Five Spot: Loest Says Banks Are Bad Bets

Robert Loest, manager of the Integrity Growth and Income Fund(IGIAX Quote), doesn't expect the U.S. economy to rebound to past growth levels in his lifetime. He's avoiding bank and consumer-discretionary stocks.

His mutual fund, rated three stars by Morningstar(MORN Quote), is down 1% this year while the S&P 500 Index is flat. The fund dropped 13% annually, on average, in the past three years, outperforming the benchmark's 23% decline.

Welcome to TheStreet.com's Fund Manager Five Spot, where America's top mutual fund managers give their best stock picks in five fast and furious questions.

Are you a bull or a bear?

Loest: I'm a bear short term and "mouse-ish" longer term. I worry that far too many investors believe that, with enough stimulus, we can get back to the level and kinds of spending and growth we had a few years ago, and are ignoring both the debt-service drag this will create for future economic growth, as well as the fact that most growth this decade was fueled by debt that must be repaid.

I don't think previous levels of economic growth will occur again in our lifetimes in the U.S. Investors would be better advised to buy stocks more like people did in the 1940s and 1950s -- for relatively secure income. We must stop depending on "yellow brick road of asset appreciation" as the primary driver of personal wealth in the U.S.

What is your top stock pick?

Loest: Becton Dickinson(BDX Quote) boasts high and consistent free cash flows and returns on assets, and is 35% below our estimate of fair value based on discounted free cash flows.