Financial adviser optimistic in annual report at Winthrop

dworthington@heraldonline.comFebruary 19, 2013 

  • Lucky ’13?

    Financial adviser Larry Carroll’s predictions for 2013:

    1. Stocks will outperform bonds.

    2. Stock in those mining gold will outperform the price of gold.

    3. Municipal bonds will outperform taxable bonds.

    4. There will be an increase in business mergers and acquisitions as companies determine what to do with large cash balances.

    5. If companies with cash don’t merge or acquire other companies, their cash balances could be returned to stockholders by increased dividends.

    6. Hybrid financial instruments such as convertible bonds and preferred bonds and master limited partnerships will be strong performers.

— America is laying the groundwork for things to get economically better, says Larry Carroll, a Rock Hill-born financial adviser with offices in Charlotte.

Carroll’s optimism is based on increased home sales, a steady rise in manufacturing jobs and an energy market that could see the U.S. be energy independent by 2020.

Carroll’s predictions came Tuesday at his annual market outlook presented at Winthrop University. About 70 people attended the event.

Carroll’s optimism, however, is cautioned by actions that could be taken in Washington, D.C. Among the known risks is government spending, which Carroll said needs to be reduced.

“We don’t know what path will be taken,” he said.

But the importance of events in Washington can be overstated, he said.

Carroll said the worry about the financial implications of the government falling off its fiscal cliff were unfounded.

“The fiscal cliff was a non-event. It was Y2K plus 13,” he said, referring to the year 2000 when computers were expected to fail but didn’t.

Carroll said another part of the problem is “the investing public is much too negative about the country, the economy and the market. Their outlook is too short-term. They are looking at five months when they need to be looking at five years.”

Looking at housing, Carroll said that while the market is about 500,000 housing starts shy of its historic average, “things are getting better.” He said the indicator to look at is new construction. If new homes don’t sell, that number drops immediately, he said.

“The housing market is already baked into the cake,” Carroll said.

He noted that when housing starts revert to normal activity it should mean approximately 3 million new jobs in construction. Those new jobs will have a domino effect as those now fully employed will make major purchases they have been putting off during the economic downturn.

The ability to extract more natural gas from shale should mean more power plants will convert to natural gas, he said. If domestic natural gas production continues to enjoy a price advantage over European and Asian gas, more companies will consider locating in the United States because of lower labor and utility costs, he said.

Currently, U.S. natural gas prices are about one-third of what is being charged overseas. Becoming energy independent in 2020, “that’s a game changer,” Carroll said.

Increasing domestic oil production could result in about 3.6 million new jobs, Carroll said.

Manufacturing jobs have been on the rise since a dip at the beginning of 2010, he said. He cited companies, such as Caterpillar, Continental Tire and Michelin, that have invested in jobs in South Carolina, where they found lower costs and a willing labor force.

Among Carroll’s other predictions was a continued volatility in the stock market, but with the positive outcomes. Over the last 33 years the market has lost money only seven years. The average drop in the market over that period has been 14.7 percent – a swing investors should come to expect.

“Don’t call me until it’s 15 percent,” he said.

He urged investors to remember that “declines are temporary, ups are permanent. You have to get through the temporary declines.”

Carroll also predicted that interest rates “won’t go up quickly” because of policies of the Federal Reserve Bank.

Don Worthington •  803-329-4066

The Herald is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service