November 24, 2004 11:20 PM
In Tug-of-War on Stocks, Some Pull Away From the U.S. Market
Excerpt: Some of the skeptics are betting against the U.S. dollar by investing abroad. Others are buying gold, copper, lumber, even farmland. Some are standing pat with U.S. bonds, despite tiny yields. All these investments are putting pressure on stocks and creating a tug-of-war over the market's direction.
Steve Leuthold has snapped up warehouses full of lead, copper, zinc and aluminum for the mutual fund he manages in Minneapolis.
In Cleveland, investment adviser Tim Swanson is putting his wealthy clients' money into stocks in Indonesia, Poland and the Philippines.
Ray Dalio in Westport, Conn., has been buying the Australian dollar, Swedish krona, Chinese yuan, gold and European bonds for his investment firm.
These investment pros' moves are creating tension in the stock market, which has posted modest gains this year after soaring in 2003. Thanks to a 7.6% gain since late October, the Dow Jones Industrial Average is up 0.4% so far in 2004, while the Standard & Poor's 500-stock index is up 5.8% this year.
Most mainstream investors still believe that U.S. stocks are the right place to put a big chunk of the American public's assets. These investors generally think stock prices will continue to post modest gains next year even if they can't match the big double-digit increases of the late 1990s.
But in contrast to much of the 1990s, when U.S. stocks were often perceived as the only game in town, a small but growing segment of professional investors is now weighing a wider range of choices. These skeptics think the mid- to long-range outlook for U.S. stocks is mediocre and hope to get bigger gains elsewhere.
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