How to Win in the Long Run

Another insane day in the markets with big names like Merrill, Pfizer, Marriott, Southwest, IBM and Comerica reporting earnings. Just to name a few. Stocks, not sectors, are starting to become polarizing. Some companies are easily exceeding expectations and some are truly disappointing. If you want to win in the long run, you need to invest in what you know and study the company.

This morning on the Opening Bell I interviewed Robert Shiller, Yale economist of the Case-Shiller Index and Robert Hormats, international vice chairman of Goldman Sachs. Talk about two smart fellows. Here is what they had to say.

In the interview, Hormats had a lot to say about leveraging. "I think the deleveraging is going to lead to more write downs, we probably haven’t seen the end of it, I’d be surprised if we have."

He also said future deals won't be able to enjoy the kind of leverage that past deals have enjoyed. "A lot of home purchases are not going to have the same degree of leverage and the other side of that is that if you’re going to thrive in this new environment you have to broaden out. "

And what about the turmoil in the housing market? Robert Shiller said home prices have to find their own level. "The problem is not to get the housing market back on track, by that you mean home prices go up."

I asked him if we were in a recession, and he said, "We’re definitely in a weak economy, and we definitely have confidence down.  I think there have been more shocks to confidence this time it may not be measured in these indexes but people are worried about their financial intuitions and their outlook in a different way.  Whether the BEA calls it a recession is not the big question, the question is what long term growth will be. "