by Niko Kloeten
Griffin, head of international strategy at ASX-listed K2 Asset Management, offers a more bullish view than most in the industry.
Speaking at the Meet the Managers forum hosted by Heathcote Investment Partners this week, he said that despite the Eurozone woes, major corporates are in good shape.
US listed stocks are doing particularly well, and are heading for a record year in terms of earnings per share, he said.
The overall economic picture isn't flash but isn't as gloomy as many are making out, according to Griffin.
"The deleveraging process is going to be with us for a long time, there's no sugar-coating it - it's not going to be one to two years, it will take 15 to 20 years. Banks will have to be recapitalised and debt restructured.
"Despite all this, corporate America has never been more profitable than it will be this year," he said.
American corporates are in "rude health" with cash to assets at 11%, and they are earning good dividends - Griffin said stocks are yielding 8% while US treasury bonds are yielding only 2%.
Companies are using these low interest rates to their advantage, borrowing money cheaply and then using it to buy their own stock in what he described as "straight arbitrage."
These and other factors are why K2 has increased its level of investment in the stock market back to where it was pre-financial crisis in 2007.
"During the global financial crisis we had 60% in cash but the amount we held in shares went back up to 80%. It's not ideal to have a large amount in cash when you're charging fees but it does give you flexibility.
"'There's also not much point having stop losses if you can't go into cash, otherwise you would stop yourself out of BHP Billiton and go into Rio Tinto."
Niko Kloeten can be contacted at niko@goodreturns.co.nz
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