FundWatch: Now's the time to buy and hold, says T. Rowe Price's Rogers
Published: Friday, June 27 2008
T. Rowe Price's Rogers says tough markets contain lots of opportunities
CHICAGO (MarketWatch) -- Investors may be seeing the "peak of negativity" in
the markets these days, and that's exactly why buy-and-hold types should be on
the lookout for opportunities, T. Rowe Price's chief investment officer said on
Friday.
"Sentiment is so negative right now that you can't help but make money in some
of these companies if you take a three-year, buy-and-hold horizon," Brian
Rogers told attendees of the Morningstar Investment Conference. He expects it
will take the next couple of years for the market to recover.
Where to look for opportunities today? Rogers, also the veteran manager of T.
Rowe Price Equity Income Fund, said that investors with a reasonable time
horizon should consider the battered financial sector.
"Buying into stress is usually a good thing to do. And if you look for where
there's the most stress right now, you go to the financial sector," he said.
There are also opportunities to invest in the higher-quality end of
fixed-income markets, including mortgages, he added
In addition, he advised those in the audience to look across sectors for good
management and strong balance sheets in firms with a history of surviving when
times are bad. Even though the stock price may be down, he said, there is still
value in strong companies that will be realized in the future.
"Invest in companies that have been in downturns before, that can survive
periods of stress and that are long-term survivors," he said. "You have to look
for companies where you trust management ... and where you think they will not
bet the ranch on a bad strategy."
One example: United Parcel Service Inc. While investors have soured on the
stock on concerns about its earnings, Rogers sees this company as a survivor
for those who plan on keeping the shares for a while.
"UPS is a great company, with great financials. They've been in business
forever," he said. He also pointed to news that the company was changing its
routes so that trucks would make only right-hand turns -- a move that will save
on gas costs.
"I love a company like that. I don't care what's going to happen next quarter,"
he added
Rogers' biggest fear, however, is the issue behind UPS' creative savings plan:
the high price of oil. He doesn't think the price of oil is sustainable, yet he
also worries for the well being of consumers who are contending with high gas
prices at the pump and higher food prices.
"It's as if the tax rebate checks came out and were recycled to the oil
producing countries," Rogers said
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