Guessing game: Robert L. Rodriguez, Principal and chief executive

First Pacific Advisors Inc. in Los Angeles

Assets under management: $4.1 billion

Forecast:

At long last, the economic recovery arrives.

Mr. Rodriguez, the manager of the FPA Capital Fund, a $680 million value portfolio, and the FPA New Income Fund, an $889 million intermediate-bond offering, says the economy will grow faster in 2003 than it did last year, though much of that growth will come in the second half.

The economy finally will respond to the aggressive Federal Reserve monetary policies and increased exports. As a result, real gross domestic product will grow in excess of 3%, he says.

“We are expecting that there will be an inventory rebuilding cycle in the first quarter, that capital spending will gradually take hold throughout the year – and in particular, technology capital spending,” Mr. Rodriguez says.

That is the good news.

The bad news is that investors shouldn’t expect any major tech rallies. “I still see this as a very substandard recovery, very much along the lines of obsolescence replacement, as opposed to a lot of green-field capital spending,” he says.

Also, interest rates have no place to go but up, Mr. Rodriguez says.

“It’s going to constrain the equity markets,” he says, limiting returns for the major averages at around 5%. “In terms of bonds, I believe we are on the verge of one of the worst periods for high-quality bonds in the last 100 years.”

The finish line, 2003:

* The Dow: 8900

* The Nasdaq: 1450

* The S&P 500: 945

Tip sheet:

* Hot stock: Big Lots Inc. (BLI)

* Hot sector: tech-related stocks

* Next big thing: more discussion about the erosion of the U.S. currency and its potential impact on our account deficit