Chief investment officer
Assets under management: $566 billion
S&P 500: 1,300
NASDAQ: 1,300 to 2,500
Hot sectors: Health care, financials, oil and gas
Hot stocks: Flextronics, Cardinal Health, Anadarko Petroleum, American International Group
Alan Brown is bullish on stocks.
Prior to the Sept. 11 terrorist attacks, Mr. Brown expected a longer, more drawn out recovery. But now he looks for a "v-shaped" recovery with the economy hitting bottom in the first quarter before bouncing back. The first-quarter decline largely will be due to a drop-off in consumer confidence, but monetary and fiscal easing eventually will bring the economy and the consumer back around.
The Federal Reserve will continue to reduce interest rates in the early part of 2002. He sees short-term rates dropping to a low of 1.5% before climbing back to 2% at the end of the year. Long-term rates will not change dramatically, he said, settling at 4.47% by midyear.
Mr. Brown is ultimately bullish on the stock market in 2002. "We'll see a fairly brisk recovery starting at the middle of next year," he said, as corporate profits begin to recover. He believes the market bounce-back since the terrorist attacks Sept. 11 might be misleading.
"I'm somewhat concerned that the market has run a little ahead of itself at this stage," said Mr. Brown. "We may go back down again somewhat before we come back up," primarily because of corporate earnings. Fourth-quarter earnings reports could have a negative impact, he added, because there may be some disappointments.
For the first few months of 2002, he believes value stocks will outperform growth, but once the economic recovery begins, the leadership will swing back to growth.