John Massey, portfolio manager of the SunAmerica Blue Chip Growth fund, has technology stakes ranging from high P/E companies Google and Yahoo to more bargain-oriented plays Motorola and IBM. He also likes eBay. "It's inexpensive not so much on fundamentals but because it's a huge cash generator," he says. One of Massey's largest holdings is Procter & Gamble, a company that could benefit from international exposure and the integration of its Gillette acquisition.
This is a strange investing environment, partly due to the schizo investing period that preceded it. The market's "worst" year between 1995 through 1999 was a 21% gain, followed by a bear market that included the worst 36-month stretch since the Great Depression. Recently, formerly boring commodities have been on fire. "Macroeconomic and capital markets data are blunt instruments designed for strategic long-term moves," says Russell portfolio strategist Stephen Wood.
He likens the current winning streak in value stocks to a bowstring getting pulled ever tighter before it snaps back. Wood doesn't advocate aggressive asset allocation, but he thinks it's probably a good time to rebalance across different asset classes. With growth, that means quality companies with consistent earnings that can defend their profits in a downshifting economy.