Reporter: As we’ve been reporting all day,
European and Asian markets posted today a very deep sell. Couple that with sharp drops
in the US market this year and a lot of people are talking about making defensive plays.
What do you do to make a defensive play right now? Well, you turn to our panel of experts.
Chuck Jaffe, a senior columnist from Marketwatch and Drew Kanaly, Chairman of Kanaly Trust.
Drew I want to start with you, because for most of this year or at least the past twelve
month period, I’ve been hearing that a defensive play is to put your money overseas. Put it
into the other markets because they’re going up even if America goes down. It doesn’t
seem to be working at the moment now does it? Kanaly: No, it doesn’t seem to be working
and they’re going to experience some slowdown just like we do. Their markets follow cycles
as well. And what you’re seeing right now is probably a general slowdown. Female Reporter: Drew, my concern is that
international stocks, it’s not just recently that money’s been going into them but the
inflows into international mutual funds have topped domestic for three years running. And
what happens now that these markets are tumbling even more than the US? Kanaly: Well, what you’re seeing is just
some change in the valuations. The Chinese market in particular, has really valuations
that we really haven’t seen since the DOTCOM days. so you see it unwinding that stock market.
And it’s really coming out of all the markets right now, because what you have right now
is just the entire market trying to reprice itself to some type of recessionary level.
We don’t know what level exactly that is but that’s what they’re trying to do. Female Reporter: Drew, if you new money to
put to work, does it make sense to put it in cash right now even though cash is not
paying you anything? Kanaly: It absolutely makes sense to put it
in cash right now. If you look out further at maturities, the ten years are approaching
levels we haven’t seen since 2003, so cash is definitely a place to be right now. Chuck
Jaffe, thanks for that and Drew Kanaly thanks for that.