Nygren Talks Value, Opportunity, And The End Of QE

Worried about the end of quantitative easing? Top fund manager Bill Nygren isn’t.

In an interview with MoneyLife’s Chuck Jaffe, Nygren says that his firm’s five-year-holding-period, value-focused, bottom-up approach means that the exact timing of the tapering of the Federal Reserve’s bond-buying program “ends up not really being an important factor,” adding, “We certainly think the markets can handle it.”

Nygren says his firm tends to go into areas where there is controversy today, but where five years down the line normalcy should return. Today he sees opportunity in financials and some cheaper tech stocks. “Our expectation is that, over time, ‘normal’ returns to the market,” he says.

As for what to expect in 2014 for the broader market, Nygren says that such short-term forecasting is nearly impossible. But he does say that he thinks many people are still underinvested in stocks and that valuations are not unreasonable. “I think it’s a tough burden on the person who wants to argue that they shouldn’t own stocks,” he said, adding that bonds rates are so low that he doesn’t think they are worth the principal risk.

Validea’s Benjamin Graham-based portfolio is up 15.9% annualized since its 2003 inception, nearly tripling the S&P 500.