Big Money Managers Are Cautiously Bullish - Barron's

by: SA Editor Eli Hoffmann November 02, 2008 | about stocks: AAPL / BRK.A / DIA / GE / GOOG / GS / QQQQ / RIMM / SPY / STI / WFC / WMT    
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Remarkably, "Big Money" managers surveyed this week by Barron's magazine are unrelentingly optimistic - with 50% saying they're bullish or very bullish about the stock market's prospects through the middle of next year.

Here are some of the survey's key datapoints:

  • 62% believe stocks are currently undervalued; 7% think they're still overvalued.
  • 70% say stocks will be the best-performing asset class in 2009; 13% favor cash; 11% prefer bonds.
  • 21% say financials will lead the way over the next 6-12 months; 17% say energy or healthcare; 1% favor consumer cyclical stocks.
  • 10% are bullish on U.S. real estate; 60% are bearish.
  • 50% call their current investment stance defensive; 20% aggressive; 30% neutral.
  • Overvalued stocks: Google (GOOG), Wells Fargo (WFC), Goldman Sachs (GS), Apple (AAPL), SunTrust Banks (STI), Wal-Mart (WMT). Most-loved stocks: Berkshire Hathaway (BRK.A), GE (GE), Research In Motion (RIMM), Wells Fargo.
  • 62% of their equity portfolio is dedicated to large-cap stocks; 20% to mid-caps; 18% to small-caps.
  • An amazing 83% say they're beating the S&P 500 this year. Wow.
  • 91% expect a recession within the next year, but most think it won't last more than 12 months. 87% believe a U.S. recession will trigger a global one.
  • 62% see normalcy returning to credit markets within half a year. Only 15% think it will take more than one year.
  • GDP growth: 0.15% in 2008 and 0.49% in 2009. Inflation 3.28% in 2008 and 3.02% in 2009.
  • 17% remain bearish on stocks, but only 3 out of 70 see the Dow closing out 2008 lower than Monday's close of 8175, and only one thinks it will be trading below 8000 next June.
  • The median estimate is for a Dow close of 10,642 this year - up 14% from current levels, but down 20% on the year.

Salient sentiment:

  • "We could have a huge rally. The Fed is pumping up liquidity, and sooner or later some of this is going to find its way into the market. I feel like a kid in a candy store. My biggest problem now is in deciding what to buy." - David Corbin, chief investment officer of Corbin & Co.
  • "A lot of money is on the sidelines, but if you're a money manager, you can't afford to be out of the market, because you might miss the comeback." - David C. Hartzell, founder of Cornell Capital Management
  • "Portfolio values are declining, home values are declining, the unemployment rate is going up and consumer confidence is waning. While the market has fallen 40%, so have earnings." - Bryan Sadoff of Sadoff Investment Management
  • "After the tech bubble burst we had three down years [for stocks]. Two thirds of the economy - namely, consumer spending - is down, so it's hard to grow earnings, and that's bound to put downward pressure on share prices. It's hard to find much to be bullish about." - Jon Fisher, portfolio manager at Fifth Third Asset Management
  • "Equity investors will become more risk averse and likely focus on high quality, [buying] 'blue chip' stocks [of companies] that are able to grow their earnings regardless of the economic environment. Plus, many of these companies have and will pay a growing dividend. The new 'Nifty 50' will be back with a vengeance!" - a respondent

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This article has 15 comments:

  •  
    Nov 02 12:22 PM
    Quote: "An amazing 83% say they're beating the S&P 500 this year. Wow."

    So if they are (so clearly) lying about their performance, what ELSE in this article is a generally-agreed-upon lie?
    Reply | Link to Comment
  •  
    Nov 02 12:34 PM
    Eli: If you wish for anyone to take you seriously, quit trying to hype the mentality that got us into this.

    Quit being a sucker for these crooks.
    Reply | Link to Comment
  •  
    Nov 02 01:59 PM
    This article smells like a pump.
    Reply | Link to Comment
  •  
    Nov 02 02:15 PM
    Is this an article from 2006 or 2007????? If it is from 2008 then it is total BS.
    Reply | Link to Comment
  •  
    Nov 02 04:29 PM
    -25% still beats s&p 500..


    On Nov 02 12:22 PM papakow wrote:

    > Quote: "An amazing 83% say they're beating the S&P 500 this year.
    > Wow."
    >
    > So if they are (so clearly) lying about their performance, what ELSE
    > in this article is a generally-agreed-upon lie?
    >
    Reply | Link to Comment
  •  
    Nov 02 07:19 PM
    I feel for all who don't get it.

    I'm up 42% for the year; down from my highs of 70% +. But I have not doubt that I will finish the year above 70%. This is not some kind of scam to get you off your ... I hope it is incoragement.

    If not maybe you should find some other way to make money because if its not working for you. You just don't get it.
    Reply | Link to Comment
  •  
    Nov 02 08:00 PM
    In watching the price action late Friday afternoon (3 min. chart). I noticed a large sell off late in the day (typical), followed by a large buy of 1.4 M shares in the last 5 minutes, raising the price up to $108.29, then settling to 107.84 (not bad). This caused a “hook” to form on the MACD SMA (blue line) setting it to rise sharply above the LMA (red line) Monday morning. OBV says were at the beginning of another buy cycle. The Stochastic barometer indicates a short-term increase in price action is coming. Additionally, covered call ratings increase to 3 Keys, +15% next week indicated in futures. I wouldn’t be surprised if we saw $109 - $110 within first 30 Min of open.


    For those TA’s interested, please review your charts. What do you think?


    Reply | Link to Comment
  •  
    Nov 03 04:49 AM
    Paul Kedrosky calls out the Big Money fibbers:

    seekingalpha.com/artic...
    Reply | Link to Comment
  •  
    Nov 03 07:31 AM
    @mlibby - one thing that I get is SPELLING. Oh, and GRAMMAR. I feel for you if you don't.
    Reply | Link to Comment
  •  
    Nov 03 07:31 AM
    Yes, this monetary easing will bring about inflation. And inflation means rising prices for everything...

    Marc Faber said that Dow may go to 100,000 if they (FED) print enough money. And Jim Rogers is expecting an inflationary holocaust. The 3% inflation for 09 seems quite modest.

    jimrogers-investments..../
    Reply | Link to Comment
  •  
    Nov 03 08:40 AM
    Clowns think Apple is overvalued at $100. Is it any wonder most mutual funds have a pathetic track record?
    Reply | Link to Comment
  •  
    Nov 03 10:23 AM
    how can you add APPL to this? it's such a stable company, financially secure and great profit..their iPhone sales beat Blackberry this past quarter. APPL is so undervalued right now.
    Reply | Link to Comment
  •  
    Nov 03 01:36 PM
    Hi TimboM,

    Let me second your comment. "incoragement.&qu... Boy, we all could use some of that... :-))))))
    Reply | Link to Comment
  •  
    Nov 03 02:52 PM
    Sentiment for DJIA, NADSAQ and SP500 are all bullish right now. I always check the sentiment meter at www.predictwallstreet.... because its updated so often. They also have sentiment charts for each specific security. And if anything, Apple is undervalue. They are one of the only companies who has remained strong throughout all this market mess. Although sentiment right now for APPL appears to be becoming more bearish.
    Reply | Link to Comment
  •  
    Nov 03 03:52 PM
    But max-optimism signals a top not a bottom?
    Reply | Link to Comment
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