Micro Strategy Against Macro Debt Crisis

Chidem Kurdas

Martin D. Sass has seen 14 major crashes during his 48 years in finance, an experience that tempers his view of the European debt crisis. He says this is a global bear market where the macro picture trumps fundamental differences but the fundamentals will come back. For a bargain hunter, this is an opportunity.

The firm MD Sass has $7.8 billion in hedge funds, seeder funds, mutual funds and private equity. It has a history investing in fixed income—-a new product, MD Sass 1-3 Year Duration US Agency Bond Fund,  launched at the end of June.

But Mr. Sass himself is a stock guy. The market does not always trade at fair value but comes back to fair value, he said, speaking at a conference. People wanted to get rid of risky assets but this was an emotional response and they threw the baby out with the bathwater, he argues.

Not that he’s optimistic about Europe, where he sees no mechanism in place to prevent the crisis contagion in Spain and Italy, or for that matter the United States, where the Federal Reserve is pushing against a string in a liquidity trap—people don’t want to spend money even at low interest rates.

Nevertheless, Mr. Sass expects some stocks will do well in the intermediate term. One sector that he owns: Generic pharmaceuticals, set to grow as important patents expire. He prefers large multinational companies, because small- and mid-cap shares are expensive relative to the market.

“If you buy the right stock, there is a big upside when sanity returns to the market,” he says.


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