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

There's uncertainty still in the market and a lot of volatility, but it has the feel to us of a market that wants to go up. We think the fundamentals will start to support that later in the year. But you can't wait for the proof. You're never going to get the proof and the price at the same time. You have to anticipate.

Actually, in Eaton Vance's asset allocation fund, we are going to start shifting at the end of this month. We had skewed slightly toward value when we started a year ago. We're taking 5% out of the value side and allocating it to growth. It's more of a signal that we have a bit more confidence in the market and a bit more confidence in the economy. We think growth stocks of all stripes are going to do better in this environment.

4. I've been counseling TheStreet.com readers to diversify away from large-cap growth, primarily because most investors have too much exposure to the category, especially among the big names in the S&P 500, many of which still seem highly valued. Owning a Janus fund, an S&P 500 fund and Fidelity Magellan isn't diversification. Do you think the S&P 500 will perform well?

I think you're right. There's also ways of upgrading within large growth, too. (Laughs.)

I do think there's a subset of the large cap growth that will perform very well in the very short term. But they could face some challenges over three to five years. Generally, those are four-letter stocks. [Stocks listed on the Nasdaq and Amex have four-letter tickers.]

Seems an apt way to describe the technology sector over the past few years.

It'll be a long time before they shake that stigma. It's still too soon.

5. Actually, looking down your top 25 holding, the only four-letter holdings I see are Microsoft and Amgen. Why are you still shying away from technology?

I had been saying for about three years that Amgen(AMGN Quote) and Comcast(CMCSA Quote) were the only four-or-more-letter stocks I liked. We haven't liked Microsoft(MSFT Quote) quite that long.

But we had some pricing on some of the four-letter stocks back in October, when Cisco(CSCO Quote) was under $10. There's a reasonable risk-reward there. It's a little different at $14. You know, we've compressed these big tech stocks, with all these stock splits. A lot of these big-cat stocks turned up in single digits. (Laughs.) It used to be you never bought a stock in the single digits because once it went that low, it wasn't coming back.