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2007 Good Year for Traders, But Maybe Not for Investors

Michael Driscoll, senior managing director of equity trading for Bear Stearns, told CNBC’s “Morning Call” that he believes 2007 will be a year for traders –- not investors.

“I’m not saying get out (of the market),” Driscoll said Thursday. “I just think 2007 is going to be very much a trader’s market. When it’s all said and done at the end of the year, I think we’re going to do fine and be somewhere around historic returns. But you sell stocks when things get a little frothy.”

Driscoll said he’s not anticipating a sharp downturn, but expects that someday “we’ll wake up and there will be a reason to sell the market off 2%.”

He said investors are looking for something beyond technology and financials, but haven’t found it yet.

“To me, it just seems that eventually the music is going to stop and (there) aren’t going to be any chairs left,” Driscoll said.

Thomas Galvin, chief investment officer of growth equity for U.S. Trust, said the market has changed, but remains sound.

“I think that inside the market it’s more of an issue of breaking a pattern of double-digit earnings growth for 16 consecutive quarters. And here’s the first quarter, it's going to be below 10%, and probably in the neighborhood of 4% or 5%,” Galvin said. “I think you’re going to see a more selective market and a market that’s going to shift away from cyclical earnings momentum into one that’s going to be carried by more sustainable growth. There’s no question the economy is softening and margins are getting pressured.”