Mutual fund winners changing their moves

Mutual FundContrast in the attitude of the managers for the market

With the dawn of the New Year 2011, many of the strategy makers are being very positive about the time ahead, hoping to give the market an uplift of 13% for the Standard & Poor’s 500 in 2010.

On the other hand analysts are busy in arguing if the best gains for 2011 are originating from the states or is it going to be the emerging-market stocks, few of them also of the view that moving away from the U treasury bonds is the wise move for this point in time.

For a better understanding of the situation, let us put light on what the most known fund managers are doing to their current popularity. I would not want to forget to mention that all of them are winners of Morningstar’s Fund Manager of the Year awards for the current year.

Robert Goldfarb and David Poppe are two of the managers from sequoia Fund that also invest in U stock market

The Morningstar’s Domestic Equity Manager of the Year award for 2010 winners, Goldfarb and Poppe declare the fact they did not pay much attention to the stock market last year and are not too sure about the New Year either. And they go on, without making prediction about the market, that they are looking for some big companies that have a reliable income stream and are managing their business very well..These might not have performed very well when we talk about short term market situation but have performed exceptionally when we are taking long term under consideration.

In 2010 sequoia fund was ranked at the 7th place amongst the rest of the competitors, and have shown some outstanding performance for a whole decade. The fact behind the success is that the mangers are taking deep individual-company research more than just seriously, as communicated by Morningstar analyst Karen Dolan.

Despite the fact the mangers from sequoia were not making predictions about the stocks, they did not overlook the situation the economy is in. According to them the companies cyclic in nature or the ones that depend on strong growth, could easily be confronted by a slow economy. Making them stay away from trucking, machinery as well as selling bank stocks.

Goldfarb makes a point about the weak expansion for the last 10 years, saying that the expansion was being fueled by the massive boom of consumer debt. The visible strength now is the result of the unsustainable public debt.

He also said that soon people will reckon though he does not put his figure on when and how it will happen, as the no one knows the move the government makes. It might take the path of austerity as it was done in UK, and in such a situation everyone would want to run businesses that can do well in austerity. But no one knows the government might go for inflation.

In case government makes the latter move, the business that have strong pricing power will enjoy an easy time as well as those that have the capability if generating massive free cash and n really have any need for working capital or any fixed investment, he also pointed.

Chris Termeer

Chris Termeer is an oil and gas consultant, industry commentator and analyst. His book, Fundamentals of Investing in Oil and Gas provides a comprehensive overview of all aspects of the oil and gas industry, including exploration, drilling, production, storage, transportation and refining, to name but a few.

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