Steve Leuthold: Apple is Not Overpriced, Airlines are Attractive

By on April 24, 2012

Steven Leuthold - Leuthold GroupLast week Steven Leuthold, founder of The Leuthold Group, was interviewed by Betty Liu, Dominic Chu and Josh Lipton on Bloomberg’s “In the Loop” regarding his stock market outlook for the rest of the year.

Leuthold said he invested in banks (Bank of America, Citigroup) a few months ago when no one was interested in them and there were questions whether they would survive. Now, said Leuthold, everybody likes the banks so he’s getting cautious on them. He’s also concerned the Volcker rule is going to be enforced a little stronger. Leuthold indicated he might be taking a little money out of the big banks and added that maybe the regional banks were better. However, he believed the banks weren’t finished going up and wouldn’t sell too much, “since they have momentum going for them.”

Leuthold remembered the days long ago when banks sold at a 20% discount to the PE of the overall market. As we expanded what banks could do they had greater earnings potential through proprietary trading, etc., according to Leuthold. However, he thinks with lower earnings growth the banks might revert to a discount once again. Leuthold said when they decide to buy an industry they purchase a lot of stocks in the sector, including some bad ones.

Leuthold said between now and the election nothing is going to be done to bring down the deficit. As far as the election, Leuthold stated that Obama is leading and if he gets elected it will be somewhat of a negative for the market. Leuthold clarified that Obama is viewed by some as anti-business, although he has a lot of support from Wall Street in terms of money.

Leuthold described himself as a social liberal and a fiscal conservative. He said if government is going to provide services, you’ve got to pay for them.

The interview continued with Leuthold responding to questions regarding the effects of political gridlock, his view of Apple (AAPL), and what sectors he would overweight (airlines).

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