March 4 (Bloomberg) -- Steve Leuthold, whose Grizzly Short Fund returned 74 percent last year betting against U.S. stocks, said now is the time to buy equities because investors are too fearful about the economy.
"These comparisons people make with the Great Depression are totally out of touch with reality, and pretty stupid," he told Bloomberg Television in an interview today. "We've been in much worse, much more panicked and more scary situations in the U.S." The economy isn't as bad as it was in 1974, when stocks began rebounding, said Minneapolis-based Leuthold. He predicted the Standard & Poor's 500 Index will surge to at least 1,000 in 2009, representing a gain of 44 percent from yesterday's 12-year low of 696.33. The benchmark measure of U.S. stocks rose 1.4 percent to 706.08 at 9:56 a.m. in New York on speculation China will add to a 4 trillion yuan ($585 billion) spending plan. Because a rally is likely, Leuthold said investors shouldn't buy his Grizzly Short Fund. It has returned 26 percent in 2009.
The Leuthold Core Investment Fund, which bets on stock gains, is most concentrated in biotechnology companies, automotive retailers and education providers, he said. Investors should also buy equities in China, Korea and Taiwan because their economies are growing faster and the Asian banking system hasn't been battered by subprime loans as badly as U.S. financial institutions, Leuthold said.
"We're going global," he said. "Global investing is the way of the future. "Leuthold's joins short seller Bill Fleckenstein in forecasting a rally because the market declined too far, too fast. Fleckenstein, who warned of the housing bubble in 2005, closed his 13-year-old bear market fund last year and recently bought shares of Microsoft Corp. after they traded at the cheapest since at least 1987.
For Related News and Information:
Stories on U.S. stocks: NI USS
Market map of the S&P 500: SPX
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