I Want To Buy Losers

4/3/2010

No investor will ever admit to a desire to buy losers in the stock market but when their behavior is examined, that is exactly what they do. This seems to be a very strange behavior for thoughtful and careful investors who are making investment decisions that will affect their financial well-being.

By an almost 2-to-1 margin Americans believe the economy has worsened rather than improved during the past year, according to a Bloomberg National Poll conducted March 19-22. Among those who own stocks, bonds or mutual funds, only three of 10 people say the value of their portfolio has risen since a year ago.

This may be the best news for stocks in a long time: Bill Gross, who manages the world’s biggest bond fund, says the 30-year bull market in fixed-income securities is ending. Though Gross, who runs Pacific Investment Management Co.’s $214 billion Pimco Total Return Fund, would never tell you to buy stocks, isn’t that what he means?

IF OPPOSITES attract, Ford’s sale of Volvo to a Chinese upstart, Geely, for $1.8 billion ought to be a marriage made in heaven. Sweden’s Volvo is the epitome of good middle-class taste; its slightly dull but hugely safe and practical cars were, in better days, the default choice on many a suburban driveway in America and Europe. Geely, on the other hand, is barely known outside China, partly because its range of mainly cheap, small cars is not yet capable of meeting the rich world’s more stringent safety and environmental regulations. But it is ambitious.

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