Ron Muhlenkamp, whose flagship fund has beaten the S&P 500 by a significant margin over the past 15 years and is up 25% this year, says that investors have “reset their expectations” for the coming years — but he’s still seeing a number of values in the market.

“We fell off a cliff last fall, and things have basically flatlined,” Muhlenkamp tells Fortune. “This is not a normal cyclical recession — this time, people have reset their expectations. … For the market, fair value today is about 15-20% lower than what it was a year ago. We think there will be a 15% drop in return on equity, our favorite metric. Price to earnings ratios should be below what they were.”

Muhlenkamp says that with consumer spending dropping about 5%, investors need to figure out where that 5% is going. One area he thinks could benefit in coming years: companies that offer financial advice.

Muhlenkamp is also high on the healthcare sector.

A quarter of his portfolio is in healthcare stocks, despite all the concerns about massive reforms in that sector. “How can you have a health care system without UnitedHealth?” he said, referring to one of his holdings. “The best time to buy pharmaceutical or health care stocks has always been in election years, because that’s when everyone beats up on the industry. Right now, any positive news about health care would be a surprise.”

“In my business,” he continues, “you make money on the difference between perception and reality. When everyone expects the bad, that’s when you get the chance to buy Pfizer, which we own, for cheap.”

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