as technology and rising wages overseas are starting to bring back many manufacturing jobs that had been sent overseas in the last 10 years. I do not believe we will have the kind of year in the U.S. that we had in 2013 [when the S&P 500 gained more than 30 percent], yet there are indications the U.S. markets will maintain and grow in 2014. Fixed-income is still not paying rates investors would like to see, so I would remain overweighted in equities and underweighted in fixed-income.

CNYBJ: What do you see as the greatest risks investors need to be aware of and seek to avoid in the coming months?

Sarenski: The greatest risk investors’ face in the next few months, in my opinion, is themselves. Markets never go up in a straight line. With such a powerful market in 2013, it is normal to see a pullback in the markets at the beginning of this year. Investors need not panic. Watch the factors, I mentioned in response to the first question. And, if those fundamentals to a good market appear to be changing for the worse, then the investor needs to be concerned and possibly reduce equity exposure in the near term.

Editor’s note: The Investment Q&A feature appears regularly in the Banking & Wealth Management special reports of The Central New York Business Journal, spotlighting area investment professionals and their views on the financial markets and investments. In this issue, Ted Sarenski provides his outlook.

Theodore (Ted) J. Sarenski, CPA, CFP, president and CEO of Blue Ocean Strategic Capital, LLC in Syracuse

CNYBJ: What is your view on where the financial markets are headed in the coming months?

Sarenski: We have had a shaky start to the financial markets this calendar year. Often we look at markets and ask what will happen this year when in reality they are a continuum with no beginning or end. I believe U.S. markets are looking strong for the months ahead based on the Federal Reserve’s moves recently to reduce the bond buying they started on 2008, the reduction in the unemployment rate, the gaining strength of the dollar, and the passing recently of a budget by the folks in Washington.

Europe is stabilizing and should not be a drag on markets. The emerging-market countries did not have a great 2013 and it appears they will not be robust in 2014 either. Many investors had moved fixed-income investments to foreign markets because of the very low interest rates domestically over the past few years. The 10-year U.S. treasury is approaching 3 percent, which will cause fixed-income investors to bring some of their funds back to the U.S. and hurt the emerging-market economies. The U.S. Treasury is still the safest place in the world to have investments.

CNYBJ: Provide specific recommendations for investments that clients should be making right now.

Sarenski: Clients should be cutting back on emerging-market investments — on both the fixed-income and equity sides. Large multi-national U.S. based companies should continue to fare well in the New Year. Small U.S. manufacturing companies will be stronger as technology and rising wages overseas are starting to bring back many manufacturing jobs that had been sent overseas in the last 10 years. I do not believe we will have the kind of year in the U.S. that we had in 2013 [when the S&P 500 gained more than 30 percent], yet there are indications the U.S. markets will maintain and grow in 2014. Fixed-income is still not paying rates investors would like to see, so I would remain overweighted in equities and underweighted in fixed-income.

CNYBJ: What do you see as the greatest risks investors need to be aware of and seek to avoid in the coming months?

Sarenski: The greatest risk investors’ face in the next few months, in my opinion, is themselves. Markets never go up in a straight line. With such a powerful market in 2013, it is normal to see a pullback in the markets at the beginning of this year. Investors need not panic. Watch the factors, I mentioned in response to the first question. And, if those fundamentals to a good market appear to be changing for the worse, then the investor needs to be concerned and possibly reduce equity exposure in the near term.