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Barton Biggs: Now's The Time to Buy Stocks

Tuesday, 17 May 2011 12:28 PM

Contrarian hedge fund manager Barton Biggs says equities are cheap now, especially technology stocks.

"I’m still big in U.S. tech, both the old champions and the new contenders," Biggs says in his latest note to investors, according to the Business Insider. "The former are just too cheap at below S&P valuations in relation to their above-average, albeit reduced-growth prospects."

"Recently I listened to a revered value investor expound on the once-in-a-generation opportunity to buy the likes of Cisco, Intel, Microsoft, IBM, et al."

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NYSE traders
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The new tech centurions playing around in the Cloud and Remote are not as cheap, according to Biggs, but their growth rates and potential are much more exciting.

“Nobody believes that companies like Apple, Qualcom, and VMW can keep growing so astronomically, and I don’t either, but at 13-14 times next 12 month’s earnings playing around in the Cloud and Remote, all they have to do is grow 15 percent to 20 percent annually to be compelling investments,” says Biggs.

“I also continue to hold, despite the turbulence, energy-related names ranging from Exxon to Schlumberger. The industrial machinery, capital goods stocks look like buys again, and small-cap value ETFs make sense,” he said.

Biggs says he’s still not attracted to European equities as an asset class, although he does have a basket of European companies with a high percentage of their earnings from the developing markets.

“In fact, the basket was my best performer in April,” he says.

The Sydney Morning Herald reports that Europe’s main stock markets and the euro currency fell last week, with better than expected European growth data overwhelmed by persistent concern over euro-zone debt woes at the end of a choppy trading week.

But not everyone agrees with Biggs and his "buy now" philosophy.

Jeremy Grantham, chief investment strategist for Boston money manager GMO, is advising institutional investors to take money off the table early — even if it feels too early to do so now.

He made the case in a quarterly note to investors crammed with caveats about his own penchant for moving early on trends, sometimes years too early. Nevertheless, the end of the Federal Reserve’s massing quantitative easing program, known in the press as QE2, means it’s time to get out of riskier assets, Grantham argues.

A third round of easing “would very probably keep the speculative game going,” he writes. But too many external shocks are building up — multiple military conflicts and natural disasters, rising interest rates in emerging markets, among other exogenous events — to insulate equity investors should the Fed suddenly close the easy-money tap.

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Contrarian hedge fund manager Barton Biggs says equities are cheap now, especially technology stocks. I m still big in U.S. tech, both the old champions and the new contenders, Biggs says in his latest note to investors, according to the Business Insider. The former are...
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2011-28-17
Tuesday, 17 May 2011 12:28 PM
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