Diamond says a range-bound market still has its buys
By MarketWatch
BOSTON (MarketWatch) -- Terry Diamond, chairman of Talon Asset Management in Chicago, said investors can find a home in a range-bound stock market, especially it you’re willing to dig deep for pricing opportunities.
“I believe the market is going to be in a channel, like it was from 1966 to 1982, but within that channel there is good money that can be made in an old-fashioned way, by buying [stocks] cheap and selling them when they go up, or having a core position and selling some of it as the market goes up,” Diamond said during an appearance on the “Your Money with Chuck Jaffe” podcast.
“We have found wonderful opportunities in here, not only in December of ‘08 and January of ’09, but not long ago when people were talking about the possibility of a double-dip or a soft patch. … some of these great companies got to a point where I almost didn’t care if we had a double-dip because they were discounting that already.”
Diamond said the current economy puts a premium on finding the right fundamentals, noting that it’s possible to uncover diamonds in the roughest of industries. For example, while Diamond does not like the outlook for the financial services industry, he is buying Bank of New York Mellon. (BK 26.21, -0.13, -0.49%)
While Diamond acknowledged potential concerns about deflation — which he considers a short-term worry — or inflation, which he believes is a long-term problem, he said investors can balance their nerves buy looking for stocks that play both sides of the coin. He identified Exxon Mobil Corp. (XOM 62.19, -0.35, -0.56%) , noting that energy is a hard asset that protects against a weak economy or but that also would benefit if the U.S. dollar strengthens.
Other stocks that Diamond suggested might be good buys nowadays include Applied Materials (AMAT 11.49, -0.22, -1.88%) and Church & Dwight Co. (CHD 67.68, +2.46, +3.77%)
During the “Hold It or Fold It” segment of the program — when guests issue opinions on stocks requested by audience members — Diamond put buy recommendations on Wal-Mart Stores (WMT 53.57, +0.21, +0.39%) , United Technologies (UTX 70.53, -0.60, -0.84%) , Homex Development Corp. (HXM 32.23, -0.43, -1.32%) , and Millicom International Cellular (MICC 96.59, +0.49, +0.51%) .
He put conservative or opportunistic buys on Colgate-Palmolive Co. (CL 76.42, -0.15, -0.20%) and Starbucks (SBUX 25.69, -0.25, -0.96%) , while putting a hold recommendation on Hartford Financial Services (HIG 23.25, -0.17, -0.73%) and Becton Dickinson & Co. (BDX 73.67, -0.63, -0.85%) — noting that both could be buys if their share price declined from current levels.
MarketWatch columnist Chuck Jaffe hosts the “Your Money” podcast every Monday, interviewing money managers on their market outlook and including picks and pans on stocks that the MarketWatch audience wants to know about. If you’d like to submit a stock or fund for future review, send your name, hometown and the ticker symbols you are interested in to cjaffe@marketwatch.com.
