Eaton Vance's Richardson Likes the Market, Not 'Four-Letter' Stocks

And the reality of the world that we're faced with -- and it may not be the world that we'd like it to be -- is a semi-permanent backdrop to the war on terrorism for the next two decades. So, for the investment horizon of everyone who reads TheStreet.com, this is it and we're going to have to learn to live with it. (Laughs.)

But that's not such a bad thing. My nightmare scenario is that people are transfixed by it and so scared away from the equity market that they don't participate in it. They don't recognize that crises -- like wars, financial events, bankruptcies, shock to the systems -- tend to set market lows, not make market highs. We had a lot of crises colliding recently -- crises of confidence, accounting, corporate America, a bit of a crisis about the U.S. and its role in the world. It's all a part of the market over the last nine months.

If we're trying to think of the longer term, I think a lot of the elements that tend to be associated with market bottoms we have seen over the past nine months. We've seen redemptions from equity mutual funds bond funds -- the sentiment indicators are telling you that people are scared. And that's a good time to buy. People are fleeing equity funds to the perceived safety of bond funds. We've seen the stabilization of prices -- stocks have stopped going down on bad news. I think what we've seen from this earnings season has been positive.

There's also been a conservatism that has crept into the business environment -- well, not crept, it more came in like a freight train! (Laughs). Corporations now are loath to say anything overly aggressive that they can't deliver upon -- as is Wall Street, because they're getting beaten up for perceived misdeeds. So, what we have is a situation where corporations and people who follow corporations are likely to underestimate companies' ability to deliver earnings.