Alamos says the recent swings in the market have made him more willing to buy and sell stocks instead of simply buying and holding.
“In quote `normal times,’ we’d say, ‘We’re going to buy here, below intrinsic value, and when it hits this point, we’re going to sell,’ Alamos says. The firm’s managers now use lower parameters for sell decisions because, with all of the volatility, they expect to be able to buy stocks more than once at low prices. ‘We need to trade this market a bit,” he says.
For example, Alamos says the firm used that strategy to buy and sell shares of New York–based bank Goldman Sachs Group Inc. “a couple of times” as the stock fluctuated.
For the Charts Homepage function, which lets you access sample charts you can use to track Goldman shares.
“We think that will add to performance going forward, if we’re in this sideways, up-and-down, volatile environment,” he says.
Alamos—who, in addition to piloting bombers, also flew 0-2 Sky masters in forward air control missions in Vietnam—hasn’t lost his love of flying. He owns a couple of small planes and still takes them up, though lately golf has become his main diversion.
Alamos say that flying can help clear his mind when the market turns confusing. “I can jump in my little Machete and go upside down a couple times and the world seems better,” he says. B
The former chief investment strategist at Merrill Lynch says recent gains in stocks may not signal an economic revival.
By THOMAS R. KEENE, CFA, and KEN PREWITT
THE REBOUND IN STOCKS that drove the Standard & Poor’s 500 Index up 37 percent as of mid-May from a 12-year low in March isn’t an all-clear sign.
So says Richard
Bernstein, former chief investment strategist at Merrill Lynch & Co., who’s not convinced the gains, led by financial shares, signify a brightening economic outlook “There’s a difference between the world not coming to an end and an actual resurgence in the economy,” says Bernstein, whose former firm was taken over by Bank of America Corp. in January.
The following is an abridged version of a May 6 interview.
You use the word consolidation. What do you mean by it?
If there’s one thing that most investors and even policy makers don’t particularly understand, it’s that bubbles create capacity. That was true in the technology bubble; we saw thousands of dot-comes formed.
Once the bubble deflated, there was no need for the companies. That’s true in virtually every industry in every country right now because of the huge credit bubble that we’ve just experienced.
One thing that goes along with excess capacity is deflation. You may see demand picldng up, but there is tremendous excess capacity in the global economy. It’s going to be years before we actually soak that up.