What is your favorite sector? Retzler: We have really been excited with the development in the storage and storage-related industries. The rise of importance in solid-state drives, with makers like STEC ( STEC), and the continued strength in the hard-disk drive, and companies like Seagate Technology ( STX - Get Report) made these areas our best performers. We also like the equipment suppliers to these industries like Xyratex ( XRTX). What sector or stock would you avoid? Retzler: I would refrain from industries that have high union exposures, significant leverage and large pension obligations. One industry that I avoid on a long side is the airline transportation industry which is also exposed to higher energy prices, which should eventually rise in a recovering economy.