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Weekly Wrap: Smart Moves When Markets Go Wild

Andrew Fisher, CNBC.com
Saturday, 8 Mar 2008 | 7:13 AM ET

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.

AP

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).

Economy Pressure

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)

In the meantime, the Fed made moves to improve liquidity and played down the need for an immediate rate cut.

The Week & You
A brief roundup of the week's top stories, with CNBC's Courtney Reagan

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.

Market Pulse Check
A look at what its going to take to gain confidence on Wall St., with Barry Ritholtz, Fusion IQ; Christopher Zook, CAZ Investments and CNBC's Mark Haines

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."

Chain Store Sales
The latest retail numbers, with Dana Telsey, Telsey Advisory Group chief research officer and CNBC's Becky Quick

Buffett Squawks

The week's turbulent events all followed a compelling Squawk Box appearance by Berkshire Hathaway chairman and CEO Warren Buffett, who would be identified at mid-week by Forbes as the world's richest person.

Buffett spoke the word that most in the financial community have been unwilling to speak.. the "R" word.

"I would say, by any measure of common sense, we are in a recession," proclaimed the Oracle of Omaha.

Some of those watching and listening to Buffett found what he did not say more newsworthy than what he did say. Among those observers was Mike Holland of Holland and Company, who took a very bullish tone, saying he expects the recession to be just about over by this summer, and adding that he believes Buffett thinks so, too.

"Warren Buffett told us yesterday there's a lot of opportunities in the fixed-income markets,' Holland said. "I think he's also buying stocks right now, even though he says they're just OK."

Over-Correction Opportunities
Opportunities seem to appear when the markets over-correct, with Mike Holland, Holland & Company chairman and CNBC's Mark Haines

And CNBC Contributor Herb Greenberg offered a piece of advice that applies to every investor who ever thought of following a market guru. When he was asked about the wisdom of buying like Buffett, Greenberg answered in the affirmative, with one very important condition.

"If I knew I could buy when he was buying and sell when he was selling, then I would do it," Greenberg said. "I'd say that riding the coattails of any investor has its perils."

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