Investment guy and Darien resident John Bailey loves U.S. stocks. His $3 billion Stamford money management firm moved client assets overwhelmingly into Americas home markets over the past 12 months, he says. Hes still there, despite the 95 percent run-up in prices since March 2009. What about European stocks? Too cold, he says. Asia? Too hot. The Goldilocks market lies right here, under our noses.
Bailey heads Spruce Private Investors , which manages money for wealthy families and foundations including clients in Stamford, Greenwich and Darien. He diversifies widely, with an emphasis on controlling risk. Last month, the trade publication Investment News named him one of the nations up-and-coming investment advisers. His Spruce Real Assets Fund won the HFM Award for the best new fund of hedge funds in 2009. (Spruce Comes from Spruce Head Island in Maine, where his parents had a home when he was growing up.)
Bailey says that, in a normal world, stocks do best in countries with high growth, low debt and reasonable stock valuations. Until recently, those criteria defined the emerging markets. But inflation and interest rates are rising in the key developing countries (China, India, Brazil), so he pulled back. Hell return to China when it gets inflation under control, which he thinks will happen sometime in the first half of this year.
U.S. stocks ought to be a fail, judging by Baileys high-growth, low-debt investment rules, but not right now. Hes betting on the success of the Federal Reserves stimulative monetary policy, combined with continuing low inflation and what he considers inexpensive stock valuations. Hes especially interested in the technology sector. Corporations will start to invest as the economy improves, he says.
Bailey isnt so happy about municipal bonds. He sees trouble in those markets and has cut his investment in half. Whats left are prerefunded munis bonds whose interest and principal payments are effectively backed by Treasury securities.
Bailey grew up in Darien and calls it a good family town. He and his wife, Prudence, have two boys in the Darien schools and a 10-month old daughter. He belongs to the Stamford Yacht Club but doesnt sail as much as hed like. Its the story of any business owner: I get out only when work and family allows.
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