There are still reasons for hope about the long-term strength of the economy.
Investment managers gave that assessment here at an investment outlook conference sponsored by MFS Investment Management, Boston, a unit of Sun Life Financial Inc., Toronto.
Michael Roberge, chief investment officer for U.S. investments at MFS, observed that few investors are in an optimistic mood.
Today, most investors are “crouching in a fetal position,” Roberge said. “At the end of the day, it is not [about] what the economy will do, but what is priced into the market.”
But Roberge noted that the typical recession lasts about 11 months.
If the current recession began in April, that means the bottom should come in March 2009, Roberge said.
When the bounce back comes, there could be “massive returns off the bottom,” Roberge said. “People will look back and wish that they had bought.”
Rather than fleeing to cash, investors should “slowly migrate” to high-quality stocks, Roberge said.
Eric Weisman, a member of MFS’s fixed income team, acknowledged that the current outlook appears to be bleak.
The “markets are pricing for a bad [recession],” Weisman said.
Consumers will have to buy 1 million of the 2.2 million housing units now on the U.S. market to restore equilibrium in the housing market, Weisman said.