How three of 2010’s biggest win­ners will tackle the mar­ket in 2011

The Washington Post Sunday - - BUSINESS - BY ERIN SCHULTE

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

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