2013 Market Predictions From 10 Top Money Managers
The stock market has had a solid start to 2013, but what do investors see for the rest of the year?
Plenty of money managers prefer to keep their views private, but a few don't mind making public predictions. As most of these investors manage billions of dollars, their expectations for the market might carry some weight.
The founder of Appaloosa Management and one of the world's richest hedge fund managers, David Tepper currently manages about $14 billion.
Tepper is extraordinarily bullish on U.S. stocks. He told Bloomberg anchor Stephanie Ruhle in an interview back in January that the “main thing right now is to be long equities.”
Last time Tepper made such a prediction, late in 2010, the resulting rally came to be known as the “Tepper Rally” as stocks traded sharply higher just as he had foretold.
As bullish as Tepper is on stocks, Wien is equally as bearish. Blackstone Advisory Partners' vice chairman believes that the S&P 500 will fall 200 points in the first half of 2013.
Also among Wien's “10 surprises for 2013,” is a rally in commodity prices and a reversal in financial stocks.
Blackstone has $210 billion under management as of December 31.
At the World Economic Forum in Davos, Switzerland, Dalio struck a bullish note. He said that excess liquidity will find its way into risk assets in 2013 and beyond. Dalio is the founder of Bridgewater Associates, the world's largest hedge fund with around $130 billion under management.
"I think the shift of the cash, that massive amount of cash will be what will be a game changer...into stocks, into everything. It will mean more purchases of goods and services and financial assets. It will be into equities, it will be into real estate, it will be into gold, it will be into a lot of...just basically everything."
Gundlach is primarily a bond investor. His DoubleLine Capital reached $50 billion in assets under management in November of last year.
Despite Gundlach's bond focus, he isn't shy about voicing his opinion of stocks: He was famously bearish on Apple shares since about April of last year, and still believes that shares could ultimately break below $400.
As for the stock market in 2013, Gundlach is bearish on U.S. stocks, but not all stock markets in general. He recommended that investors sell U.S. shares and buy Chinese stocks at the beginning of the year.
Jim Rogers doesn't invest others' money anymore, but his views are still widely respected. He founded the Quantum Fund with another famous investor -- George Soros. At the Quantum Fund, the pair had a ten-year stretch where the value of their portfolio gained 4,200 percent compared to an advance of around 47 percent for the S&P 500.
Rogers has been consistently critical of Federal Reserve policy and has said previously that he was shorting some U.S. stocks while being long commodities. He reiterated his long commodity position during the last week, saying he “owns them all.” He also warned once again that the Fed's easing policies, and similar monetary policy around the world, would eventually end in disaster.
Robert Doll is Nuveen Asset Management's chief equity strategist. His firm manages $117 billion. He recently told Bloomberg that the Fed's interest rate policy will allow the stock market to extend its gains. He likes U.S. and emerging market stocks but said that he was concerned about European and Japanese equities.
“The fundamentals, meaning corporate earnings, macroeconomics, delay of problems in Washington, zero-percent return on cash, and monetary accommodation virtually everywhere in the world,” Doll said in a Bloomberg Television interview. “They're the ingredients to me for stocks to go higher.”
Speaking at the Barron's annual round table, noted value investor Mario Gabelli said that he is positive on U.S. stocks, but he doesn't think the market will close up more than five percent in 2013. Gabelli is one of the wealthiest investors in America and runs GAMCO Investors, a $30 billion global investment firm.
While Gabelli expressed mild optimism about the broader market for 2013, he was enthusiastic about the atmosphere for event driven investing in individual stocks.
He said “I have never been more excited about specific stocks. This year, you will be able to make a lot of money as a result of financial engineering -- companies engaging in deals, takeovers, split-ups, spinoffs, and such. It is a phenomenal time to make money in the market.”
Felix Zulauf, the founder of Zug, Switzerland-based hedge fund Zulauf Asset Management, was more bearish than many money managers when he offered up his view for 2013 at the Barron's Roundtable. He said that the rally in risk assets is “late in the cycle” and that the market would fall between the second and third quarters as unresolved crises will re-emerge.
Unlike some observers, Zalauf is not a believer in a European recovery and said that he thinks interest rates will begin to rise once again for countries like Greece, Spain and Italy, reigniting the crisis.
“It is difficult to time such things, but around the middle of the year, the markets will start to reverse. I don't know whether they will end the year slightly up or slightly down. I expect the first half of 2013 to be friendly to equity markets, and the second half to be unfriendly, with risk rising.”
Brian Rogers is the Chairman and Chief Investment Officer of T. Rowe Price Group (NASDAQ: TROW). Speaking at the Barron's Roundtable, he said that he is expecting a fairly good year for equities in 2013. Rogers added that one thing that has the potential to boost equity returns in the year is money rotating out of bonds and into the stock market.
While he is not as optimistic about S&P 500 earnings growth in 2013 as some market strategists, he does think that the equity market is attractive relative to fixed income.
Rogers argues that “a combination of decent economic performance, reasonable valuations, and decent dividend activity suggests stocks could do well this year.”
Scott Black also shared his view for 2013 at the Barron's Roundtable discussion in January. He is the founder of Boston-based money management firm Delphi Management. Black said that his firm is modeling an earnings increase for the S&P 500 of around 5% for the year and that using these estimates the market looks fairly cheap. In particular, Black argued that large cap stocks are “systemically underpriced.”
The major obstacle that he pointed to for the year is the potential fight over the debt ceiling. Black noted that from “a July 7, 2011 market peak through October 3, 2011, trough, a period encompassing the prior debt-ceiling fight, the S&P 500 fell 18.8%. You can't rule out the possibility of something similar happening this year.”
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