ROBERT C. DOLL
President and CIO
Merrill Lynch Investment Managers
Assets under management: $500 billion
GDP: zero to 1%.
Unemployment: 6% to 6.25%
S&P 500: between 1215 and 1274
NASDAQ: between 2021 and 2122
T-bills: approaching 3%
Dollar to euro: 89 cents or lower
Yen to dollar: 124 or higher
Hot sectors: consumer cyclicals and health care
Hot stocks: TJX, Cendant, EDS, Genzyme, Trigon
Robert C. Doll believes that this year, "fiscal policy will determine the direction (of the market) but valuation will determine the level and magnitude."
Because of high valuation levels now, "the recovery (in the stock market) is likely to be less than is normally the case." But because the fiscal "policy response has been gargantuan," he expects the broad stock market to return in the high single digits.
Technology stocks will continue to lag the S&P 500 and Nasdaq indexes in 2002, although he recommends one computer-related company. The hot sectors of the market will be consumer cyclical stocks and health care stocks.
For cyclical stocks Mr. Doll likes TJX Companies Inc., an off-price retailer of apparel and home fashions; Cendant Corp., which provides travel and real-estate services to businesses and individuals; and Electronic Data Systems Corp., which provides systems services, including management of computer networks and information processing facilities. In health care, he likes Genzyme Corp., a biotechnology company that develops and markets therapeutic and diagnostic products, and Trigon Healthcare Inc., which, among other services, provides managed care products and medical and workers compensation administration.
As for the market, he thinks the focus will shift to growth from value and it will favor small-cap and midcap segments, as opposed to large cap. He expects the Russell 2000, a proxy for smaller stocks, to do better in 2002 than the S&P 500.