Guru Investing Advice For Today's Market

By Ryan Barnes | November 09, 2009 AAA
Guru Investing Advice For Today's Market

Sure, you could take investment advice from your Uncle Larry over Sunday dinner; but instead, try gleaning some tips from a group of investors that have profited to the tune of tens of billions – in both good markets and bad.
Today we'll look at what's being said and done lately by some of the most famous investors of our time, including Warren Buffett, George Soros, Bill Gross and Bill Miller.

Buffett Watch
While Mr. Buffett has been outspoken lately regarding his expectation for a slow economic recovery, he has been stepping up big to bet on stocks, beginning last Fall with his "Buy America" op-ed piece, followed by taking stakes in Goldman Sachs (NYSE: GS) and General Electric (NYSE: GE).

Words and commentary are all fine and good, but following the money quickly cuts through the rhetoric to what these investors really believe. And Buffett made big news this week by announcing the largest purchase in Berkshire Hathaway's history, a $34 billion takeover of railway operator Burlington Northern Santa Fe (NYSE: BNI).

While the purchase is in many ways a bet on the domestic U.S. economy, a deeper look exposes more angles. Burlington Northern is a major West Coast operator, and a large chunk of its business comes from transporting goods that have been shipped over from Asia to Long Beach and other western ports. So Buffett is also making ancillary bets on strong U.S. imports and commodities like iron ore and coal. Commodities also benefit from a falling dollar, a trend that Buffett has repeatedly said he expects to continue for a long time.

George Soros
Hedge fund manager Soros made his reputation by being the first trader to make a billion dollars on a single trade (in a single day, actually!). His immense bet against the British pound in 1992 established a trend still visible today – Soros has no problem making oversized bets on his convictions.

Soros' most impressive calls have been macro calls on entire economies and business cycle changes, and he still makes big bets with bonds, commodities and currencies. But he also owns many stocks, and his favorite bets are on crude oil, gold and agricultural commodities. Some of his largest holdings include Brazilian oil driller Petroleo Brasileiro (NYSE: PBR) and fertilizing nutrient miner Potash Corp (NYSE: POT).

Like Buffett, Soros believes that the U.S. dollar will remain low. Soros is also quite bearish on U.S. financials, and thinks that the distressed consumer will subdue U.S. growth for many years.

Bill Gross
Ever heard of PIMCO, the asset management fund company whose flagship Total Return Fund is managed by Bill Gross? Maybe not, but chances are that you or someone you know has money invested with him right now. Gross manages over $150 billion in assets, and his focus is on interest rates and fixed income products like Treasury bonds and mortgage-backed securities.

Mr. Gross writes a widely read newsletter every month that outlines his current take on macroeconomic events. In his October letter he echoed his prior fears as to whether the U.S. economy - and that of other advanced nations - can make the transition from a finance/debt/capitalism machine to an economy that values savings and actual production of useful goods and services.

His advice to is to stay safe and stable until we know more, so investors should stick with high quality bonds and dividend-paying stocks that provide steady income streams.

Bill Miller
This lead manager of the Legg Mason Value Trust became legendary when his fund beat the S&P 500 for 15 straight years heading into 2006. Miller admittedly took some real lickings in the past few years as he was over-invested in U.S. financial firms as the crisis unfolded. But he's learned from his mistakes, and this year his fund is back among the top for all large-cap value funds.

Miller recently gave an interview in Barron's in which he talked about his fondness for healthcare stocks: "This is the best time to buy health care since HillaryCare", he said, referencing the last time healthcare stocks got beaten down on fears of reform.

Specific stocks he likes today are health insurers Aetna (NYSE: AET) and UnitedHealth Group (NYSE: UNH); he sees very favorable valuations for a long-term holding. Miller also likes Ebay (NASDAQ: EBAY) and IBM in the technology space.

Parting Thoughts
Granted, tips are isolated pieces of information that may or may not be useful on their own. But, if you're looking to shore up - or spice up - your investment policy, it's best to start your tip gathering at the top.

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