Fund giant offers a positive take on the economy

When investors tell Brian Rogers, chairman and CIO of T. Rowe Price, the giant mutual-fund company in Baltimore, how pessimistic they are about the investment markets, he responds: Statistically speaking, the world hasn’t ended very often.

In fact, Rogers and colleagues are rather optimistic about the investment markets. At a recent conference, several predicted that the economy would start improving next year or in 2010—and that we’re certainly not in for a depression.

Chief economist Alan Levenson said the recession will last into 2010, although there will be a “sluggish recovery” next year.

“I think we’ve seen much of the pain,” Rogers said. “Next year will be a better year than most people expect.”

I asked Rogers which stocks he might recommend to someone interested in dipping his or her toe back into the market. He named TimeWarner, BP, Schlumberger, Anheuser-Bush, and Cooper Industries.

Mary Miller, director of the fixed-income division, predicted that investors will tire of low-yielding Treasuries and return to other vehicles. High-quality municipals are yielding more than comparable Treasuries, she noted, which she called “extraordinary.”

In the stock market, values are “compelling,” said portfolio manager David Giroux, adding, “It’s a great time to buy.” While he was down on consumer staples, he was positive on utilities.

Ray Mills, who manages foreign funds, said that emerging market countries are still growing, and that in general, “Stocks are as cheap as they were in the 1970s.” He recommended dividend-paying stocks: “Dividends are more stable than earnings.” And he believes that value stocks will do better than growth stocks. Mills also called oil stocks “cheap,” and with China and India still “in their infancy,” it will be “tough for the supply to keep up.” — Warren Boroson

Guest contributor Warren Boroson is the author of more than 20 books, including “How to Pick Stocks Like Warren Buffett” (J.K. Lasser).