2Q Stock Picks

Biggs Says U.S. Stocks May Surge 20%, Led by Technology Shares 2010-05-11 02:57:51.772 GMT By Shani Raja and Susan Li May 11 (Bloomberg) -- U.S. stocks could jump as much as 20 percent, led by technology companies, as the global economy rebounds from Europe\'s debt crisis, said Barton Biggs. \"I\'m betting the next move in the U.S. market is going to be up 15 to 20 percent,\" Biggs, who runs New York-based hedge fund Traxis Partners LP and whose flagship fund returned three times the industry average last year, said in a Bloomberg Television interview today. \"I would just point out that the world is having a strong economic recovery, and so is Europe.\" Biggs recommended buying U.S. stocks last year when benchmark indexes sank to the lowest levels since the 1990s. He did not give a timeframe or refer to any specific stock index in his comments today. Futures on the Standard & Poor\'s 500 Index lost 0.1 percent to 1,155.10 as of 11:56 a.m. in Tokyo. The stock gauge climbed 4.4 percent yesterday, the most in more than a year, after European policy makers announced an almost $1 trillion loan package to contain the region\'s sovereign-debt crisis. \"There are plenty of opportunities in the U.S.,\" Biggs said, adding that shares in drug developers look cheap and that property companies are also attractive. \"It\'s by no means a foregone conclusion that we have a crisis every three years and, my God, that the world is coming to an end. I don\'t believe that\'s what\'s happening at all.\"

MacGyver wrote:

Again, i cautioned my fellow forummers. This is not a normal market correction. I have mentioned in my previous posting that 2Q looks ripe for a market correction given that DJIA is up 15% over the past 10 weeks. STI is looking tired and could not hold the 3,000 points convincingly. The Goldman scandal provides an excellent excuse for fund managers to take profit. So if you want to buy today, be prepared for a 3-6 month investment horizon.

I hope my dear forummers are not badly bruised in the latest market correction. This sell-down is likely to continue for a while. No sensible fund manager will buy small-cap stocks now given the uncertainly in the market. They will dump small-cap stocks to cash up and keep the big caps as there are more liquidity. I have personally sold off 90% of my portfolio to wait for a market correction. Another 10-15% correction in June for the small cap stocks is possible. No hurry to buy now. Might as well enjoy the World Cup in S.Africa. JPM issue a report that said England will win the World Cup this year. Cheers.

Hi Macgyver, If we buy only when we feel confident and sell when things look stormy, this would be tantamount to buying high, selling low. Not the most profitable strategy. Instead, I would advise purchasing companies with good fundamentals, financials, cash flows and economic moats at reasonable valuations. These companies should be stable in nature, have a track record and pay consistent dividends. The idea is not to pay too high a price for the future as the future is always uncertain; and to leave a margin of safety so as to preserve capital. I personally have begun buying slowly as the market has come down, with a 3-5 year time horizon in mind. Of course, at the same time I will be monitoring the results and business activities of the companies in which I am invested. Cheers to all!

Hi, Sorry, I cannot recall when did I say this.. \"....If we buy only when we feel confident and sell when things look stormy....\" Please help me to refresh my memory.

Hi Musicwhiz, Your strategy works when you have a longer time horizon and ample bullets. The bottom-up approach is still workable in today\'s environment but you need to have a brave heart. For me, I target to maximise returns on an annual basis. Pretty much like how a fund manager work. This is good training for myself to learn how the minds of present portfolio managers work. Hence, I look at big picture scenario and how it will impact each sector and specifically each stock weighage in a fund manager\'s portfolio. Watch out for another correction coming. Worst not over yet. Cheers!

A funny thing about markets is that, sometimes, when a certain expectation becomes widespread, the market is ripe for a different behavior. In the current situation, if a lot of people stay sidelined until month X, expecting the market to fall further or stay sideways, then theer will be those who will want to buy ahead of month X. So the expected recovery in month X never materialises - instead it comes earlier. Of course, the markets are very complex & dynamic and we are now in uncertain times. Policy changes and initiatives in Europe & US would likely surface this week, next week, next month, etc, and the markets will turn euphoric -or depressed - or stay neutral. Good luck everybody.