After correctly calling the stock market rebound after the lows of March 2009, Michael Browne, portfolio manager from Sofaer Global Research, is changing his bullish stance and selling stocks.
CNBC.com
"It's time to take exposure off the table. Am I going bearish? No, but I am no longer a bull," Browne said.
"It's going to be desperately slow growth in the stage two, post-inventory rebound phase and there are two causes of that and they're both financial," he said.
Browne thinks uncertainty about financial regulation from governments and stagnant bank lending is going to prove a major drag this year.
"The disconnect between the banks and politicians is leading to complete disarray in policy making," he said.
Secondly, the uncertainty surrounding financial regulation is discouraging banks from lending, Browne said. As banks fail to increase lending, it will be the politicians that bear the brunt of anger from the private sector, he said.
"If the banks can't lend, the economy can't grow," he added.
- Watch the full interview with Michael Browne above and watch his interview from March 2009 here >>>
Banks have been encouraged to buy government bonds instead of lending to the private sector, Browne pointed out.
Browne, who was described as a long-term bear before turning bullish in March last year, thinks 2010 will bring a "muddle-through economy."
"That's going to have a very major effect on the cost of money and the supply of money to the private sector. Governments don't produce growth, the private sector produces growth," he said.
Browne thinks there will be "no inflation, no interest rate rises and gentle employment growth" in 2010. Housing markets will not weaken, but not strengthen either, he added.
Browne recommends buying "old-fashioned GARP stocks" (Growth at Reasonable Price), "with a touch of cyclicality."
He likes airlines, gambling stocks, specialist financials and luxury stocks. Browne is also buying Phillips, Deutsche Post and Experian.
