Dec. 9, 2002 -- To secure re-election, President Bush will move aggressively to jump-start the economy next year, said Mario Gabelli, noted value investor, speaking at an Enterprise Group of Funds press briefing last week in New York.
The administration's economic steps will include targeted spending and a wide array of tax cuts, including ending double taxation on dividends, said Gabelli, who manages Enterprise Grp Small Company Value Fund/A (ENSPX) and Enterprise Grp Mergers & Acquisitions Fund/A (EMAAX).
Bush's strong economic moves in his third year of term follow a long-standing tradition, said Ron Canakaris, manager of Enterprise Grp Growth Fund/A (ENGRX) and president of Montag & Caldwell. A president's third year in office is often "extremely favorable" for stocks, said Canakaris, who noted that the market has risen an average of 18% in the third year of past administrations.
Several fund managers speaking at the Enterprise Funds briefing were moderately hopeful about the economy next year, forecasting GDP growth of 1.5% to 2.5%.
Dan Chung, manager of Enterprise Grp Technology Fund/A (EIFAX) and chief investment officer of Fred Alger Management, predicts the economy will grow 2.5% next year. A moderate gain is likely because shallow recoveries usually follow shallow recessions, Chung said. He is "quite bullish" about stocks, although he expects the market will retest its bottom of October 9. Technology stocks likely to gain in this environment include Yahoo Inc (YHOO), Amazon.com (AMZN), eBay Inc. (EBAY), Dell Computer Corp. (DELL), Microsoft Corp. (MSFT), and Flextronics Intl (FLEX), Chung said.
The equity risk premium is currently "off the charts," said Kirk Barneby, manager of Enterprise Grp Strategic Allocation Fund/A (ESRAX) and managing director of quantitative investments at UBS Global Asset Management. Unless there is a recession, Barneby feels the market currently offers "some of the best buying opportunities in years." He predicts the equity markets will return 5.5% to 6% next year. Signaling his bullishness, Barneby said he's currently weighted 95% to equities and 5% in intermediate maturity bonds.
With the economy showing consecutive growth in the last four quarters, the market is poised for additional gains, said Steve Irons, manager of Enterprise Grp Deep Value Fund/A (EDVAX) and vice president at Wellington Management Co. Irons likes Hewlett-Packard (HPQ), Intel Corp. (INTC), and Micron Technology (MU), because he expects widespread upgrades by PC users.
James Coughlin, manager of Enterprise Grp Growth & Income Fund/A (EGNAX) and president of Retirement Systems Investors favors several stocks trading below market multiples. He sees attractive opportunities in United Technologies (UTX), Ingersoll-Rand`A` (IR), Alcoa Inc. (AA), and Exxon Mobil (XOM).
A global economic recovery will gradually take hold next year, although volatility is "here to stay," said Joyce Haboucha, manager of Enterprise Grp Global Socially Resp Fund/A (EGSAX) and a co-director at Rockefeller & Co., Inc. Haboucha sees gains next year for Pearson plc ADR (PSO), Pfizer, Inc. (PFE), and Bank of Hawaii (BOH).