Today in Class:
Michael Sena briefed the classroom on a new technology the class could use to speed up votes, rather than using pens and paper. Clickers are provided by the Bucknell University Library and display voting results instantly on the in-class projector.
The econ committee reported on the current US consumption, investment, governmental spending, net exports, and GDP numbers. We expect consumption to rise by 2%; residential investment to remain stagnant and non-residential to improve modestly; government spending to contract this year and then increase at a slower rate over the next five years; net exports to increase by around 4% due to a weak American Dollar, and for GDP to grow by around 1.3% over the next year. We are bearish overall.
- Energy – Oil is down and energy as a whole is not forcasted to grow.
- Financials – These should continue to remain depressed for the foreseeable future, and special attention should be payed to Europe.
- Utilities and Consumer Staples – These will ride out the market, the class plans to overweight.
- Materials – Investment decisions will depend on the strength of the U.S. Dollar.
- Consumer Discretionary – As the economy grows slowly or not at all, we should expect to underweight consumer discretionary stocks.
The class discussed the possibility of a double dip recession and decided that over 2% GDP growth is necessary for sustainable job growth. Housing should be monitored as it will most likely lead us out of the current period of depressed growth.
- TEVA (Monica Wu): Recommendation is to hold. The class noted that margins are down so growth will be hard, there have been no recent brand-name drug approvals, and that sales are down. However, market data showed that out of 28 analysts, 22 said TEVA was a strong buy, so despite general consensus to sell, the class ultimately decided to hold in hopes of being able to sell TEVA at a higher price.
Access the complete minutes here: 09-22