Investing in a Post-Crisis World

06/01/2011 2:00 pm EST


David Callaway

CEO, The Street, Inc.

One scary headline after another this time to put any money in the markets? Well, sure, says David Callaway, editor-in-chief of MarketWatch, who shares his thoughts on which sectors should perform well as the bull market continues.

So, it seems that there are all these black swan events that keep happening. People are terrified. They're scared. They often don't want to get into the market. Is that something that investors should be concerned about?

I don't think so. I think investors should actually ignore the headlines.

That may sound crazy from somebody who's in the news business, but the online news business gets faster and faster, on a 24/7—and there's always something alarming going on. There's an earthquake in Japan. There's a revolution in Egypt. There's flooding on the Mississippi.

Investors need to ignore that and think about the long-term trends, and the long-term trend here is that the financial crisis that rocked the world two years ago is over as we understood it. We're in a recovery, and investors need to figure out how to play that.

So what about going forward should investors play the market right now?

Well, I think investors need to play for a more sustained recovery. We've just concluded the second year of a bull market. I think we're going to celebrate the third anniversary of a bull market next March. I think it'll probably go right through the presidential election next November.

Investors in equities, in strong economic companies...we haven't seen a rotation into financials yet. They are still weak. We will in any bull market, so that could be expected. Tech is still strong. I'd hold off on the energy companies. They've had a good run already.

There's a lot that investors can think of, but they should play for growth.

Play for growth—what does that mean? Does that mean get into market segments where volume is heading in that direction?

I think: get into market segments where there's some value, where we haven't seen an overextension already, like the energy companies, like some of the tech sector. Look for various areas of growth.

Watch out for the commodities, which are overextended. Be careful on currencies...but really the equity rally is still there.

And you're really talking about investing in the US economy.

Well, or in the big European or in the big Asian. I think there was a huge trend during the financial crisis into emerging markets. That has reversed itself, and people are coming back into the big blue-chip markets in Europe, Asia, and the US.

Why is that? Because they're looking for more safety?

Well, I think because they see recovery, really. They were looking for safety and yield beforehand, and those other emerging-market economies were rocketing because we were flooding them with US dollars. Right now, that money is starting to come back...and especially if you think the dollar has bottomed, and is coming back, you want to come back into safer, bigger markets.

How long could you see the bull market lasting in the US?

I think it'll last through the presidential election next year, at least.

Okay, and then what about your thoughts on global investing?

Well, global investing, I think Europe is probably undervalued right now. They're in the middle of a crisis, which is going to keep people concerned about them.

I think China is overvalued. That's something to be worried about. But the rest of Asia—Australia especially—looks really strong.

So, still a lot of great opportunities in emerging markets?

A lot of great opportunities—and emerging markets are going to come back. The money moved out of there, but now they've cooled off. Time to kind of get back in. If we can have a sustained growth in the economy of the US, that will help everybody, and so you can get back into emerging markets.

So your message is we're investing in a post-crisis world. The crisis is over. There'll be bumps along the way, but lots of opportunities.

Absolutely, lots of opportunities.

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