Directions For Investing In a Non-Directional Market
Scott Richter has a set of directions for investors in a market that lacks direction: be selective; be defensive; and be very attentive to valuation.
His Fifth Third Asset Management Disciplined Large Cap Value Fund is up an average of 14.7 percent per year over the last five years.
How does he size up the current environment?
"We are clearly in a slowdown, but I think there are some compensating elements as well," he told CNBC. "All I can say at this point is, I think we're in a contraction, and we have to act as such."
In health care, Richter likes Forest Labs.
"It's got a very low valuation," he said. "They have a very interesting pipeline going into 2008-2009. They have about $2 billion cash, and the Street just beat the stock up."
His favorite technology name is International Business Machines.
"We are playing it, but we're playing it as an international idea, if you will," he said. "Also, an outsourcing idea, to the extent that companies want to cut costs, outsource IT. They can look at an IBM to do that."
And Richter has an energy play: Ensco.
"Ensco's an interesting offshore driller," he said. "It's being valued like land drillers right now, which seems to me to be a discrepancy. Also, natural gas is getting a lot tighter than it has [been] for the last several months. They drill in the Gulf of Mexico. We expect that to tighten up."