“A lot of the optimistic outlook is priced in,” Mr. Temple said. “I’m not here to tell you the market will be up X percent in the next year.” Returns will depend, he said, “less on a market call and more on a security selection call.”
Among the calls he is making with his portfolio is for continued strength in big technology companies, such as Microsoft and Alphabet, the parent of Google, for which he expects the earnings backdrop to remain favorable no matter what, and Bank of America, an exemplar of what he calls “responsible growth.” The bank has been able to expand profits at a healthy clip, even as it reduces risk in its lending, by cutting costs substantially.
Reducing risk is a good idea for bond investors, in Mr. Landmann’s view. TCW is shortening the average duration of its holdings and limiting corporate debt exposure. Corporate issues that he favors include companies like General Electric and Kraft Heinz.
Mr. Grantham finds…