According to Robert Olstein, chairman and chief investment officer of Olstein Capital Management, focusing on market fundamentals reaps bigger rewards than trading on news of the day.
Don’t miss Friday’s broadcast of the FOX Business Network’s Wall Street Week, when the values-based investor will share why he sees a big difference between an investment decision and a market decision.
Continue Reading Below
“The general market, they don’t really understand there are real companies behind those stocks. You have to value the business. And the values of those businesses do not change as rapid as the stock prices do,” Olstein said.
He said two major differences between what he views as attractive and unattractive investment opportunities. First is the difference between buying an index fund like an ETF, and buying into an actively-managed fund like a mutual fund.
Olstein said he prefers active over passive management.
“I would tell investors to find people to manage your money, unless they’re going to do the work. We create volumes of information on every company we look at, looking behind the numbers…and if you don’t have that ability, then I guess you have to buy the index, but there’s no guarantees with the index,” he said.
He continued by saying getting into the market at the right price is the key to long-term investing – but often those names are unattractive to a certain segment looking for immediate results. He pointed to several stocks that he sees as value-based plays in the current market environment. One of them is Bed Bath and Beyond (NYSE:BBY).
“Everybody hates it. Their margins are going from 12%, 11%. We think this company is real. It’s relevant. The margins are going to drop to 10%. That’s enough to produce $6 a share in free cash flow. The stock is $48. We like the problems because we get the right price,” he said.
Find out his other stock picks and investing advice during the full interview Friday at 8:00 p.m. ET on the FOX Business Network.