Secondly, annualized housing starts are down 80% from the peak and builders are vastly under-building relative to the annual population growth and annual household formation. As a result, we expect inventories to continue to come down, which should set the stage for a recovery as we have recently witnessed an improvement in new and existing home sales. Toll Brothers is one of the highest-quality homebuilders and has excellent management with a well-capitalized balance sheet. What is your favorite sector? Haase: We like the financials now. The industry has been completely recapitalized and the survivors, or winners, will now be in an even stronger competitive position than they would have otherwise been and will now be able to further take market share and grow their franchises as there are now fewer competitors. We also like Wells Fargo ( WFC - Get Report) and Goldman Sachs ( GS - Get Report). What sector or stock would you avoid? Haase: We do not own any of the large pharmaceuticals stocks. The industry has already consolidated and it is no longer a growth industry. The old gold standard of investing in the next "$1 billion drug" is meaningless as it doesn't even move the needle anymore. The recent merger announcements within the drug industry are from a position of weakness, not from a position of strength. Lastly, by 2012, close to 70% of all prescriptions will be filled by generics.