Oakmark: Despite Volatility, Stocks Have Less Risk than 'Safe' Bonds

The slumping European economy has sparked a stock market correction and corresponding bond market rally or the third straight year, Oakmark Equity & Income portfolio manager Clyde McGregor wrote in his quarterly letter to shareholders. The result was a disappointing 3 percent loss for the fund in the second quarter, trailing the benchmark Lipper Balance Fund Index loss of 2 percent. For the first half of 2012 the fund gained 4 percent vs. 6 percent for the benchmark. Since inception in 1995, the fund has generated an 11 percent return, far above the index return of 6 percent.

McGregor noted that it's unclear when the market will shake the pessimism that currently is holding stock prices back. But he added that it's likely that stock investors today face less risk than the holders of supposedly "safe" bonds.

To read his full letter, click here.

Oakmark Equity & Income is a component of the Bradway Strategic Portfolio, which consists primarily of investments with top money managers.