James Dailey, CIO and senior portfolio manager for Team Asset Strategy Fund, says he believes the market is likely to continue its rally off the July low for the next two to three weeks.
"However, I am bearish on the overall market for the remainder of the year once the current rally exhausts," he says.
"I believe that the economy is poised to slow down rapidly for the remainder of 2010 and is becoming increasingly vulnerable to shocks that could result in a new recession in 2011," he says. "We believe that earnings estimates, which are currently being revised higher due to strong Q2 results, are setting up a period of disappointment for the remainder of 2010."
So where is he putting his money now?
"Our two largest portfolio themes are precious metals and related stocks and high quality mega cap stocks with significant dividend yields," he says. "Gold is suffering its typical mid-summer seasonal weakness, but continues to be in a long-term bull market."
The best strategy, he says, is to buy corrections and crashes.
"I prefer smaller and mid-sized gold miners with attractive growth prospects for production," he says. "They’ve lagged gold and even the large cap gold miners over the past few years and offer increasingly attractive value."
Yamana Gold Inc. (TSX:YRI; NYSE:AUY; LSE:YAU)
Minefinders Corporation (TSX:MFL; NYSE:MFN)
Both are stocks Team Asset Strategy Fund owns and that Dailey says represent significant value.
"Both have significant production growth that should emerge over the next couple of years," he says. "Both stocks have been laggards, which is an opportunity given the long term fundamentals remain intact."
What's a Market Bear to Do?
Source: Analyst Watch (7/29/10)
"James Dailey believes the market will continue its rally."