How three of 2010’s biggest winners will tackle the market in 2011
Investing in stocks in 2010 was a white-knuckle ride. Spring kicked off with the largest oil spill in history, and energy stocks were punished. The Dow Jones industrial average dropped a thousand points in a single day in May. Americans continued to question the strength of the U.S. economic recovery, and incessant talk of a double-dip recession dogged investors all summer. Unemployment numbers remained grim. And if you bought a house at the market peak, well, forget about getting out from under that mortgage. But, as always, despite the bleak chorus of talking heads, there was money to be made in stocks.
More important, there were many ways to make money in stocks, as we discovered by talking to managers of three of the best-performing stock funds from 2010. One saw an opportunity in energy companies that sold off steeply after the oil spill in the Gulf of Mexico. Another profited from the telecom sector, on the hunch that cellphone service providers, in response to complaints about dropped calls and dead zones, would spend big to patch up notoriously spotty networks. And the third looked to emerging markets to outperform U.S. companies— though this year he’s turning his focus back home.
We asked the managers about the most compelling investment ideas for the coming year, what will drive growth in 2011 and how they’re re-configuring their portfolios for another successful run across a changing investment landscape.
By the end of the year, housing will be much improved. I’m sticking with it. ... I’m expecting employment to pick up. ... When people start working, they can buy houses.”
— Jerome Dodson, Parnassus Small Cap fund There are a lot of positive stories that were not part of this credit bubble. Oil and gas, technology and industrial America are doing really well.”
— Brian Barish, Cambiar Aggressive Value fund I think we already had the lost decade in the U.S. The market today is in the same place it was in 1999.”
— Doug Rao, Marsico Flexible Capital fund