Now's the time to buy and hold
T. Rowe Price's Rogers says tough markets contain lots of opportunities
CHICAGO (MarketWatch) -- Investors may be seeing the "peak of negativity" in the markets these days, and that's exactly why buy-and-hold types should be on the lookout for opportunities, T. Rowe Price's chief investment officer said on Friday.
"Sentiment is so negative right now that you can't help but make money in some of these companies if you take a three-year, buy-and-hold horizon," Brian Rogers told attendees of the Morningstar Investment Conference. He expects it will take the next couple of years for the market to recover.
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Where to look for opportunities today? Rogers, also the veteran manager of T. Rowe Price Equity Income Fund (PRFDX ![]()
PRFDX) , said that investors with a reasonable time horizon should consider the battered financial sector.
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"Buying into stress is usually a good thing to do. And if you look for where there's the most stress right now, you go to the financial sector," he said. There are also opportunities to invest in the higher-quality end of fixed-income markets, including mortgages, he added.
In addition, he advised those in the audience to look across sectors for good management and strong balance sheets in firms with a history of surviving when times are bad. Even though the stock price may be down, he said, there is still value in strong companies that will be realized in the future.
"Invest in companies that have been in downturns before, that can survive periods of stress and that are long-term survivors," he said. "You have to look for companies where you trust management ... and where you think they will not bet the ranch on a bad strategy."
One example: United Parcel Service Inc. (UPS ![]()
UPS) . While investors have soured on the stock on concerns about its earnings, Rogers sees this company as a survivor for those who plan on keeping the shares for a while.
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"UPS is a great company, with great financials. They've been in business forever," he said. He also pointed to news that the company was changing its routes so that trucks would make only right-hand turns -- a move that will save on gas costs.
"I love a company like that. I don't care what's going to happen next quarter," he added.
Rogers' biggest fear, however, is the issue behind UPS' creative savings plan: the high price of oil. He doesn't think the price of oil is sustainable, yet he also worries for the well being of consumers who are contending with high gas prices at the pump and higher food prices.
"It's as if the tax rebate checks came out and were recycled to the oil producing countries," Rogers said.
Promoting corporate citizenship
While market-related talk dominated the question-and-answer session of Rogers' presentation, the main thrust of his speech was about corporate governance. He spoke about T. Rowe Price's (TROW ![]()
TROW) obligation to protect investors' interests, its process in making the best decisions for these investors, and how scandals such as those at Enron, WorldCom and Tyco helped bring increased scrutiny to corporations.
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It was an important issue to address, attendees said.
"There are so many people who are affected by the stock market as a tool for retirement; corporate governance should be one of the top issues looked at," said John Callegari, chief investment officer at First Independent Bank in Vancouver, Wash.
Attendee John L. Liechty agreed. He's senior vice president of financial services for Goshen, Ind.-based MMA, or Mennonite Mutual Aid.
"Poor management practices translate into poor financial performance, and so if management concerns are not adequately addressed, it's going to manifest itself in a lower stock price," Liechty, said. "And that is clearly detrimental to mutual fund investors' interests." 
Amy Hoak is a MarketWatch reporter based in Chicago.
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