CalSTRS Is Buying

The second largest pension fund in the U.S.,the California State Teachers' Retirement System,or CalSTRS,is getting to the point of being shell-shocked,Chief Investment Officer Christopher Ailman revealed.Even so,we're actually investing.We put about one billion dollars into the market last week.These are bargains that you don't want to pass up.We're just stepping in.Wall Street is overreacting.I'm still worried about Europe.If we don't see the credit market continue to thaw,that would make me worry.Wall Street has already priced in a 30-40% earnings decline.You're still gonna have negative news,but you've got to digest through that.The circuit breakers are too wide,and the market has too much emotion.Wall Street is looking at the fourth quarter projections.I am confident in the American consumer getting through the financial crisis,Mr.Ailman affirmed.

Money Men Cautious

Several leading money managers have expressed a guarded attitude toward the stock market.Brian Gendreau of ING cited credit tightening and bonds being pulled as worrisome.He looks for a tougher second half,though the market will end a little higher.There is an unquantified risk in the subprime mortgage market.In consequence,he is buying bonds and large companies,which are less dependent on credit.Christopher Ailman of CalSTRS is rebalancing the huge pension fund.He is unwilling to take risks until the subprime fog clears up.Mr.Ailman is concerned about high yield debt and alt A mortgages.Beginning in August,400 billion in loans will reset.This pressure could cause more problems such as those at Bear Sterns(BSC).Thomas Melcher of PNC's Hawthorn is waiting to see how much of the mortgage market is enveloped by distress.Consumer spending and possibly more hedge funds could be affected.A bond fund such as Lehman Brothers' TLT will be a popular haven until the fog lifts.Happy Independence Day,American readers.I am starting to feel heat because you aren't showing interest in the ad links.