Regional banks primed to weather credit crunch
A CONVERSATION WITH MONEY MANAGER CARL M. BIRKELBACH
CRAIN'S: Whither the U.S. economy?MR. BIRKELBACH:
We're probably in a recession, and if we're not in one, the economy is
easing. This whole tax rebate strategy I question, because we're
creating more debt, and consumers have a lot of debt already and we're
telling them to spend more.
Have we seen the bottom of the market?
The market could go
lower, but I think further downside is very limited. We're at least a
year away from the market breaking new, higher ground. Sometimes the
market moves sideways, and a sideways market isn't all that bad. Market
timing is going to become more important, along with individual stock
selection.
Any particular industries you find appealing?
It's not the
kind of market we had in 2000, when we had unbelievably inflated
prices. I think technology stocks have been too beaten up and regional
banks, too. This is a buying opportunity.
Are you worried about the credit crunch affecting banks?
Regional
banks that don't have subprime loans, such as (Connecticut-based)
Peoples United, are going to withstand it better than anybody else.
There's not a cash crisis for them. There's tons of cash around to take
us out of this. With interest rates coming down, banks are going to
make a lot of money.
Any stocks or sectors to avoid?
Retailing doesn't look good
to me. Wal-Mart is a "hold." The rest of retailing, I'd sell. The
consumer is fully extended and is nervous. That probably won't change
for a year.
FIVE TO BUY
Mr. Birkelbach recommends these stocks:
1. Apple (AAPL)
2. McDonald's (MCD)
3. Citicorp (C)
4. Peoples United Financial (PBCT)
5. Penn West Energy Trust (PWE)
©2008 by Crain Communications Inc.
