WILLIAM F. "TED" TRUSCOTT
Chief investment officer
American Express Financial Advisors
Assets under management: $234 billion
Treasury rates: 10-year bond: 4.5%
Long bond: 5%
S&P 500: 1230
Hot sectors: industrial cyclicals, service industry, service side of health care providers
Hot strategy: small-cap
William F. "Ted" Truscott believes things will get a little worse before they start to get better for the economy and the stock market.
Even then, don't expect things to return to anything like the go-go '90s. Now it is time for moderation in the financial markets, and investors should look for returns closer to historical norms, he said.
"Sobriety is much more the norm in our outlook ... the huge returns of the past just aren't going to be there. The returns will be positive, but modest."
Mr. Truscott, who became CIO only days before the Sept. 11 terrorist attacks, is "mildly bullish" for stocks in 2002 and expects the economy to start picking up during the second half of 2002 "at a minimum."
Inflation should continue to be a non-issue, he said. In fact, he said, deflation is starting to become a "downside risk."
Without specifying individual stocks, Mr. Truscott said the decision between growth stocks and value stocks is "a good question, but a hard one to call" for 2002. In the end, he said, "if we had a tilt it would be mildly in favor of value."