Thorne Perkin takes con­trar­ian view of most in­vestors, says stocks are a good long-term play

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Thorne Perkin, pres­i­dent of Pa­pa­markou Well­ner As­set Man­age­ment, can’t un­der­stand why most in­vestors don’t like the Wall Street bull and keep diss­ing it all the time.

“This bull is uni­ver­sally loathed and has been hated for years, and I can’t fig­ure out why,” says Perkin, whose firm man­ages $3.5 bil­lion for high net worth in­vestors around the globe.

Not even de­clines three of the past four days, two of which were siz­able sell-offs, could change his view. Asked if the re­cent bout of volatil­ity made him re­think his call to hold an above-av­er­age help­ing of stocks in his client port­fo­lios, he shot back, “No. Volatil­ity doesn’t sur­prise us. We will have more of it.”

The fact is this bull, still within 3% of its record high de­spite the re­cent de­cline, has made a lot of money for in­vestors in the past 71⁄2 years — tripling in value and post­ing a 224% gain. But a cho­rus of doubters still warns of trou­ble ahead for this bull mar­ket, which they say is over­val­ued and propped up by un­prece­dented stimulus from cen­tral banks.

Wall Street heavy-hit­ters, such as bil­lion­aire investor Carl Ic­ahn, warn of trou­ble ahead.

“You look at the en­vi­ron­ment, and I think it is very dan­ger­ous,” Ic­ahn said Tues­day at an in­vest­ment con­fer­ence spon­sored by CNBC and In­sti­tu­tion- al Investor. At the same event, Stephen Sch­warz­man, CEO of pri­vate equity firm Black­stone, said the mar­ket has got­ten a pop from low in­ter­est rates and is “a lit­tle ex­pen­sive for his taste.” Hedge fund hon­cho Ray Dalio of Bridge­wa­ter As­so­ciates warned cen­tral bank stimulus is los­ing its ef­fec­tive­ness, put­ting the debt mar­ket in a “dan­ger­ous sit­u­a­tion.”

Amid the pes­simism, Perkin is a con­fi­dent, un­abashed bull, one who sees op­por­tu­nity in stocks where oth­ers see risk and reg­u­larly spin a bear­ish sto­ry­line of a fi­nan­cial world on the cusp of fall­ing apart. Perkin, in con­trast, is a true be­liever in the longer-term health of the mar­ket with a healthy con­trar­ian streak, an anti-pes­simist who is now pro­mot­ing what he says will be a win­ning in­vest­ment theme of “U.S. pre-em­i­nence.”

There’s sim­ply too much pes­simism mask­ing what’s good in to­day’s equity mar­ket, Perkin says. The lack of ir­ra­tional ex­u­ber­ance, he says, ac­tu­ally is a good thing.

Perkin ticks off all the things mar­ket doubters are scared of: “The bears say, ‘The Fed is go­ing to raise rates. The mar­ket’s ex­pen­sive. We have all these geo-

“The world is not end­ing. We dis­agree with the neg­a­tive tone we con­tin­u­ally hear.” Thorne Perkin, pres­i­dent of Pa­pa­markou Well­ner As­set Man­age­ment

po­lit­i­cal con­cerns. What will hap­pen if Trump gets in? Is the world go­ing to end?’ All the fo­cus is on neg­a­tiv­ity and things to worry about.”

Perkin thinks his view will win out and be more prof­itable than the doom-and-gloom picture painted by pes­simists.

“The world is not end­ing,” Perkin says, adding mar­ket pos­i­tives are be­ing drowned out by a story of fear, such as ris­ing in­ter­est rates. “We dis­agree with the neg­a­tive tone we con­tin­u­ally hear and be­lieve there’s an op­por­tu­nity for a con­trar­ian story with a pos­i­tive bent on the mar­kets and see at­trac­tive in­vest­ment op­por­tu­ni­ties in U.S. stocks.”

While most in­vestors worry about the Brexit fall­out, im­mi­gra­tion is­sues, an ugly pres­i­den­tial elec­tion, do­mes­tic ter­ror­ism and ISIS, Perkin stresses those and other world prob­lems “do not un­der­mine our the­sis of U.S. pre­em­i­nence.” While he says there’s al­ways a chance for a 5% to 10% mar­ket drop (a too-early Fed hike could spark such a de­cline, as could some other ex­oge­nous shock), he says in­vestors should take ad­van­tage of fear in the mar­ket and buy when prices dip.

He still rec­om­mends that his wealthy clients with longer-term in­vest­ment hori­zons and the abil­ity to stom­ach any pull­backs to­day put 50%-55% of their as­sets in in­di­vid­ual stocks. And when you add in the equity ex­po­sure his clients get from al­ter­na­tive in­vest­ments such as hedge funds, clients’ stock ex­po­sure rises to roughly 70%-75%, which he says he’s com­fort­able with.

Buy brand-name U.S. blue chip stocks with stay­ing power, he says. Perkin likes Google, Ama­zon, Visa, JP Mor­gan Chase, Exxon-Mo­bil and Pfizer. He says it doesn’t pay to in­vest in bonds, given the bench­mark 10-year Trea­sury yields 1.7%, which is less than the yields now paid by many blue chip stocks.

Other rea­sons why Perkin fa­vors stocks: Cor­po­rate earn­ings sea­son ended up bet­ter than feared, and any hint of a re­bound in earn­ings growth will get stock in­vestors ex­cited. He doesn’t see the Fed hik­ing in­ter­est rates un­til af­ter the Novem­ber elec­tion and ex­pects the cen­tral bank to re­main very ac­com­moda­tive.

 ?? CHANI CHURCHILL ?? “Volatil­ity doesn’t scare us,” says Thorne Perkin, whose firm man­ages $3.5 bil­lion for high net worth in­vestors. “We will have more of it.”
CHANI CHURCHILL “Volatil­ity doesn’t scare us,” says Thorne Perkin, whose firm man­ages $3.5 bil­lion for high net worth in­vestors. “We will have more of it.”

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