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Hersh Cohen Shares His Top Dividend Picks -- -2-

8 Apr 2017 4:33 am

How do we get out of the pension crisis facing the country? Pensions are expecting 7% returns, but how do they get that when the 10-year Treasury yields 2.3%, the market is at these levels, and dividend yields are much lower than actuarial assumptions? To compensate for the market's low returns, pension managers have transferred money out of bonds into stocks, but that makes returns more volatile. Some of this goes back to game theory and a fear of missing out. That's what a lot of portfolio managers competing against passive are thinking. Wages are rising. Business is improving. People are now afraid of missing something.

The market has come a long way. It isn't cheap, but it's not 1999 either. The Lowry's technical indicators I have used through my career continue to show more money flowing into stocks than out, which means you can't expect the market to collapse on a near-term basis.

What is the one lesson you'd pass on to investors?

The only way to make money is to hold stocks for long periods -- even better if you buy them when markets are down. If someone needs money within three years, put money in Treasury bills. But young people should put every penny they have in the stock market -- not trading, but just buying high-quality stocks and letting compounding work.

Thanks, Hersh.

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April 08, 2017 00:33 ET (04:33 GMT)

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