Dorfman: Sectors for the Recovery

Is the recovery real? Yes, says John Dorfman.

In his Bloomberg column, Dorfman — who was on target in calling the start of the stock market rally — says improvements in auto sales, existing home sales, and third-quarter gross domestic product are among many factors that point toward the recovery being for real.

Given that position, Dorfman focuses on three sectors that he says usually lead in the early stages of recoveries: energy, materials, and industrials. Consumer discretionary stocks also usually fare well at such times, he adds, but he’s not recommending them — this time around, he thinks consumers will struggle to unwind excessive debt, keeping consumer discretionary stocks down.

“Why am I so sure we are even in a recovery?” Dorfman says. “Well, I’m never sure of anything, but the evidence is very strong. My partner and I talk to executives of about 50 companies a month. From one after another, we are now hearing a consistent story that orders are increasing. Three months ago that wasn’t so.”

Dorfman also says that he sees Asia growing more quickly than the U.S. or Europe in the next couple years.

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