Barron's interviews Douglas C. Lane, President of Douglas C. Lane & Associates. The composite of his firm's funds has soundly beaten the S&P 500 over the past 10 years in every timeframe.
Lane says he wouldn't be surprised if the market tests its 2008 lows in 2009, but also notes that the biggest risk is missing the next leg up. Point in case: After hitting bottom in 1982, the market rose 60% over the following nine months.
On his reluctance to invest in emerging markets: "When you are shoving a lot of money into a very narrow space, who do you sell it to when it is time to leave, or when you find out it didn't work, or when you have to cut back? China is down about 50% this year, so that is somewhat indicative of what you can expect in those worlds, which are too dangerous for us."
Lane coughs up four picks:
- Gannett (NYSE:GCI) - he's not convinced the internet will replace newspapers. "I remember when TV was going to replace radio, and cable was going to replace the movies, and none of that happened." Lane isn't sure exactly where Gannett's new revenue streams will come from, "but I know that most of these guys, particularly the guys at Gannett, get it."
- GE (NYSE:GE) - with a 4% yield, all you need is 4% growth for an 8% return. He thinks CEO Immelt may pick up ailing financial companies on the cheap.
- Qualcomm (NASDAQ:QCOM) - what's there not to like about its 3G patents? "As long as you believe that you are going to have a camera on your phone and you are going to get video on your phone, you want to be in 3G."
- Kimberly-Clark (NYSE:KMB) - good management, good brands, 3.8% yield.