Money Q&A with Jeffrey Saut, Raymond James investment strategist *

Published: Friday, Feb. 3 2012 4:00 p.m. MST

Jeffrey Saut, the chief investment strategist for Raymond James, visited Salt Lake City this week for an investment strategy presentation. Raymond James is headquartered in St. Petersburg, Fla.; however, the company has a regional office in Draper. The company provides various financial services to individuals and corporations.

Q: With the Feds keeping interest rates so low, where should people keep their money if they want low risk?

A: I think dividend-paying blue chip stocks are fairly low risk. Valuations are still pretty darn good. The equity markets have been below their median P/E ratio for the longest period of time since the 1970s. I think the S&P. I am not of the opinion that the U.S. is going into a recession. I think we are in a self-sustaining recovery, and a weak one. The retail is still frozen like deer in the headlights because they didn't manage the risk. I told people to raise cash in March and April of last year. Nobody wanted to hear about it because stocks were going up. They peaked their stocks between August and September lows, which was actually when we were recommitting capital to the equity markets.

Q: How much potential growth is there for municipal debt? And for U.S. Treasuries?

A: I'm not a real big believer in fixed income right here. I take the Fed at their word, and that they're going to keep the short end of the interest rate spectrum down for as long as they possibly can because they are worried about spinning the nascent recovery in the housing and real estate complexes into another downside swoon. If you buy the fact that we are not going into a double-dip recession, then interest rates over a longer cycle only have one way to go. As the economy gathers steam, interest rates are going to go up. People have forgotten that you can lose money in a fixed income. I was in the business when the 30-year Treasury bond went from a 4 percent yield to almost a 15 percent yield. And if you owned those bonds at the time your principal got cut in half.

Q: Is investing in certificates of deposit a good idea? Is there a better alternative?

A: I think there are better alternatives than CDs. If you are going to be in CDs, you need to stay fairly short term because interest rates over the next couple years are going to trend higher. I wouldn't be going out five to 10 years because you aren't getting any return. The government tells you the embedded inflation rate is around 2 percent, and they lie. The inflation rate is higher than that in my world. I don't now how it is out here (in Utah), but I am living in a world where the University of Michigan tuition goes up 8 to 10 percent per year. It's a big number.

Q: A bill was passed in May allowing gold and silver to be used as an alternative to paper currency in Utah. Utah is the first state to do this. What are your views on gold? At this point is it still a valuable investment or good as a safe haven for people?

A: I have been bullish on gold since December 2001 when China joined the World Trade. I connected the dots and said per capita incomes are going to rise. When per capita incomes rise, people consume more stuff. I define stuff not just as oil, gas and coal, but base metals, precious metals, cement, timber, agriculture and fertilizer come right into that fuse. So I think with interest rates low and per capita income rising in the emerging and frontier markets, a lot of those people do not trust their own currencies. I think gold over the next two or three years trades higher.

Q: In your opinion, what equity sectors are you finding the most potential for? If you had $100,000 to play, where would you place it?

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