Word: levkovich
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...Calling financial firms the bright light of the market would be a very nice way to put it," says Tobias Levkovich, chief U.S. equity strategist of Citigroup. "But what is happening is that last year was the financial crisis, and this year is an economic crisis...
...were scared out of your stocks during the bear market, no doubt it's time to suit up again. This recovery is real. But it's far too late to pile in indiscriminately. Tobias Levkovich, a U.S.-market strategist at Smith Barney, figures the major stock averages will end the coming year flat or slightly lower as investors wait for the economy to catch up with stock prices. That's no sure thing, given that the stimulative effect of lower taxes and falling interest rates will run its course early...
That doesn't mean you can't make money in stocks. Other analysts are more bullish, and even Levkovich believes that some sectors will do well. He expects around midyear a massive shift out of economically sensitive cyclical stocks like technology and basic materials (Alcoa, Dow Chemical, International Paper) into defensive stocks like drugs, foods and beverages. Why? Defensive stocks, which are less vulnerable to the ups and downs of the economy, lagged badly in '03, rising just 8% on average. They now look relatively cheap next to tech (up 40%) and basic materials (up 30%). And as it becomes...
...LEVKOVICH: Over time they'll do better. One thing we look for is strong inside ownership. Family-controlled companies will be interested under new legislation to pay themselves...
...LEVKOVICH: I'll hit a couple of them. Long term, dividends are important. I think defense is another long-term theme. A Northrop Grumman is going to pop up as a beneficiary. But if I look at very specific ones, one of the very few areas where you can talk about pent-up demand is travel. Corporate travel, leisure travel have been put off by two wars, recession, a bubble bursting, SARS. The only thing that hasn't hit this industry is pestilence. There are very few new rooms coming on the market, so you have an industry that...