One of our favorites, legendary investor Felix Zulauf, shares his 2nd half 2011 outlook with Barron’s for their Mid-Year Investment Roundtable. Zulauf is extremely cautious as we head into the latter part of 2011 – he has several short recommendations, but only reluctantly gave some long ideas “if you have to be in the market”:
Barron’s: How’s the view from Europe, Felix?
Zulauf: I am in a good mood but I feel sorry for the world. The global economy’s structural problems haven’t gone away, and the authorities continue to kick the can down the road. They go from one quick fix to the next. Quick fixes have worked well in the past two years, and might work a bit longer. But at some point we will have to face reality, and that will be a very sour moment.
In the medium term, it is much more a trading market than an investment market. Expectations for earnings growth are too optimistic. Professional investors are fully invested because they have no choice. Individuals have come back to the market, but not like in previous cycles. There just isn’t much firepower left to push stocks higher, and there have been some important changes in fundamentals.
(Note: If you get stonewalled by their subscriber wall, enter “Barron’s Mid-Year Roundtable 2011” into Google, and hit the first link that appears…it’ll get you in for free).