Unequivocally the economy is slowing, but until we see some data to the contrary we think there's only a 50% chance of recession. And barring a very serious recession, many parts of the market are still attractively valued.
The market will go lower because there are legitimate issues facing the financial system, so if you're going to invest now keep cash reserves for dry powder. Stick with blue chip companies whose fundamentals you understand and that are trading inexpensively. Right now we like 3M (MMM), energy names like Anadarko (APC) and Apache (APA), and pipeline companies like Atlas Pipeline (APL). We think Merck (MRK) is an inexpensive good company, and it also pays a dividend. Dividends are important because, historically, they provide almost half of all stock market returns. And we also like Boeing (BA) because it is less sensitive to economic cycles and has a five-year order backlog.
Last updated February 06 2008: 10:16 AM ET
