Heard on the street: Money manager pushes 'defensive' stocks, cash as record-breaking continues in markets
AuthorAffiliation Staff Reporter of The Wall Street Journal</br></br>"The bulk of the market gain for 1995 has already been accomplished," warns Mr. Connolly, who has put away his rose-colored glasses now that he is a partner at money-management firm Miller Anderson & Sherrerd. Located in the Philadelphia suburb of West Conshohocken, Miller Anderson manages $31 billion, 40% of it in stocks.</br></br>If investors are looking for a savvy investment in today's apparently over-heated markets, think cash, suggests Mr. Connolly, who is 51 years old.</br></br>His reasoning: The market is already up more than 14% this year. Corporate earnings can't go up much more, he says. His advice is to buy "defensive" stocks such as food, tobacco, utilities, health-care and banks, whose results don't suffer too much in a recession. Buy bonds, he says -- and build up some cash reserves.</br></br>"We have about 10% cash in our portfolio," Mr. Connolly says, referring to Miller Anderson's core stock portfolio of about $9 billion. That's significant because normally the portfolio is fully invested, with zero cash. "Maximum cash would be 20%. So that doesn't signal great fear -- it just signals caution."