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Dow new high: buy, sell or hold?

Tuesday, March 05, 2013 - 02:18

Mar 5 - A look at differing views on how stock investors should play the market as the Dow sets an all-time trading high. Fred Katayama reports.

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Legendary investor Warren Buffett says he's buying stocks now, and so are many others. They've pushed the Dow up close to its all-time high hit six years ago. Ditto with the S&P 500. REPORTER BRIDGE: FRED KATAYAMA, REUTERS REPORTER (ENGLISH) SAYING: "But many investors are still funneling their money into safer, conservative investments. So is it time to dive in? Three strategists give their arguments to buy, sell or hold." Buy, says Raymond James chief investment strategist Jeffrey Saut. He says the recovery in auto and housing will drive growth in earnings and the economy. SOUNDBITE: JEFFREY SAUT, CHIEF INVESTMENT STRATEGIST, RAYMOND JAMES, (ENGLISH) SAYING: "Now you've got housing and multi-family housing coming on and coming on stronger than most people expect. So I think the combination of those are going to show stronger-than-expected GDP figures as we get into the back half of the year. And therefore, I think you'll continue to get earnings surprises on the upside." Wait, says JP Morgan's U.S. equity strategist Tom Lee, who's otherwise bullish longer-term. SOUNDBITE: THOMAS LEE, CHIEF U.S. EQUITY STRATEGIST, J.P. MORGAN, (ENGLISH) SAYING: "The ideal entry point for the S&P today is 1400 to 1450, meaning if we are at 1515 or 1500 right now, I'd rather wait for the market to go lower before I buy, rather than buy it at higher prices. I think it's really because the market is just not positioned from here to sustain new highs. I think there are some negative headlines developing and that's from higher gasoline, the payroll tax, the sequestration." Grab your parachute. The market will drop even lower to the 1300 level in the view of Uri David Landesman, President of the hedge fund, Platinum Partners. He says sell. SOUNDBITE: URI DAVID LANDESMAN, PRESIDENT, PLATINUM PARTNERS, (ENGLISH) SAYING: "If you have anything longer than I think a month-and-a-half-long horizon, I'd be selling the market here. While corporate profits were excellent in this last quarter, we see that companies aren't spending on growth. What that means is it is going to be very hard for them to sustain the kind of growth rates that are implied by the valuations of stocks when the S&P 500 is at an all-time high. So the likelihood in 2013, I think, is for disappointment in earnings and for disappointment for the general economy." On the bright side, Landesman sees stocks bottoming near 1300, thereby avoiding a bear market.