{"id":30226,"date":"2012-06-13T12:44:04","date_gmt":"2012-06-13T16:44:04","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/2012\/06\/what-says-the-investing-all-star-team\/"},"modified":"2012-06-13T12:44:04","modified_gmt":"2012-06-13T16:44:04","slug":"what-says-the-investing-all-star-team","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2012\/06\/13\/what-says-the-investing-all-star-team\/","title":{"rendered":"What Says the Investing All-Star Team?"},"content":{"rendered":"

By The Sizemore Letter<\/a><\/p>\n

I\u2019ll let you in on a little secret, dear reader. In those moments when I have doubts, I like to look over the shoulders of great investors to see what they are doing. (Actually, it\u2019s really not much of a secret. It\u2019s a topic I discuss quite openly and frequently. See \u201cWhen in Doubt, Follow the Greats<\/a>.\u201d)<\/p>\n

Back in grammar school, your teacher might have called it \u201ccheating,\u201d but this isn\u2019t grammar school. It\u2019s the rough-and-tumble real world of investing, and we can all learn a lot from following the trades of great investors.<\/p>\n

Every year in January, Barron\u2019s<\/em> assembles an \u201call-star team\u201d of sorts to participate in their Roundtable discussion. The 2012 team includes familiar names such as Pimco founder Bill Gross, Gloom, Boom & Doom Report Editor Marc Faber, and Senior Investment Strategist of Goldman Sachs Abby Joseph Cohen.<\/p>\n

\"\"<\/a>In the June 9 issue of the magazine, Barron\u2019s<\/em> checked up on the Roundtable to get their investment outlook in light of the turbulence coming out of Europe (see \u201cCaution: Sharp Turns Ahead<\/a>.\u201d)<\/p>\n

Views among the ten panelists run the gamut, but a couple themes showed up with consistency.<\/p>\n

    \n
  1. Europe\u2019s sovereign debt crisis continues to be the single biggest threat to both the global economy and the capital markets.<\/li>\n
  2. China\u2019s slowdown is also a major concern.<\/li>\n
  3. The United States\u2014while healthy by comparison\u2014faces the \u201cfiscal cliff\u201d of tax hikes and spending cuts next year barring a deal between the White House and Congress.<\/li>\n<\/ol>\n

    The panelists might as well have added that the sky is blue, as these conclusions will come as a surprise to no one. Still, their recommendations for how to navigate the storm are varied and insightful.<\/p>\n

    Felix Zulauf, President of Zulauf Asset Management, is the most bearish of the bunch. Zulauf notes that stocks are cheap\u2014adjusted for inflation, Italian stocks trade at \u201clevels last seen in Mussolini\u2019s era\u201d<\/strong>\u2014yet that does not guarantee good returns going forward. Zulauf sees the West more or less caving in on itself under the weights of its debts.<\/p>\n

    Abby Joseph Cohen notes that \u201cIndividual investors have had the stuffing knocked out of them\u201d in recent years, which explains their skittishness. No one wants to sit through another 2008 meltdown, so investors tend to sell first and ask questions later.<\/p>\n

    This has created bargains, however. Like Zulauf, Cohen considers stocks to be cheap by historical standards: \u201cStocks are selling at low price\/earnings ratios [and] companies have strong balance sheets.\u201d<\/strong><\/p>\n

    Of course, as Cohen notes, this means nothing in the short-term. Stocks can go from cheap to cheaper.<\/p>\n

    Meryl Witmer, General Partner of Eagle Capital Partners, has the views closest to my own. Says Witmer, \u201cThe exodus from the market has created bargains. You have to stay unemotional and analytical and try to find companies that, in the long run, will generate free cash and increase in value. Usually, when stocks get cheap like this, things get better.\u201d<\/p>\n

    Witmer takes a play out of Warren Buffett\u2019s book, arguing that you should only buy a company \u201cif the market were to close for 10 years, you would still be happy owning that company.\u201d<\/strong><\/p>\n

    I will note that when I have made the biggest mistakes in my investing career, it is usually because I failed to take that advice. You don\u2019t have to actually hold the stock for ten years. You should just make sure that everything you own is something you\u2019d be willing to hold for ten years if the market were to close tomorrow. It\u2019s a sound rule of thumb.<\/p>\n

    Bill Gross\u2019s comments were particularly interesting. For a man known around the world as the \u201cBond King,\u201d<\/strong> Mr. Gross is not at all bullish on bonds, noting that \u201cTreasuries are overvalued and getting more so.\u201d<\/strong><\/p>\n

    Gross sees roughly a decade ahead of slow growth with the economy on central bank monetary \u201clife support.\u201d Yet he is bullish on select emerging market bonds and, interestingly, Sizemore Investment Letter<\/a><\/em> recommendation Siemens ($<\/span>SI<\/a>)<\/strong> and French pharmaceutical giant Sanofi ($<\/span>SNY<\/a>)<\/strong>\u2014both\u00a0European companies in the heart of the sovereign debt crisis.<\/p>\n

    I\u2019ll wrap this up with comments from \u201cDr. Doom\u201d Marc Faber.<\/p>\n

    Faber, uncharacteristically, is surprisingly light on the doom and gloom. Though he expects things to get worse before they get better, he believes that \u201cstock markets are oversold\u201d<\/strong> and that \u201cthe U.S. bond market is overbought.\u201d<\/strong><\/p>\n

    Not surprisingly, Faber likes gold. He\u2019s a long-time gold bug. But rather than recommend investing in a bunker in Idaho, Faber also likes Singapore REITS at current prices, as well as select European blue chips\u2014including Sizemore Investment Lette<\/em>r recommendation Nestle ($<\/span>NSRGY<\/a>)<\/strong>.<\/p>\n

    So there you have it. The All Star team is cautious, but they\u2019re not exactly running for the hills either. By and large, they are recommending selective buying on dips, particularly of high-quality, dividend-focused equities.<\/p>\n

    Sound advice, I would say.<\/p>\n

    Disclosures: SI and NSRGY are Sizemore Capital holdings. \u00a0This article first appeared on MarketWatch<\/a>.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

    By The Sizemore Letter I\u2019ll let you in on a little secret, dear reader. In those moments when I have doubts, I like to look over the shoulders of great investors to see what they are doing. (Actually, it\u2019s really not much of a secret. It\u2019s a topic I discuss quite openly and frequently. See … <\/p>\n

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