Why Barton Biggs is selling his tech stocks now

Traxis Partners LLC’s Barton Biggs sold almost all his U.S. technology shares last week. Biggs, whose stock investments in March 2009 gave New York- based Traxis a 38 percent gain last year, said concerns the economy will contract spurred his technology sales last week. The Commerce Department said purchases of new homes fell 33 percent in May to an annual rate of 300,000, the least on record. The Institute for Supply Management’s manufacturing gauge expanded in June at the slowest pace this year. Buying shares after they fell to a 12-year low pushed Traxis’s gain to almost three times the industry average last year, according to Chicago-based Hedge Fund Research Inc. While Biggs cut his equity holdings by almost half last week, he said the second recession in three years isn’t inevitable and that stock gains usually slow at this stage of an economic recovery. The U.S. stocks rally since March 2009 and the retreat that began two months ago mimic the pattern set in 1982, when a bull market that lasted five years began, according to Birinyi Associates Inc. While the Russell 2000 Index of small companies tumbled as much as 20 percent since April, the research firm says the S&P 500 may not follow it into a bear market. Since 1940, the S&P 500 has avoided long-term declines when the Russell 2000 plunged 20 percent at least five times, according to Westport, Connecticut-based Birinyi.