Steven Romick, whose FPA Crescent fund produced annual returns of more than 11% during the 2000s, says he thinks stocks have gotten pricey after the recent rally. “We think the stock market has run a little bit ahead of what the economic fundamentals are,” Romick tells WealthTrack’s Consuelo Mack. “It’s a time for relative caution. Stocks just aren’t cheap.” He says he thinks the economic recovery will be anemic, but that, while a double-dip recession is possible, he’s not expecting one. And, he says, there are still attractive areas of the market.
Romick, whose fund invests in a variety of different assets and often holds large amounts of cash, also talks about his broader contrarian long-term approach. “It’s not our goal to beat [the market] every given year, or any given year, or every two-year period,” he says. “To outperform longer term we believe that you have to be willing to take a stance that might be contrary at times, and that might mean you might be early and you might have to underperform for a period of time.”