Emanuel Weintraub: Risk and Reward on the Long Side

When do you sell?

EW: When the risk/reward is no longer attractive. That can happen due to price appreciation, it can happen due to deteriorating fundamentals, or it can happen because nothing changes and the price doesn't move significantly one way or the other. Regardless, it is not worth spending too much time on, as our process is about finding new, attractive ideas, not about squeezing every last dime out of past ideas.

What's your outlook on interest rates?

EW: In terms of long rates, we are in a rising-rate environment that bottomed in June of 2003. From a risk/reward basis, rising rates are the biggest threat to equity market valuations, so we try to assume that valuations will continue to contract when we set our target prices. As for the economy, these days we are "optimists for hire"; when others are nervous and we can make a good return buying cyclicals with the assumption that there won't be a recession, we will do that. Conversely, in a period like today where the risk/reward is less favorable, we will tilt more defensively.

Get Jim Cramer's picks for 2006.

« Previous Page

1 2 3

Next Page »