Pessimism a Positive Sign for Stocks in 2013
NEW YORK (TheStreet) -- Stocks have performed exceptionally well this year in the face of overwhelmingly negative sentiment, and that's a positive sign for the markets heading into 2013, said John Buckingham, portfolio manager for the Al Frank Fund (VALUX). The fund, which garners three stars from fund-rater Morningstar, has returned 15% year to date, beating the S&P 500 by more than a full percentage point.
Welcome to TheStreet's Fund Manager Five Spot, where top fund managers give their best stock picks and views on the market in a five-question format.
What is your view of the economy?
Buckingham: Whether it is confidence, retail sales, auto sales, housing numbers or jobless claims, much of the data points associated with the consumer have been trending very much in the right direction. Further, important statistics on manufacturing and GDP growth recently have come in better than expected. Despite these seemingly positive developments, the mood of business executives has been pessimistic. In third-quarter earnings releases and conference calls, those occupying the corner offices have been very guarded in their outlooks, with the lack of optimism showing up recently in a big drop in the Business Roundtable's CEO Economic Outlook Index.Happily, when management has been down in the dumps over the past 10 years, it has been a great time to be buying stocks as the pendulum soon swings in the favorable direction. And we can't forget that Ben Bernanke and central bankers around the world are presently expending plenty of firepower in an effort to ignite a global economic rebound, suggesting to us that the Federal Reserve's 2013 projections for U.S. GDP growth in the 2.5% to 3% range are not unreasonable. What is your top stock pick? Buckingham: As broad diversification is a central tenet of our investment philosophy, we can never label just one stock as our favorite. Sorry about that. That said, a few that are top of mind right now, in alphabetical order, are Archer-Daniels-Midland (ADM), Corning (GLW), CSX Corp (CSX), Freeport-McMoran Copper and Gold (FCX), Hasbro (HAS), MetLife (MET) and Total (TOT). What is your top "sleeper" or "under the radar" stock pick? Buckingham: That's a tough one. But keeping diversification in mind, I would say Marvell Tech (MRVL), PetMed Express (PETS) and Portugal Telecom (PT). I suppose you could characterize these as little known, dividend-paying, undervalued stocks.
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