Catching up with ... E. Clifton Hoover

David Dreman has entrusted you with the investing success of the company. How is the transition going?
The transition is complete and all the documents have been signed. I have a 25% ownership stake in the company. David remains chairman and he'll spend a lot more time on the quantitative side of the business. But from an investment philosophy standpoint, not much will change. He's stood shoulder to shoulder with myself and the other members of the investment team, so he'll still be a resource on which we rely.

We know you regularly speak with advisors. What are you hearing from them?
I was just in Chicago speaking with a group of advisors, and they were scared, just frozen in place. I had to remind these guys that, yes, it's volatile, but from volatility comes opportunity. People are worried, but when we climb a wall of worry, markets typically do well.

So how do you see it shaking out?
We're constructive on this market. Our valuations are cheap at about 10 times earnings. I believe you can have a free lunch if you have a mid- to long-term time horizon. Rather than buying into the bond bubble, if you have a portfolio with companies that have 10 times earnings and 5% dividend yields, you'll do well.

So should we be defending against inflation, deflation, what?
We're entering an inflationary environment, clearly. We'll be importing inflation if Bernanke continues to debase the currency. Bernanke is a Keynesian, and Keynesians are inflationists. The question every advisor should be asking their clients is, "Where do you want to be positioned in order to best protect your wealth and purchasing power?" When do you want to buy inflation protection? The answer is when it's cheap! At 10 times earnings, it's cheap now.