UBS Financial Services investment guru Nick Feild sees ebbs and flows

Published 7:50 pm Friday, May 23, 2008

EVERETT — It’s not a good time for nervous investors.

“Dealing with this market in the past few years hasn’t been easy,” admitted Nick Feild, executive director of national sales for UBS Financial Services.

Since the turn of the millennium, the stock markets have largely moved sideways. Over the long term, the average annual return from the Standard &Poor’s 500 index has been about 10 percent. Since 2000, however, the S&P 500’s return has average just 0.40 percent a year.

The market conditions in recent years have been a harsh wake-up call, especially for younger investors who might not remember a time before 1982, when history’s longest bull market began. That incredible run in market performance ultimately lasted through 1999.

“We’re been through this cycle before, and we’ll get through it again,” Feild said.

During bullish times, it’s easy to make money in the stock market. At times like these, it’s still possible to realize good returns. It just requires a little more investor know-how.

“We have to be more thoughtful and think outside the box going forward,” Feild said.

The investment expert for the one of the world’s largest private banks and asset management firms was in Everett last week, speaking to UBS’ local clients.

A Texas native now living in New Jersey, Feild won’t be accused of seeing the investment climate through rose-colored glasses. After the mortgage meltdown and credit crisis last year, he can’t shake the feeling that something else might hit markets hard.

“I’m hoping there’s no other shoe that’s going to fall that we haven’t anticipated,” Feild said.

Here’s more of what he had to say on a variety of issues concerning those watching Wall Street.

Where we’re headed: UBS forecasters think the U.S. economy will narrowly skirt a recession this year, but the technicalities don’t matter much.

“We think the economy will continue to slow, mostly due to the housing situation, which has become a big drain on the economy,” Feild said. “We don’t think the question right now is whether we’re in recession. It’s more how long will it take to start recovering.”

Bright spots: Feild is bullish on big multinational companies that can withstand recessionary times and do a lot of their business overseas, where many economies are growing faster.

The energy sector has done well lately. UBS also is bullish on investing in health care companies, as well as the consumer staples: the agribusiness, technology and telecommunications sectors.

The housing market: It usually takes 12 quarters for the housing market to drop from its peak to the bottom. With that in mind, Feild and UBS forecasters think it could take another year to 18 months for the housing market to bottom out. “The subprime loans are working their way through the system,” he said, and he’s cautiously optimistic that the worst of the mortgage meltdown may be past.

Oil prices: When crude oil futures soar, the stock markets tend to fall. And economists are worried about oil, which has soared past $130 a barrel in recent weeks.

Feild said there’s more behind oil’s rise than simple supply versus demand.

“I think there’s about a $20 to $30 price in there that has nothing to do with supply and demand. That price is all investor speculation.”

But as the world economy slows, he sees oil coming back down as well.

Still, get used to paying $3.50 to $4 a gallon, as he thinks that will be close to the new norm in the U.S.

The weak dollar: Part of the reason oil prices have gone up is the weakness of the dollar. Also, the spread between the euro and the U.S. dollar has widened to record levels recently.

That will force Europe’s central bank to lower rates sooner or later as slower economic times take hold there, Feild said.

“We think that’s going to happen soon. We think the dollar could easily strengthen, versus the yen and the euro, by the end of the year.”

On the election: Investors ask which candidate or political party is better for Wall Street. Most of the time, it doesn’t matter much, Feild said. Looking at past history, the average rate of return for investors under a Republican-controlled White House and Congress has been 12 percent. When Democrats have run the White House and Congress, the average is 11 percent.

“Taxes are probably going up no matter who’s in there,” he said. “But no one’s going to make radical changes on Day 1.”

Investor psychology: “Investor confidence is as low as it’s been since 1980. People have a fairly jaundiced view,” Feild said.

The key to investing right now, he said, is not to panic. Diversify smartly and don’t let short-term events overrule good investment judgment, he said.

“It’s very important in this market to have your head on right and your thinking straight.”

Reporter Eric Fetters: 425-339-3453 or fetters@heraldnet.com