Stay Contrarian to Make Money: Pros
Stock markets rise and fall, but investors with a long-term view will make money, real estate investor Tom Barrack of Colony Capital told CNBC Wednesday.
Calling himself a "slow money guy," Barrack said the key is to "go back to controlling those things that only we can control and don't worry about the things we can't control."
Momentary ebbs and flows in the market "are nothing that we really pay attention to," said Barrack, whose company has $27 billion invested in real estate and $45 billion in assets around the world. "We’re stretching it out over a longer period of time and saying what we really have to do is get back to fundamentals, which for most of us in America is working for a living, not investing for a living."
As central banks print more money, "money won’t be worth anything. Assets will be worth everything," he said. With home occupancy returning, real estate has become "one of the best opportunities for those with a little bit of contrarian testosterone to invest. Now is the time, not when the herds are running."
Colony's holdings include 500 foreclosed homes it is already renting out. "It’s safe to say we’re at a cyclical bottom someplace. Whether we're at the edge of the bottom or coming on the down side or the upside, I don’t think anybody knows," he said.
He called the shadow inventory of foreclosed housing the "biggest tumor in the U.S. economy," and noted homebuilders "can't fight their way out of this box." That's one reason he is invested in single-family real estate investment trusts, or REITs.
Also with a contrarian point of view is Marc Utay, managing director of Clarion Capital, who, with Barrack, was part of a group that made what was ultimately an unsuccessful bid for the Los Angeles Dodgers baseball team.
"We try to take a longer timeframe perspective than what is happening in any one day," Utay said. With the market the most "volatile we’ve seen over last couple of years," he said doesn't look to take advantage of that on a day-to-day basis.
"Over the longer run, we look at where are the flows of capital going and which asset classes, which stocks, which kinds of investment is money flowing into and where is it flowing out of," he said. "We try to go wherever everyone else is going out of and sell where they're coming into."
Utay said he likes equities more than long-term debt. "Long-term government or high-grade corporate debt is going to be a pretty lousy investment in the long term," he explained.
Utay added he has "relatively positive, but modest expectations" on where company earnings will go over the next year or so. As for the economy, he has the advantage of being invested in companies that provide some indicators, including advertising, where he sees growth, and a competitor of payroll company ADP , where, based on payrolls and hiring, he doesn't see a sustained economic recovery.
The economy "will continue to drift in the right direction, but not necessarily upward in a very strong way," Utay said.
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Trader disclosure: On Apr 4, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Stephen Weiss is long JPM; Stephen Weiss is long SNDK; Stephen Weiss is long TBT; Stephen Weiss is long TBF; Stephen Weiss is long LUV; Stephen Weiss is long VAL; Stephen Weiss is long LLC; Stephen Weiss is short XHB; Stephen Weiss is short JCP; Jon Najarian is long AAPL CALL SPREADS; Jon Najarian is long X CALL SPREADS; Jon Najarian is long JACK CALL SPREADS; Jon Najarian is long GG CALL SPREADS; Jon Najarian is long CME; Jon Najarian is long CIGX; Jon Najarian is long CBOE; Jon Najarian is short SNDK; Jon Najarian is short MON; Jon Najarian is short GLD; Joe Terranova is long VRTS; Joe Terranova is long IBM; Joe Terranova is long MCD; Joe Terranova is long EMC; Joe Terranova is long MSFT; Joe Terranova is long JOY; Joe Terranova is long OXY; Joe Terranova is long LQD; Joe Terranova is short Gold Futures; Joe Terranova is short Silver Futures; Joe Terranova is long HFC
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CNBC.com with wires.