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Biggs: Stocks the Place To Invest

By Julie Crawshaw   |   Tuesday, 14 Jul 2009 08:26 AM

Over the next five years, stocks are the place to be, says contrarian investor Barton Biggs.

"When stocks do poorly versus bonds and inflation, it has always been a great buying opportunity," Biggs wrote in Newsweek.

"It has only happened twice before in America: In the second quarter of 1932, and the third quarter of 1949."

Biggs said the major stock markets around the world just have been through one of the most dismal 5-, 10-, and 20-year periods in history, when compared with bonds and also in inflation-adjusted terms.

The world has seen one of the greatest bull markets in government bonds ever, while a brutal bear market has left stocks cheap in Europe and Japan, slightly undervalued in the U.S., and fairly priced in emerging markets, he said.

Now, heavy stimulus programs will result, inevitably, in higher inflation, crushing government bond prices.

“All of this means that over the next five years stocks are the place to be,’’ Biggs said.

U.S. stocks, which had declined for four straight weeks, rose on analyst Meredith Whitney’s recommendation for buying shares of Goldman Sachs Group, Bloomberg reported.

During the decline, consumer sentiment dropped more than estimated while oil’s steepest retreat since January dragged down energy shares.

Investors will be looking closely this week at reports on retail sales and factory production to gauge the strength of the economy before deciding where to put their money.

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