Miller at Legg Mason's Baltimore headquarters
Given the number of cyclicals in your portfolio -- Delta Air Lines, Bank of America, homebuilders like Pulte and KB -- you seem optimistic.
I wouldn't say it's a particularly bullish portfolio to the extent that I've got an out-of-consensus view that requires some sort of change in the environment to succeed. I'd call it an obvious portfolio. What's happened is that risk aversion among investors is so high that everybody is now focused on risk management. They tend to think more about reducing volatility than about making money.
Give me an example.
It's obvious that housing is getting better. We've gone through the worst housing collapse in history. Affordability [of housing] is now at the highest it's ever been. Housing starts are at the lowest they've ever been, and home prices are still below replacement value. We're one year into a housing recovery, yet suddenly the Wall Street Journal is writing that it's all over -- that the stocks went up a lot last year, so that's it. I disagree.
Do you have a favorite stock today?
Apple. The argument you hear most is that Apple trades on earnings-estimate revisions. And with the new iPhone launch, Apple just announced it's at the top end of its earnings guidance for the fourth quarter. On top of that, we've got a new iPad coming next month, and [a deal with] China Mobile probably coming in the next three to six months. We've got the iWatch coming too. So the path for earnings estimates points higher.
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