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Stocks should be like tractors: sturdy and reliable

April 07, 2006

To Muhlenkamp, stocks should be like tractors: sturdy and reliable. So he wants companies with a retirn on equity above 14%, revenue growth of at least 10% a year. He'll have no truck with exotic asset allocation theories, saying, "Academic theories are good as academic theories, but my job is to make money."

The maverick Muhlenkamp is guided by a peculiar mix of bottom-up stock picking and macroeconomic forecasts. He foresees a fairly steady economy in 2006, with 2% inflation and 4.5% short-term interest rates. Thus he concludes that the bottom won't fall our on his eclectic collection of holdings.

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