VIEW-Buy quality stocks on downs

By Jeremy Gaunt, European Investment Correspondent

LONDON (Reuters) - Swiss wealth manager Julius Baer is telling its clients it is time to accumulate equities, buying and selling within their portfolios dependent on the swings of stock markets.

It remains cautious about stocks, however, and advocates a bottom up strategy of picking only those companies that meet certain criteria that will survive in what it expects will be continuing hard economic times.

"Quality is key," Scilla Huang Sun, Baer's head of equities investment products, said in a presentation on Tuesday, noting that in past years analysts had mainly looked at simple earnings for guidance.

She said her firm was focusing on companies that had good cash levels, a sound balance sheet, a stable business outlook, were transparent, led within their industry and were diversified.

She cited watchmaker Swatch (UHR.VX) as one company that fit some of the criteria, in part because of its net cash position and low price to earnings ratio.

By contrast, Huang Sun said investors should avoid companies that were leveraged and in debt, had off balance sheet items, were cyclical businesses, had complex internal structures, were followers in their industry and offered concentrated risk.

She declined to give an example but said that successful stock picking now was a matter of looking at a firm's products and market, management, financials and value.

"If you look back three or four years, a lot of analysts had forgotten there is a balance sheet, it (was) just P&L," she said, referring to profits and losses.