In a roundtable with The Wall Street Journal four of the most preeminent asset managers discussed their outlook for the economy, and while they expect rough times to continue for some time to come, they do see pockets of opportunity.

George Soros, who called the current market a “trading market,” is optimistic about the emerging markets of China, India and Brazil. John Paulson likes distressed debt, top-rated residential mortgage bonds and companies in bankruptcy. Alan Fournier is better on healthcare, and James Melcher is investing in corporate bonds.

“I’m not bearish, but I don’t see how we can have the kind of growth in profits that we had during the superbubble,” Soros said.

Explaining why he is buying shares of some financial companies, Paulson said, “While we don’t believe bank stocks in general are undervalued, we do believe many represent compelling investment opportunities over the cycle.”

While some are debating whether the economic stimulus has yet to be felt, Fournier thinks it already has and that bad times are ahead: “I just don’t know if the market can sustain itself past this brief window, when the stimulus impacts the economy. It’s only a matter of time before stimulus effects fade, the economy rolls over, deficits hurt bond yields, and the dollar gets hurt.”

Melcher is also largely pessimistic, saying, “The economy is still deteriorating. Job losses are still huge. I really don’t see where earnings will come from to drive valuations. Just because things are getting worse at a slower pace doesn’t mean they’re getting much better.”

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