MARKET CRISIS Fund managers buying conservative stocks October 13, 2008 AP
Top fund managers say fear and panic drove global financial markets last week as they bought conservative stocks to try and avoid volatility.
US stocks had its worst week in history and the Australian market followed its lead by closing eight per cent softer on Friday in a session that wiped $106 billion from the value of stocks.
Perpetual investments portfolio manager Matt Williams told the Sky News Sunday Business program that the recent losses were "extraordinary" but he was not panic selling.
"We've seen a small spike in redemptions but it's been pretty solid," Mr Williams said.
"We're generally looking to buy in conservative companies with solid balance sheets like ASX, Computershare, Commonwealth Bank of Australia and Harvey Norman."
He said he expected further weakness in the market and didn't rule out a short sharp bounce in the coming days.
"If you're going to the market now, you need to take a two- or three-year view."
Founder and investment director of Investors Mutual Anton Tagliaferro told the business program that the current financial crisis was caused by not enough regulation in the financial sector.
"Financial deregulation went to extremes over the last 20 years, the last 10 years in particular."
"This created this huge bubble of debt and we're seeing the consequences today," Mr Tagliaferro said.
"The sort of falls we're seeing today are extreme falls caused by very nervous sellers."
He said he was buying stocks like Telstra Amcor and Brambles, which were safe havens and had good balance sheets, while he had concerns about listed property stocks and the resources sector.
Mr Tagliaferro also said that the G7 initiative, where finance ministers are trying to come up with solutions to the global financial crisis, could not legislate trust and confidence in the market.
"That will take time to rebuild," he said.
"We're facing another nervous week but I wouldn't be surprised if we do have a rally in the next fortnight or so.
"Hopefully it will get to a level where it will stabilise and people can catch their breath and confidence will regain again."
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