Weekly Wrap: Smart Moves When Markets Go Wild
It was a week to rattle the nerves of even the most unshakable investor, with another wave of credit concerns, indecisive retail sales results, and sobering employment numbers.
Even Warren Buffett had to admit things look unusually bad.
But what Buffett did not say may have carried more clout than what he did, and analysts still had plenty of stock-market investment ideas. (See the Weekly Wrap in the video below).
Those ideas generally involved bargain hunting in admittedly risky environments. And many of the experts stressed that typical investors may want to look for ways to be cautious and limit risk. (Check out an investor primer).
The week ended with a disappointing jobs number, a payroll loss of 63,000 for February. That renewed debate about whether or not the United States is in a recession.
"This confirms the fears that have been lurking in the financial markets in recent weeks. The probability of a U.S. recession is at more than 50 percent," said Richard DeKaser, chief economist for National City Corp. in Cleveland. (Read full story)
Amid the economic worries, what's an investor to do?
Patrick Cunningham of Manning and Napier advised the familiar path of least resistance: a big overseas corporation with a global scope. His choice was Unilever,based in the Netherlands, but with interests that even include Ben and Jerry's ice cream!
"Given the restructuring, given the concentration they're putting on their number one and two brands, we see this as very attractively valued right now," Cunningham told CNBC. (Click here for his full comments).
Financial Turmoil Continues
Financial stocks continued to reel as banks, worried about potential losses and the risk of mortgage related securities in their portfolios, continued to keep a tight rein on credit.
One bit of biright news, Ambac completed a stock offering that will allow it to forstall ratings downgrades from credit rating agencies Standard & Poor's and Moody's Investors Service. (Read full story here).
But Thornburg Mortgage and a Carlyle Group bond fund disclosed troubles with investments backed by mortgages. In addition the Mortgage Bankers Association that home foreclosures rose to record levels in the fourth quarter.
As a result, financial and bank stocks were pounded throughout the week.
But Christopher Zook of C.A.Z. Investments thinks it's time to buy them. Zook's top pick is Bank of America. Many analysts have criticized the bank for its acquisition of mortgage giant Countrywide Financial, but even as Countrywide CEO Angelo Mozilo was preparing to appear before a Congressional panel investigating huge executive pay packages, Zook was praising the deal.
"You've got a company that has massive earnings power, and we believe is going to be there to pick up the pieces that have been left over in the mortgage business,' Zook said.
Retail: Not so Bad?
Released at mid-week, February sales figures from retail store chains varied widely. Trendy Abercrombie and Fitch disappointed analysts, as did upscale Nordstrom, but February was better than expected at Wal-Mart and Target. (Read the full retail report here).
CNBC asked chief research officer Dana Telsey of Telsey Advisory Group which of the two successful retailers had the most attractive stock.
"Buy Wal-Mart over Target!" she quickly replied. "Wal-Mart's ability to continue to gain traction right now certainly looks good."