Stock markets can soar or falter in an instant. One day the European debt crisis is receding, the next day the region’s on the brink of disaster. Economic statistics never give investors the whole picture.
In these jarring times, Bloomberg Markets magazine in its August issue asked six billionaires for their advice on which stocks might outperform the market in the next 12 months.
Their responses showed much disagreement: Peter Hargreaves, the largest shareholder of Hargreaves Lansdown Plc, the U.K.’s biggest retail broker, said water, health care and technology stocks will outperform in the next 12 months.
Casino mogul Phil Ruffin, who controls the Treasure Island Hotel Casino in Las Vegas, and Mark Cuban, the owner of the Dallas Mavericks basketball team, both say to avoid stocks unless you have better information than the market.
“Pay off debt,” says Cuban. “Search online for the best price on items your household needs. Pay local merchants in cash, while still paying sales tax. You’ll never lose money or sleep.”
John Catsimatidis, the owner of Red Apple Group Inc., which counts a Pennsylvania oil refinery and the Gristedes grocery store chain in New York City among its assets, says betting on banking stocks like JPMorgan Chase & Co. will pay off.
“Mitt Romney will get elected, and banking will be straightened out,” the billionaire says.
Following are profiles of the six billionaires and their answers to the question, “What stocks -- or categories of stocks -- do you think will outperform in the next 12 months? Why?”
Primary Asset: 32.2 percent stake in Hargreaves Lansdown Plc Country of Citizenship: U.K. Age: 65 Industry: Financial services
Tip: Three sectors may outperform during the next 12 months.
Health care: The developed world is getting older, while living standards in the developing world are improving. Medical discoveries and new technologies add to the excitement. The industry’s cash flow and dividends are prodigious.
Water: With the population passing 7 billion, the need for water won’t drop. Sales turn into cash flow and dividends very quickly.
Technology: Apple Inc. is sitting on $100 billion of cash; Microsoft Corp. is still one of the big beasts of the tech jungle; Google Inc. is dominant in search. Companies are using technology to become more efficient. Consumers want the latest gadget. I see no reason for these trends to end.
Primary Asset: Sole owner of Kingston, Jamaica-based Digicel Group Ltd. Country of Citizenship: Ireland Age: 54 Industry: Telecommunications
Tip: Vodafone Group Plc has an excellent footprint in both wealthy and big emerging markets, such as India. Its 5 percent dividend seems bulletproof. Its network is a platform for every tech trend. The challenge is to capitalize, possibly by charging fees to Facebook Inc., Google and others for access. Bharti Airtel Ltd. and Millicom International Cellular SA are also undervalued.
Primary Asset: Sole owner of the Treasure Island Hotel Casino in Las Vegas. Country of Citizenship: U.S. Age: 76 Industry: Leisure
Tip: No stocks. Choose hard assets that have a cash flow and appreciate with inflation. They should cost triple to replace.
Primary Asset: Sole owner of New York-based Red Apple Group Inc. Country of Citizenship: U.S. Age: 63 Industry: Energy, real estate
Tip: JPMorgan -- Mitt Romney will get elected, and banking will be straightened out.
Primary Asset: 68.3 percent stake in Mumbai-based Oberoi Realty Country of Citizenship: India Age: 42 Industry: Real estate
Tip: Apple and Samsung Electronics Co. are among the world’s innovators. Companies that focus on core operations, manage cash flows and working capital and generate cash year over year will outperform the general markets.
Primary Assets: Proceeds from sale of Broadcast.com Inc., Dallas Mavericks Country of Citizenship: U.S. Age: 53 Industries: Technology, media, sports
Tip: Unless you know an industry or company better than everyone, keep your money anywhere but the stock market. Pay off debt. Search online for the best price on items your household needs. Pay local merchants in cash, while still paying sales tax. You’ll never lose money or sleep. You’ll never care what the market is doing. You’ll control your financial destiny.