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Investing Specialists

Our Ultimate Stock-Pickers' Top 10 Buys and Sells

The decline in the equity markets created plenty of buying opportunities in the most recent period, but some of our managers seem to have jumped into energy stocks sooner than they should have.

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By Greggory Warren, CFA | Senior Stock Analyst

Equity markets can be fickle things at times. After running up more than 12% during the first quarter of 2012, the U.S. markets (as exemplified by the S&P 500 TR Index) declined 3% during the second quarter, but only by virtue of a strong rally in the final weeks of June. Concerns about everything from the future of the eurozone to slowing growth in developing markets like China and Brazil, as well as a stalled economic recovery in the U.S., weighed heavily on the minds of investors, who (according to our research) continue to prefer fixed income over actively managed equities. Looking at the stock sectors that got hit the hardest in the second quarter, financial services and technology were both down 8% on a total return basis, energy declined 6%, basic materials and industrials fell 4%, and stocks from the consumer cyclical sector dropped 3%. The decline in the U.S. markets during the second quarter did, however, make stocks look a bit cheaper than they did at the end of the first quarter, with the market-cap weighted price/fair value estimate for Morningstar's stock coverage universe standing at 83% at the end of June (and dipping even lower during the month of May), compared with 92% at the end of March.

The Morningstar Ultimate Stock-Pickers Team does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.