Barron’s Subtitle: “The Market’s Gains Won’t Come Easy From Here”
This is the first of two sessions. This year’s participants are: John W. Rogers Jr., Todd Ahlsten, Meryl Witmer, Rajiv Jain, Mario Gabelli, Scott Black, David Giroux, Sonal Desai, William Priest, Henry Ellenbogen, Abby Joseph Cohen.
It’s an insightful free-wheeling discussion. Short on specific buy recommendations but an exhaustive look at how investing is likely to be affected by domestic / geopolitics (in the broadest sense) along with the economic backdrop. Most foresee a flat to down year for U.S. equities. David Giroux expects a range of +5% / -5% this year - but looking out 5 years sees annual returns in the 6.5% area. He wasn’t too explicit, but seemed to be referencing his own fund (PRWCX) which he termed a “balanced” fund.
Giroux’s list of “likes” is long (excerpt): ”We see good value in managed care, life-sciences tools, utility stocks, and waste. We still see good value in companies like Microsoft, Intuit, and Salesforce, which has a low valuation … we are seeing good value in energy now as some supply-and-demand dynamics have changed.” And he’s still likes “high quality high yield bonds” (The latter struck me as a bit of an oxymoron.)
Graham Holdings (GHC) was recommended strongly by Witmer. Others joined in and much time was devoted to its numerous components including broadcasting, education and health care. It hurt a bit because I recently unloaded this one after what I thought was a nice run-up. Knowing when to sell a stock is a skill that escapes me. Deere (DE) is another stock that received favorable comment.
Participants noted that the economists / market prognosticators were nearly 100% wrong a year ago when recession was widely seen as “baked in the cake” and the market appeared headed for another bad year. Someone quipped that every year one of them says “It’s a stock picker’s market.” (When isn’t it?) Much was said of the approaching U.S. election and mostly with foreboding. One of the “optimists” (Witmer) predicted the U.S. will somehow “muddle through” without significant damage. Some think the markets will rebound late in the year after the election. The eternal optimism of Buffett and Templeton were noted in this regard. But the general feeling was far from optimistic. Most (if not all) find big cap valuations too rich, while small cap value is greatly undervalued. “De-globalization” is seen by some as a headwind, reducing efficiencies and adding costs for consumers. Franklin’s Sonal Desai says the “real interest rate” (inflation +) is in the 4-5% range - much above what the market currently assumes - implying rates will rise by year’s end.
Really recommend this article!
Comments
In some years, there are only 2 parts, but 3 parts are mentioned for 2024. Frankly, Part 3 gets quite stale, and all the stuff has leaked out by then. Remember that this year the Roundtable was held on January 8, 2024.
Rarely, if there is some huge event, Barron's may reach out to the remaining panelists for revisions to their upcoming recommendations.
There were 2 new panelists this year - John Rogers (Ariel) and Rajiv Jain (GQG).
In comparing with 2023 Roundtable, Rupal Bhansali left Ariel to start her own firm, and Ariel CEO Rogers replaced her. There was 1 net addition in that 2023 had 10 panelists, 2024 had 11.
Mario Gabelli has been a Roundtable member for as long as I have followed these Roundtables.
Succinct and very accurate.
@Crash, Devo, our MFO contributor posted a nice article on oversea investing this month. It pretty much sum up my thinking in recent years. If one ventures into EM, make sure you pick experience fund managers, not indexing.
FD: the above is good advice for most categories(stocks+bonds, that are not US LC.