So you think we are in for a prolonged bear market.
My gut says so also. I have a major cynical side. What president would not milk the war on terrorism (with 85% personal approval ratings) for his reelection. His ten year tax cut is terrible for the economy.
So, I build the best strategy I can fearing the worst. SSB says growth will outperform value. I say, they may be right--history is on their side, but I still want to overweight value, it is a more cautious and defensive strategy. Even if 2002 turns out to be like 1931, instead of the usual bounceback after two negative years, I think I will have an acceptable year. But what makes the 2000s different from the 1930s is that we are not having bank failures, we do not have a major recession, and we do not have high unemployment.
I look at the bear market performance of Cambiar. In 1977 the S&P 500 lost 7.19%. Cambiar gained 14.4%. In 1981 the S&P lost 4.91% while Cambiar gained 9.8%. In 1990 the S&P lost 3.19% while Cambiar gained 2.83%. And there was last year, when the S&P lost 11% and Cambiar gained 6.17%. Overall, for 26 years, Cambiar had an average return of about 20%.
Would you think it is most wise to be in cash, or in a portfolio that is 40% Cambiar, 30% Kayne Anderson (small to midcap growth), 25% bonds, 5% international? I have a lot a stake here, and don't want to be wrong. Any help you can offer would be appreciated.
Thanks,
Tom |
