LOS ANGELES (TheStreet) -- The stock-market slide isn't over yet, says David Wright, manager of the Sierra Core Retirement Fund (SIRAX) - Get Report. He's keeping more than half of the mutual fund in cash.
The Sierra Core Retirement Fund has returned 3.7% this year, better than 99% of its rival funds, which have fallen an average of 1.3%, according to
. The fund has gained 13% during the past year, outperforming two-thirds of rival funds.
Fund Manager Five Spot, where America's top mutual fund managers give their best stock picks and views on the market in a five-question format.
Is the worst over for stocks?
No, not at all. We're still in very dangerous waters here. Among other things, we had a bulge in sentiment. We had a lot of very exuberant trading over the past three or four months. We have all of the major signs of a top behind us, and we're only part way down on a major down cycle. I see more downside in equities in the second half. Perhaps a drop of 20% to 25% and maybe even more than that.
Why do you like long-dollar funds right now?
The dollar is a flight to safety haven. And as we expected starting in December, as fear accelerates in the coming months, you'll see global money flowing into the dollar and into Treasuries.
Why do you like muni bonds when there is so much worry about state finances?
All of the worries are already priced into today's market structure. And muni bonds have been exceedingly productive in the last three months and indeed the last 12 months. If you interpose a skillful manager from
, these are people paid to worry, and paid to understand which bonds to buy and which bonds to check out of the portfolio.
Why are you getting out of high-yield bonds now?
High yield turns down usually a few weeks after the stock market turns down and it turns down more slowly, but it tends to follow the major trends in the stock market. China turned down in August. Commodities turned down in January, Europe turned down in January. And so basically high yield bonds was among the last dominoes.
Why are you skeptical about emerging markets when lots of people say that's the place to be for the future?
China is lying through its teeth about its growth rate. Its exports are actually in decline and exports are at least a third of their GDP and China has other structural problems. Other emerging markets are somewhat dependent on exports to the developed markets. But the main thing is psychology. And as psychology is in the outgoing tide if you will, it's going to take all the boats out. All the things that were risky that people got exuberant about and greedy about in the last four months are turning down. And there will be another big cycle of psychology selling off by the end of the year.
-- Reported by Gregg Greenberg in New York.
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Before joining TheStreet.com, Gregg Greenberg was a writer and segment producer for CNBC's Closing Bell. He previously worked at FleetBoston and Lehman Brothers in their Private Client Services divisions, covering high net-worth individuals and midsize hedge funds. Greenberg attended New York University's School of Business and Economic Reporting. He also has an M.B.A. from Cornell University's Johnson School of Business, and a B.A. in history from Amherst College.