Jerry Jordan             Portfolio Manager, Jordan Opportunity Fund (JORDX)

Comments & Outlook

I believe the stock market has bottomed, but this won’t mark the start of a new bull market. I expect at least three to five years of consolidation. If you’re an index investor, don’t expect too much excitement. More flexible investors can shift to cash when necessary and focus on buying the best ideas; stocks levered to key longer-term trends should continue to climb because the overall environment will be amenable to good stories, not every story.

The Consumer Price Index (CPI) will remain relatively low over the next five to ten years because the wages and housing component isn’t going anywhere. However, the food and energy component could triple over that time. I continue to believe that there’s a one-in-three chance that oil prices will hit $200 over the next three years, a one-in-two chance oil goes to $150 and a 100 percent chance that it hits $100. Agricultural commodities are another long-term story.

Recommended Strategy

I don’t expect a lot of money to flow into the US stock market in the coming years. Investors will shift some cash from money market funds to stocks, but that amount won’t be more than a drop in the bucket. Because of that, the US market will be prone to massive rotational shifts.

Market participants finally have realized that the economy is improving and commodity prices are headed higher. I expect a rally in energy, coal and gold at the expense of large-cap financials and large-cap tech stocks. That trade will outperform between now and the end of the year. I’ve also been buying health care stocks on weakness; if my views on the economy don’t pan out, that sector should perform well–and the ones I’ve picked up won’t hurt me too badly because they’re already undervalued.

That being said, the only way to navigate these markets over the next few years is to reduce exposure when the market is overbought and buy the best ideas on pullbacks.

Vinson Walden          Co-Manager, Thornburg Global Opportunities Fund (THOAX)

What to Buy Now

Having underperformed for the past eight months, oil and gas services giant Schlumberger (NYSE: SLB) is cheap on both an absolute and relative basis and has little downside risk. Spending in the oil patch is on the mend and oil prices are already firming up. In a year, this could be a $100 stock.

Comments & Outlook

In contrast to late 2008, when everything appeared to be synchronized and strongly correlated, we’ve had very meaningful differentiation in the global markets this year. We’ve seen very strong performance in the emerging markets, which have outpaced developed markets. There’s also been significant differentiation across sectors. The market once again appears to be focused on fundamentals and long-term trends, as opposed to the fear and emotions that predominated last year.

Asian markets have enjoyed a huge rally, though some appear to be overheated. Fundamentals have improved moderately, but there are cases where stocks are up 100 percent or 200 percent since last year and, broadly speaking, that’s not where we’d look for new opportunities. We generally target underperforming stocks that offer attractive value characteristics—for example, a low price-to-earnings (PE) ratio or a large, reliable dividend.

Recommended Strategy

Broadly speaking, the US markets have underperformed this year; we’ve put a little more capital to work here as opposed to overseas. We did really well earlier this year with some of our non-US telecommunications investments, and we’ve shifted that capital to US-centered opportunities in financial services and other sectors.

For us, growth is an element of value; our strategy targets promising companies that trade at a discount. We look at each opportunity on a stock-by-stock basis, weighing the quality and prospects of the underlying business as well as the price we’re paying–some companies warrant a low multiple, while others warrant a much higher multiple. As value investors, we generally look for lower valuations, but don’t rule out paying an above-average multiple for a company when warranted.

What to Buy Now

Global Crossing Ltd. (NSDQ: GLBC) is a leading facilities-based provider of communications services, meaning they own their own physical network. They provide service to Fortune 500 companies in the UK, Latin America and the US. Because the firm’s services save customers money, demand has held up through the crisis and into 2009. Contracted customer orders have been steady, producing industry-leading revenue growth. Its Latin American business has been a particular bright spot; Internet usage there remains in its early stages.

We also like UK-based insurance broker Willis Group (NYSE: WSH), one of three global insurance brokers that provide insurance placement and advisory services to major corporations worldwide. The stock currently trades at a very low price–its PE ratio is around 9–and yields over 4 percent.