Roundtable Guests See Challenges, Opportunities

Barron’s recently held its mid-year Roundtable report, asking several top strategists where they think the market and economy are headed. Ten investors participated; here are a few highlights:

Archie MacAllaster: The chairman of MacAllaster Pitfield MacKay says bargains abound. “If earnings come in close to consensus estimates, the market not only is cheap but maybe as cheap as it ever gets,” he says. “It’s not a bad time to put your toe in the water and invest, but given the way the market has been acting, do it carefully. Don’t use leverage, and make sure you have enough cash on the sidelines in case stocks go even lower.” He likes stocks like MetLife, Hewlett-Packard, and Manulife Financial.

Bill Gross: PIMCO’s “bond king” continues to see a “new normal” of slower growth ahead for the economy, caused by deleveraging in the private and public sectors, re-regulation, and de-globalization. He recommends high-quality sovereign bonds in the U.S. and Germany, and also likes some GMAC notes.

“We see similar gains of 4% to 5% this year in stocks, high-yield bonds, commercial real estate and other risk assets,” Gross says. “There is no asset that glistens, promising double-digit returns.”

Abby Joseph Cohen: Cohen, senior investment strategist and president of Goldman Sachs’ Global Markets Institute, says Goldman’s updated estimate for the S&P 500 for the next six to twelve months is between 1,250 and 1,300. She says she doesn’t think Europe’s crisis will be “fatal” for the Euro or Euro zone, but adds that — while Greece has gotten much of the headlines — Spain is a more important country to keep an eye on, because its economy is four times the size of Greece’s. She says the U.S.’s population growth and productivity growth bode well for it compared to many other nations. “April 2009 represented a critical turning point for the U.S., because that is when we did stress tests on the nation’s major financial institutions,” she says. “The banks that needed to do so adjusted their accounting, taking dramatic writedowns. That didn’t happen in Europe.”

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