George Vanderheiden, head of the capital appreciation group of Fidelity Investments, has turned bearish.
He wrote in the January Fidelity Mutual Fund Guide that several historical trends might weigh in against the stock market. Over the past 70 years, two successive years of 20%-plus gains in stocks have been followed by a year of flat to negative returns in a peacetime economy.
In addition, when a president is re-elected, the market tends to fall in the first year of his second term.
"History and presidential trivia aside, I believe 1997 could be a difficult year for stocks because both the economy and corporate earnings are likely to feel some strain," he wrote.
As a result, he is emphasizing growth at a reasonable price and high-yielding stocks.
Mr. Vanderheiden, who runs - among other funds - the equity portion of the $10.9 billion Fidelity Asset Manager fund, included s the stocks of the Federal National Mortgage Association, Philip Morris Cos. Inc., General Motors Corp., Compaq Computer Corp. and IBM Corp., as of Nov. 30.
