Barron's recently ran an interview with Joe Rosenberg , the chief investment
strategist of Loews Corp. (NYSE: L ), a New York-based conglomerate controlled
by the Tisch family that some have compared to Warren Buffett's Berkshire
Hathaway (NYSE: BRK.B ) Like Berkshire Hathaway and Prem Watsa's Fairfax
Financial, Loews is primarily an insurance company with a sizable investment
portfolio that tends to be invested with a strong emphasis on value. Rosenberg
has been in the business a long time, has a long history of strong returns and
has seen plenty of bear markets come and go. Chances are good that he's been
on Wall Street longer than many of this articles readers have been alive. He has
been around long enough to remember investing during the Cuban missile crisis.
In a business in which memories tend to be short, that kind of experience and
wisdom is hard to find. I found many of his comments encouraging, and I wanted
to repeat them here. On the attractiveness of current valuations: "In my 50
years on Wall Street, it is rare that I've been so attracted to some of the
best and finest companies. I will name a few, but generally speaking, I feel
like a kid in a candy store because I don't know where to begin. There's
Microsoft, Merck, Amgen, Johnson & Johnson … The best companies in the world
are now some of the cheapest stocks." Joe Rosenberg's "kid in a candy
store" reference is reminiscent of a much-younger Warren Buffett's comment
after the 1973-74 bear market that he felt like "an oversexed young man in a
whorehouse" when he saw the prices on offer among some of America's best
blue-chip stocks. (The gentlemanly Forbes editorial staff changed
"whorehouse" to "harem" when it published the interview, but Buffett's
point was well made.) On relative attractiveness of stocks vs. bonds: "In
terms of economic history, the equity market looks a lot like the Treasury-bond
market in the early 1980s, when I had the most difficult time convincing people
that they ought to buy bonds at 15 percent yields. Equities can easily generate
10 percent annualized total returns over the next 5 to 10 years. And they would
still not be overvalued at that point." On financial stocks and value
investing: "I don't want to recommend banks. The experience of the past few
years has taught me that it's impossible to figure out what banks own, even
when you're on the inside. As an outsider, I can't analyze them." Well
said, Mr. Rosenberg. My thoughts exactly. I'll repeat for Joe Rosenberg what
I've said for other high-profile investors I respect and follow: You never buy
or sell a security because you watched someone else do it. You always should do
your own homework. That said, it never hurts to compare notes . And the growing
consensus among long-time value investors is that stocks represent a good
bargain at current prices. We should expect the markets to be volatile for as
long as the European debt crisis remains unresolved. But volatility should not
be confused with the risk of long-term or permanent loss. The companies that
Rosenberg mentioned specifically Microsoft (NASDAQ: MSFT ), Merck (NYSE: MRK ),
Amgen (NASDAQ: AMGN ) and Johnson & Johnson (NYSE: JNJ ) all have two very
important things in common. All are among the leaders of their respective
industries, and all have a long history of rewarding shareholders with rising
dividends. These are exactly the kinds of companies that investors should be
looking for in this environment. Experienced investors can scoop up shares of
Joe Rosenberg's recommendations, and to these I would add other household
names such as Intel (NASDAQ: INTC ), Wal-Mart (NYSE: WMT ) and Procter & Gamble
(NYSE: PG ). Investors wanting a simpler "one-stop shop" instead might want
to buy shares of the Vanguard Dividend Appreciation ETF (NYSE: VIG ). VIG is a
collection of some of the best dividend growers in America and a worthy addition
to any growth-oriented portfolio. Charles Lewis Sizemore, CFA, is the editor of
the Sizemore Investment Letter, and the chief investment officer of investments
firm Sizemore Capital Management. Sign up for a FREE copy of his new special
report : "Top 5 Contrarian Stocks for 2012."
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