Interview Question: What securities would you invest in?
I have an interview tomorrow afternoon with one of the world's largest investment management firms and have a feeling one of the questions that will be asked is somewhere around the lines of:
Considering the current global economic environment, what would you consider to be the best investments?
Please state what you believe is to be the best investments currently taking into account emerging markets, rising inflation, and real estate. Also please state why you expect these investments to have a solid return.
Thanks for the input!
Short on crude & long with FB.
Long AAPL
Natural Gas.
MLPs: 6% yield that grows at about 7% per year. Investment in a real asset where revenues are tied to producer price index + 2-3% and not tied to commodity prices, at least for midstream. Just about the easiest business model to understand...oil and gas pipelines. If the US continues to consume energy, these will do well. More stable client base now as there are significantly more mutual funds in the space vs. the hedge funds that were in during the crisis in' '08.
I like where your head is at--lot of interesting tax implications with these though.
I like natural gas at the moment. Definitely going to see increasing demand. Just gotta hope we can get more terminals on-line so we can export that ish.
All the other ideas suggested are solid too.
Long AUD/USD
I would go with non-cyclical businesses. Healthcare and dividend stocks are good bets.
Investment grade debt with shorter durations.
For stocks, investment grade companies, growing dividend. Buy and hold strategy. Possibly look for betas less then 1 (such as utility stocks - b/c they are safer in a down market).
If you can't come up with an original idea, why should they hire you?
Harsh...
But true :P
I would invest half of it in low risk mutual funds and then take the other half over to my friend Asadulah who works in securities...
Cheryl: You said you had a plan. Sterling Archer: My plan is to crowdsource a plan.
Get clever and show how you pick whatever you pick.
My approach would be:
Ask what time horizon to assume, what the target return is, establish a goal of steady return and minimal risk, focusing on preservation of capital. You want steady companies with room to grow and minimal downside.
Have strong views on whatever you pick but be ready to say "I never thought of it that way" and then try and mesh that thought with your thesis.
But I have to say, if you don't have one now, it might be a bit late and you're looking in the wrong place...but I wish you luck. You really should prep some memos if you are going to be doing more of these/further rounds.
That said I think there are a lot of assets at distressed prices that offer good long term prospects of returns. Many discount retailers (KSS), transport companies (LSE:FGP), and companies in scandal (Olympus) I think have been unfairly beaten up. Look at a pair trade between FGP and Student Transport. Both subject to similar macro trends, but one view is that Student is being propped up by overly charitable retail investors who like the idea of investing in a company that buses kids to school.
I hate these questions like "you have 1 mm, one stock, go." It sort of presumes that you've looked at every opportunity, which is impossible. Instead try and limit his focus and find out the goals and have some ideas ready.
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