Chief investment officer, domestic equities
TCW Group Inc.
Assets under management: $80 billion
Hot sectors: technology and biotechnology
Hot stocks: Overture Services, Siebel, Cisco, Microsoft, Juniper Networks, Vertex Pharmaceuticals, Gilead Sciences and Paychex
Doug Foreman thinks 2002 will be a good year, even for growth managers.
"I think it will be a year of above-average returns," Mr. Foreman said. "The last two years have been terrible. That the economy has gone into a recession is abundantly obvious to everyone on the planet. When everyone understands that, in the financial markets it's over. All the damage has been done."
But don't go out and spend your inheritance on champagne just yet. Mr. Foreman does not think the market will show signs of recovery until early spring. He also doesn't think 2002 will be a boom year. It'll be a stable period in which the economy will begin to recover from the recession primarily in capital goods, manufacturing and technology sectors.
He expects gross domestic product growth will be positive and 2002 to be a decent year.
"We'd gone from plus 8 at the end of 1999 to minus 2 in the third quarter (on GDP). That's a train wreck," Mr. Foreman said.
Layoffs will slow, he said. But costs will remain rock-bottom low for a while because companies will wait a few quarters before hiring new employees. The last thing business owners want to do is to rehire someone after they've just fired them, he said.
"The economy is going to get better, corporate earnings will be up higher and technology is on its way up, finally," Mr. Foreman said.
In the boom times, there were far too many technology companies created.
"A lot were nonsense and were never going to work, but a lot were funded," he said. Many tech companies disappeared and many more need to disappear. What will survive are the high-quality technology companies with tight business models and unique positions in the market.
The technology sector is being closely watched by growth managers, and for good reason.
"The average value manager does not own much technology, and the average growth manager owns a lot," he said. "If I'm right, growth managers will have positive returns next year and outperform value, but I'm a biased growth guy."