June 2, 2009
A number of top investment strategists offered their opinions about the market and the economy at the recent Morningstar Investor Conference in Chicago, including value fund star (and Benjamin Graham disciple) Mario Gabelli.
Gabelli, whose ABC fund posted its first negative returns in 14 years last year — when it dropped just 2.6% — sees opportunities in the market for long-term investors. “Basically we are very simple: What will the stock market do over the next ten years?” he told MarketWatch.com. His firm thinks gross world profit will grow at about 3% going forward, with inflation of 3%. Margins will be “a little challenged” and taxes will rise, but profits will still grow at about 5% or 6%. “Valuations are reasonable today on normalized earnings, so the markets are going to grow 7-8% total return to an investor today,” he says.
Gabelli said his firm does intense research into small- and mid-sized companies, and sees a round of consolidation and takeovers that will add 3 to 5 basis points to those returns. He said stocks still have a wall of worry to climb, as they always do, with issues like fuel prices, North Korea, and Iran having the potential to derail the market. But he thinks that the global efforts to address the financial crisis will eventually work, and he sees companies worth investing in. Gabelli was far from the only one to weigh in on the markets at the conference. SmartMoney offers a good, concise summary of what some other top investors had to say. As you’ll see, some shared Gabelli’s opportunistic view. Jeremy Grantham says he sees good values in emerging markets, for example, while Ron Muhlenkamp likes a number of bargain blue chip “Cadillacs”. Others had a gloomier view. PIMCO bond guru Bill Gross said he foresees a new world where “investors won’t be the winner”, for instance, while FPA’s Bob Rodriguez said the U.S. could even see its credit rating slip in coming years.
Past Performance is no guarantee of future results and pertain to the Gabelli ABC Fund Class AAA shares only. Other share classes may have different performance. As of 3/31/2009, –1.20%, 4.54%, 5.25% and 6.88% were the 1 year, 5 year, 10 year & life of Fund (since 5/14/93) average annual returns. The current expense ratio for Class AAA shares is 0.64%. Total & average annual returns are historical & reflect changes in share price, reinvested dividends & cap gains & are net of expenses. Due to market volatility, current performance may be lower or higher. Investment return & principal value will fluctuate so, upon redemption, shares may be worth more or less than their original cost. Visit www.gabelli.com/funds for most recent month-end performance. As a non-diversified Fund may have a larger portion of its assets in a single issuer than a more diversified fund. Because the Fund invests in announced mergers/acquisitions, it is subject to the risk that the announced merger/acquisition may not be completed, may be negotiated at a less attractive price, or may not close on expected date. The Fund may not achieve its objective & you may lose money by investing in it. Views expressed are those of Mr. Gabelli only through 5/28/2009 & are subject to change based on market & other conditions. Investors should consider the investment objectives, risks, charges, and expenses of the fund before investing. The prospectus contains more information about this & other matters and should be read carefully before investing. You can obtain a prospectus by calling Gabelli & Company, Inc. at 800-GABELLI, or contacting your financial representative or visiting www.gabelli.com.
Published with permission from the Guru Investor — theguruinvestor.com
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