Joe Battipaglia

Top 134. Feb 22, 2001 8:31 AM

» Rande - Re: Joe's Usefulness

In response to message posted by Kirk:

Kirk,

Concur. The value of optimistic guys like Joe B. is that they provide some balance to the perennial doom and gloom crowd. Take short-term action based on either view? Nonsense. But when it comes to the long-term Big Picture outlook, my money is on continued growth and prosperity, despite the inevitable cyclical downturns along the way.

-- posted by Rande

Top 135. Feb 22, 2001 9:59 AM

» DennisL - Re: Re: Joe's Usefulness

In response to message posted by Rande:

Glass half full or half empty?

The value of optimistic guys like Joe B. is that they provide some balance to the perennial doom and gloom crowd.

We probably should turn that statement around and say

The value of the perennial doom and gloom crowd is that they provide some balance to the optimistic guys like Joe B.

Both statements are valid and both camps (bulls and bears) are necessary. That's why they make chocolate and vanilla, and that's what makes markets.

Bulls make money.

Bears make money.

Pigs get slaughtered.

Keep your asset allocation in order, ignore the gurus, don't be a pig, make money, and be happy...8-)

-- posted by DennisL

http://cbs.marketwatch.com/news/story.as...

Top 136. Mar 27, 2001 6:27 AM

» Rande - Not Putting Down the Bat

Joe keeps swinging. Is anybody still listening? One nugget in the following that might deserve some attention. Battapaglia's analysis of the S&P 500 earnings yield (inverse of the P/E ratio). This is a model the Fed has used in an attempt to guage overall stock market valuation levels. The historical relationship between the 10-year Treasury rate and S&P P/E ratios is uncanny, but for sound fundamental reason. Anyway, something to consider.

Setting the stage for the next leg

Setting the stage for the next leg
By Joseph V. Battipaglia, CBS MarketWatch.com
Last Update: 12:09 PM ET Mar 26, 2001

NEW YORK (CBS.MW) -- I'm certainly not going to talk about capitulation and market bottoms - I'll leave that to the technicians and shorter-term oriented.

But what I will point to was that Thursday's complete rout of stock prices in the face of no significant or new fundamental developments speaks a lot about short-term volatility, but offers little insight into the longer term outlook for the market.

For the longer term, a progression of encouraging data on the broad economy suggests that the worst may be over. I have said that for the market to recover it needs to see improvement in the economy, a sense that the worst of the earnings cuts are behind us and an overall renewal of confidence. This process is underway.

For quite some time some fundamental factors have been working against us. With each passing month these became more onerous. In the early part of last year interest rates were rising as money supply was tightening. Energy prices after going through $30 bbl went on to $35 bbl and put a damper on spending. And, thirdly, the 36-day long election battle hurt confidence and changed behavior sufficiently during the fourth quarter to add that much more negativity to the situation.

Of course, the combination of a slight disruption in final demand coupled with a fairly significant inventory build going into the second half of 2000 put the stock market in reverse.

PCs and Semiconductors

The worst of this seems to be over. Interest rates are going down. Liquidity is being added to the economy. Energy prices have cracked below $30 on their way to below $25. Consumption on big ticket items like autos and houses continue to move ahead at an acceptable pace due in part to lower mortgages, relatively full employment rolls and significant buildup of net worth over the last five years despite the recent stock market decline.

As I have pointed out for the last several weeks, unemployment claims are a key, leading indicator for our analysis and those numbers appear to have stabilized somewhat in recent weeks. While earnings may be the last thing to improve, I am encouraged by anecdotal good news from the likes of Micron, Nokia, Applied Materials, and Lucent. The recent better performance by the Semiconductor index ($SOX: news, msgs, alerts) and the performance of most PC companies, and an uptick in the equipment component of the durable goods report may, in fact, allow the PC and semiconductor to take an early lead in any recovery to come.

These are the kinds of things when woven together help paint the bullish picture for the future.

Valuations have also turned in our favor. We are now at a point where the earnings yield on the S&P 500 (SPX: news, msgs, alerts) (the inverse of the forward P/E ratio) is higher than the five- and ten-year government bond yield. This is nearing the same trough levels seen several times over the last 20 years. Interestingly, the S&P 500 returned, on average, 24% following each of the seven "trough" points we've identified since 1981. This is a far better return than the 11% annualized return seen during this entire period.

Moreover, it appears that the NASDAQ composite's performance has returned to more normal levels. For example, the 20-year annualized return for the S&P 500 and the NASDAQ composite are both roughly 11.5 percent measured from March 21, 1981 through March 21, 2001. Assuming that the growth rate in technology remains higher than the broad market (a recent I/B/E/S survey of Wall Street analysts reveals a 23.8 percent expected long term growth rate for the technology sector while the growth rate for the broad I/B/E/S universe is 15.5 percent) the NASDAQ appears to be undervalued on a historical return basis.

Long Run Relative Returns (20 Years)

Index Level on March 21, 1981 Level on March 21, 2001 Annualized Return

S&P 500 134 1,139 11.3%

NASDAQ Composite 206 1,928 11.8%

As for the economy, the consumer is getting help from lower interest rates.

Today, consumers are seeing generally lower lending rates at the same time investors in money funds are getting squeezed. Specifically, 20-year fixed mortgage rates have fallen to 7 percent from 8.7 percent last May. The prime rate has been cut to 8 percent from 9.5 percent last May. With room to cut further, I believe the consumer will continue to benefit from the real effects of falling rates. Meanwhile, tax-free money market yields have declined sharply since December to approximately 2.7%. When subtracting the expected inflation rate, the real return on this money falls to near 0%. The $2-plus trillion currently sitting in money market funds, will ultimately serve as an important source of funds for the next leg of the equity bull market as the fundamental picture improves.

Lastly, I continue to see modest signs of incremental improvement in the economy. Last week was a bit light on economic data, but what little data we did get, helped confirm our thesis that inflation is headed lower and that the pace of rising initial jobless claims has slowed. Consistent with my earlier comment about falling interest rates, the federal funds rate has been reduced by an additional 50 basis points since last month.

So with valuations now reset to historically normal levels and the fundamental picture gradually improving, I believe that we are setting the stage for a continuation of the bull market in equities.

-- posted by Rande

Top 137. Mar 27, 2001 8:49 AM

» JenL_2 - Re: Not Putting Down the Bat

In response to message posted by Rande:

Yup Rande - Just like The Bears, that were wrong for so long, were eventually proven right.....The Bulls like Joe B and Abby, that seem wrong now, will eventually be proven right....and The Bears will start their prognostications of gloom and doom all over again.

Oh My....what's an investor to do?....Just follow the common sense advice of John Bogle, Rande, and others....to have a diversified asset allocation according to risk tolerance and time horizon. DCA and/or rebalance occasionally.... but otherwise forgetaboutit.....Jen

-- posted by JenL_2

http://inq.philly.com/content/inquirer/2...

Top 138. Apr 2, 2001 9:29 AM

» Kirk - Joe and bullrun in the news

In response to message posted by bullrun:

I was interviewed by the woman that wrote this story... too bad she took bullrun's post as the one to quote but my comments agreed with Ron Insana's so they were cut for space. Still, a mention for suite101.com is a positive!

Monday, April 2, 2001

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Celebrity stocks analyst's forecast rosy

By Miriam Hill
INQUIRER STAFF WRITER

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NEW YORK - Joe Battipaglia is a big man, and that may be why he endures the body blows so patiently.

They came again Friday, verbal punches and counterpunches by Fox News television host Neil Cavuto, who challenged Battipaglia's upbeat prediction that the stock market will make a swift rebound.

Battipaglia is one of thousands of investment advisers across the nation who are hard at work trying to predict where this nasty market will go and to reassure millions of anxious investors.

But few do it as publicly as the 6-foot-7, 300-pound Battipaglia. And few, in the face of a market that has lost more than $4 trillion in value in the last year, are as bullish about the market's direction.

Battipaglia, who commutes from Bucks County every day to his job as chief market strategist for the investment firm Gruntal & Co. in Manhattan, appears frequently on financial news programs.

He is one of a band of high-flying analysts who, as the public's interest in the stock market climbed with the market's own stunning rise in the '90s, have become very visible, highly quoted figures. They are regulars on television. They appear at seminars and other paid, public forums and in return get marquee recognition.

And every judgment they make is picked apart, live and coast to coast, by TV commentators such as Fox's Cavuto.

"We have Cisco chief executive John Chambers and others saying, 'We don't see much demand out there,' " Cavuto challenges. With such a weak outlook for technology, the country's leading industry, how can Battipaglia remain so optimistic?

Battipaglia remains calm.

"Yeah, but [technology] is not the majority of the economy," he says. "And we know that if the economy grows, technology spending grows."

It's a spiel that Battipaglia, 45, will give again and again Friday as he pounds the table for stocks: The stock market has overreacted to a marked slowdown in the economy and in corporate earnings. As the economy rebounds in the second half of the year, earnings will recover, companies will start spending on technology again, the Dow Jones industrial average will hit 12,700, and the Nasdaq will add 1,000 points.

It's not an easy stance.

A year ago, when the Nasdaq surpassed the 5,000 mark, Battipaglia predicted it would soar even higher. It headed south instead, closing at 1,840.25 Friday.

Battipaglia has spent the last year explaining that while his prediction of a Nasdaq at 6,000 was wrong in the short run, he will be vindicated in the long run. Clients who take his advice and buy stocks now will see big gains, he said.

His professional reputation and ultimately, his job depend on calling the market right. His constant TV, radio and print appearances have helped build Gruntal's assets to $20 billion. If he's wrong, the firm's fortunes will suffer, too.

Battipaglia - CNBC hosts nicknamed him Batman and play the superhero's theme song when he appears - is one of a handful of celebrity market strategists. They were the heroes of the bull market. And if it doesn't recover, they may be the sacrificial lambs of the bear market.

If the pressure is getting to Battipaglia, it doesn't show.

When he enters, Battipaglia not only fills the room with his size but also with his presence. He is patient with clients and reporters who ask him the same questions dozens of times in a single day.

He knows how to explain the market in simple terms - "Here's a bumper sticker point: The Internet is real. Investors have gotten confused about that because Yahoo is on its back and Amazon is down, but the real benefit of the Internet is that it helps traditional businesses."

He will repeat these same points from the minute he steps off the train at the World Trade Center at 6:58 a.m. until he finishes the day on Cavuto's show at 4:15 p.m.

He leaves his house at 5:15 a.m. to catch the 5:44 a.m. train in Trenton. Lunch is a chicken Parmesan sandwich at his desk with his researchers Kevin Caron and Chad Morganlander. He is so accommodating of TV's demands that his neighbors still tease him about the time a driver for CNBC woke them up at 2 a.m. looking for Battipaglia, who was to appear on the show in New York at 4 a.m.

"There's a glamour attached to this, but the reality is, it's a lot of hard work," Battipaglia said. "When you're right, you get a lot of accolades, but when you're wrong, you get people saying, 'A year ago, you said this.' " He jabs at a newspaper with his finger, pretending to be an angry investor.

He is relentlessly optimistic and says his personal holdings are all in stocks, rather than bonds or more conservative investments. But lately, he said, he finds himself thinking of the blues lyric, "Nobody loves you when you're down and out."

But because he has been more right than wrong over the last few years, he has become an important source of Gruntal's growth. During the bull market of 1999, a string of Battipaglia's TV appearances lured 600 new accounts to the firm. He is the focus of a new $1.5 million Gruntal advertising campaign.

"I never want to say the firm's success is due to one person," said Eric Seiber, Gruntal's national sales manager, "but I hate to think where the firm would be without him."

It was Fordham Prep, the Jesuit high school in the Bronx, that opened his eyes to the possibilities of a richer life.

"There were a lot of guys from Long Island," he said. "I was living in an apartment, and they had big houses and their fathers were doctors and lawyers."

Battipaglia grew up in Astoria, Queens, where his Italian neighborhood "bordered on the Greek neighborhood, which bordered on the African American neighborhood."

He was the only child of Ann, an executive at Bloomingdale's, and Joseph, now deceased, who was a crane operator for the city sanitation department. From their fourth-floor apartment, he could see the Empire State Building and the rest of the Manhattan skyline.

"I knew there was a very big world out there," he said, "and I had to go out and find my place in it."

After high school, he went to Boston College, where he played rugby, graduated Phi Beta Kappa in economics, and met his future wife, Mary Ann. (The couple live with their three children, Matthew, 18; Christen, 16; and Jeffrey, 12, in Washington Crossing.)

After graduation, Battipaglia got a finance degree from the Wharton School of the University of Pennsylvania and went to work for Exxon. At the same time, he had been investing on his own and thought he was good enough to help other people do it. He joined Elkins & Co. in Philadelphia in 1982. That firm merged into what eventually became Prudential Securities. He liked smaller firms, and in 1986, he joined Gruntal & Co., which manages $20 billion in assets and has 650 account executives.

In 1993, Gruntal chairman Robert Rittereiser plucked him from the pack of investment managers to be the firm's investment strategist because of his easy way with numbers and words.

"I asked him to take on the role for the firm and asked him to speak plainly and clearly about the markets," Rittereiser said.

Battipaglia's manner and ability to explain difficult concepts clearly has made him a popular guest on CNBC and CNN. He has talked stocks with Today host Katie Couric and CNN's Larry King.

CNBC host Ron Insana said he enjoyed having Battipaglia on to represent the bullish case for the market.

"He's always presented a well-articulated, well-thought-out point of view backed by research," Insana said. "He knows how to craft a sound bite, which is always helpful."

Battipaglia has been bullish on stocks ever since he got into the business, but two prescient calls helped him grab the spotlight. During the Asian crisis of 1997 and again in the Russian debt crisis of 1998, Battipaglia told clients - and American viewers - that stocks would head back up.

On Larry King Live in 1997, King asked Battipaglia how high the market would trade the next day. He predicted a 100-point drop in the Dow followed by a rally. Whether it was luck or skill, Battipaglia was right.

With the Dow at 7,500 in August 1998, Battipaglia predicted recovery to 9,500 by year's end. The Dow hit 9,500 in January 1999.

Last spring, he predicted the Nasdaq composite index would hit 6,000. Instead, it sank from its high of 5,048 on March 10, 2000, and closed at 1,840.26 Friday, the worst decline ever for the index.

Battiapaglia's miscall of that downturn and his stubborn bullishness have earned him the ire of some investors.

"I completely ignore Joe, and Abby [Joseph Cohen, strategist at Goldman Sachs], too," said an investor posting under the name bullrun on the Web site http://www.suite101.com/ . "Neither one would recognize a bear market if it smacked them right in the face."

CNBC's Insana credits Battipaglia with admitting his errors.

"We were on Larry King together and he admitted that he had missed the turning point in the market and missed the extent of the increase in rates from the Fed and the increase in energy prices," Insana said. "That's all we can ask for is to be intellectually honest."

But Jeffrey Hooke, author of Security Analysis on Wall Street, thinks many strategists are forced into bullish positions by their firms' need to sell stocks and generate commissions.

"Generally, the role of the strategist is to convince the brokerage firm's clients to keep holding stocks or to buy them," Hooke said. "None of these strategists were telling people to sell when Nasdaq was at 5,000."

Although Battipaglia is still one of the Street's biggest bulls, he has backed off from his earlier estimate that the Nasdaq will rebound to 4,300 by the end of the year. But he stops short of issuing a new, lower target because he thinks people will criticize his backtracking.

"I don't want to capitulate," he said. "People will say the bottom occurred when Battipaglia reversed his estimate on the Nasdaq. I don't want that."

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Miriam Hill's e-mail address is hillmb@phillynews.com.
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© Philadelphia Newspapers Inc.

-- posted by Kirk

Top 139. Apr 2, 2001 9:43 AM

» bullrun - AWESOME!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Now, the world listens to Bullrun, not just this board. My head's so big its going to explode!!!!!!!! Kirk, this is awesome stuff we're talking about here. Bullrun is now the foremost poster on this board. Doesn't this mean Bullrun needs his own thread?

-- posted by bullrun

Top 140. Apr 2, 2001 9:44 AM

» KLR - Not to Worry.....Seeds of next bull market being sewn

Seeds of next bull market being sewn
By Joseph V. Battipaglia, CBS MarketWatch.com
Last Update: 11:32 AM ET Apr 2, 2001

NEW YORK (CBS.MW) -- New information on the economy strengthens the case for equities.

Last week, data on home sales, consumer confidence and durable goods orders for February were generally positive. The basic case for higher equity prices relies on evidence of an improved economy, a more optimistic earnings outlook and renewed confidence by investors, businesses and consumers.

I believe we have already begun this process after a year-long falloff in economic growth, declining earnings and stock prices. We have already seen a sharp reduction in excess inventory, falling energy and import prices, core inflation rates headed under 2 percent and sharp cuts in lending rates. Monetary aggregates are rising and over $2 trillion has accumulated in money market funds earning a real return close to 0 percent.

On a historic basis, the earnings yield of the S&P 500 (SPX: news, msgs, alerts) has risen to an attractive level versus bonds and suggests that equity returns should prove to be above average in the months ahead. In sum, the seeds of the next major bull market are now being sewn.

For the month of February:

1. The housing market remained strong as existing sales and new sales both rose. Existing home sales rose by a better than expected 5.18 million annualized units and new home sales posted a strong 911,000 annualized units. Inventories of homes for sale remain low and house price gains are still very healthy. New house prices continue to post solid gains of close to 4 percent year-over-year growth. Looking beyond the data, I am impressed by the confidence and willingness of consumers to enter into sizable, long-term financial commitments such as the purchase of a home. New homeowners' ability to secure a mortgage, present a down payment and take on the myriad of costs associated with a new home also supports my thesis that the bulk of the wealth created by the long running bull market is still with us.

2. The snap back in consumer confidence during March was a surprise. After five consecutive months of sharp declines, confidence rose to a reading of 117 from an upwardly adjusted reading of 109.2 in February. Consumers now expect better business conditions and labor market conditions over the next six months. Consumers may be responding to lower interest rates, the relatively healthy job market, and the fact that most sectors outside of manufacturing continue to perform well. The frequency of large layoff announcements seems to be abating and new claims for unemployment are holding steady around 375,000. This level is consistent with a slowly growing economy, but well above the levels seen during past recessions. As I've said before, the job picture is a critical leading indicator as it relates directly to confidence and the lions share of spending in the economy.

3. Oil prices continued to work their way lower helped by rising supply and moderating demand. According to the American Petroleum Institute and the Energy Information Association, the week ending March 23 saw the highest flow of crude imports ever, and constituted the third week in a row with imports exceeding 9 million barrels per day. As a result, May crude oil futures fell to around $26 per barrel. Natural gas prices also fell to $5 per cubic foot.

4. February durable goods orders also rose by a better than expected 0.5 percent after excluding volatile aircraft and transportation orders (-0.2 percent overall). Electronic and electrical parts & equipment (semiconductors, components) bookings rose by $2.2 billion. Industrial equipment (approx. 2/3 computers) fell by 2.4 percent. Taken together, bookings for electrical parts, equipment and industrial equipment posted their second monthly gain following several months of straight declines.

5. Lastly, the Chicago Purchasing Manager's index fell 8 points to 35.0 percent in March, the index's lowest level since March 1982. While dramatic sounding, the falloff is consistent with the fast curtailment of production in the manufacturing sector as wholesalers and retailers work off excess inventories. Expect the NAPM data to be released Monday to reflect a similar degree of weakness.

On balance, the data continues to support my thesis that the economy is nearing the end of its downturn. I expect that the market will respond favorably as additional signs of improvement become evident and the earnings outlook begins to stabilize.

-- posted by KLR

Top 141. Apr 2, 2001 9:51 AM

» mitelo - Re: AWESOME!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

In response to message posted by bullrun:

needle and thread..por la boca...

-- posted by mitelo

Top 142. Apr 2, 2001 11:06 AM

» Roger_Babson - Three most important factors in the market...

... are (1) profits, (2) profits, and (3) profits. I cannot emphasize this enough.

The secular peak in the rate of change of growth of profits (and the peak in P/E and Q Ratio) for the S&P 500 and broader Wilshire 5000 means that hereafter firms will not be able to even maintain profits, let alone grow them, without reducing high fixed costs taken on during the bubble period; this phenomenon will mean NOT even single-digit net returns from the stock price peak over the next decade, as Mr. Bogle, Sir John Templeton, and a handful of other old market horses speculate will occur.

Looking back from 2015-20, certainly, from the coming lows in ~2002-04 and again in ~2011-12, there is a high likelihood of mid- to high single-digit returns, "including dividends".

However, from the same retrospective vantage point in the future, the returns from ~1990-91 will not exceed Treasury and the best Aaa-rated corporate bonds purchased during the period 1990-1997 to ~2015-20.

To the point, at the mania peak, the market maniacs discounted almost "20 years" of long-term-trend growth (aggregated 20, 40, 60, and 100 years) of profits for S&P 500 firms, which dramatically drove overinvestment and malinvestment in tech and supporting infrastructure, which, in turn, drove returns to capital's share of GDP (corporate profit's share of GDP) to a level that simply could not be sustained without growing GDP at ~10% for 10-20 years.

Therefore, the profit growth deceleration will be accompanied by the greatest restructuring of the economy and, in the process, the transformation of the business firm in US history.

Analysts' earnings projections for Q3 and after are still at ~20% yr./yr., which is reflective of either they are just doing their typical pump and dump routine, or they have no clue of the secular forces coalescing, and a lot of still-in-denial bubbleheads will get their deflated heads handed to them in the years ahead. If these clowns were not so pathetic and the implications for "savers-turned-unwitting-speculators" not so negative, I would laugh when I hear them spouting their moronic drivel.

-- posted by Roger_Babson