WSW: Louis Rukeyser's Wall Street Summary & Discussion $treet
- JenL_2
- Rande
- Rande
- lp061574
- SteveT
- Kirk
- Rande
- SteveT
- Kirk
- lp061574
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» Rande - From the latest Louis Rukeyser's Mutual Funds --
From the latest Louis Rukeyser's Mutual Funds --"To Stay on the Wealth Track, Face Forward, Not Back" [exerpts]
Thoughts while waiting for the bull market to resume:
1) Savvy mutual-fund investors are again looking smarter than most of the pros.
Interest rates will not be going up from here to eternity. Most corporate earnings are solid and rising. And when the merchandise goes on sale, it's a good time to buy.
2) The markets may be more volatile than ever, but you shouldn't be.
Huge daily changes, often accompanied by wild intraday swings, have become routine. Those who learned to live with them last year saw the index wind up with a stunning 85.6% advance for the year. I can't promise you that kind of gain every year -- indeed, I can promise you that you won't see it -- but I'm convinced that those who stick with good funds even when the media is screaming "Sell!" will be handsomely rewarded, as usual, over the next couple of years.
3) Most short-term predictors have excellent vision -- in the rear-view mirror.
When stocks are falling, the prognosticators get increasingly gloomy about any chance of a shift to the upside. In other words, their advice will be useful as long as tomorrow is exactly like yesterday. Which, alas for them, it never is.
4) There are an awful lot of bargains out there.
Smart shareholders will not be scared away at times like these.
Bonus -- From the Rukeyser Interview with Maura Shaughnessy (manager of MFS Utilities Fund), entitled "Keeping Her Wits About Her":
LR: To what extent do you factor an overall economic forecast into your stock-picking?
MS: Lou, my first job out of school was at the Federal Reserve. I was going to become a Ph.D. in economics, so I went to the Fed -- and worked in the area that actually made interest-rate forecasts. And I can assure you the Fed can't do it, so why should I think I can? I'm just trying to pick stocks, and I can't do that based on an economic forecast that I have no idea is going to be right or wrong.
LR: Do you think the Fed knows at this point what's going to happen?
MS: No.
LR: Finally, Maura, what's your single best piece of advice for mutual-fund investors over the next 12 months?
MS: Be patient and don't panic.
-- posted by Rande
» SteveT - Lisa I do remember in an anniversary show awhile back Lou introd
Lisa I do remember in an anniversary show awhile back Lou introducing the Woman "usher" . Lou runs a classy show. I think this is another way he distinguishes his show for the rest of the pack. Agreed opening comments are always the highlight of the show, no one does it like LOU.It was revealed this week Panelist Alison Deans was selected as one of People magazines 50 most beautiful people in the World. The photo used to illustrate was not a very good one IMO. Presumably it was the photo that ran in the People story.
Speaking of Alison she likes Financial Stocks now and is avoiding many retailers and is wary of many Internet stocks, but does like some with a brand name and a viable business models. Roger Mc Namee thinks the tech wreck is done likes INTC MSFT CSCO YHOO and EBAY. He thinks the break up of MSFT is the best thing that could happen to the Company and they are wasting energy trying to fight it. He went on to say the only people that may have a problem with a break up are the customers. Liz Ann Sonders likes the over all Fundamentals of many Large Cap Techs and thinks they will win the tug of war with the FOMC. She believes earnings are key and sees growth of at least 15% for the year and would not be surprised if it ran up to 20%. Also is favorable on next year and sees much less cyclicallity to tech spending which is good for tech providers.
Lou reviewed the 15 month record of the Internet 100 by Chase H&Q. E.C. 15 months is an unusual time frame, maybe to dramatically show volatility. The 100 are broken down to 3 sub groups B2B, Networking & server, and B2C. While they all have been volatile B2C is the only group down over all for the 15 month period.
Lou introduced guest Henry Blodget of Merrill Lynch by saying he was formally a journalist but his other habits are good. Henry is bullish over the next 5-10 years but noted we have to expect volatility. He is cautious about Companies that need to raise money in the next 6 months. He does like Companies in the B2B and infrastructure areas with fast growth rates. He thinks only about 20% of the current 400 Public Companies will survive 3-5 years. His guess is 25-30% go bankrupt but maybe 40% of the doomed Companies will be bought out. He ultimately thinks 10-20 of the 400 companies will dominate and become highly profitable. Henry likes INKT, ARBA, and CSCO. Sees no monopoly in the Time Warner AOL deal.
-- posted by SteveT
» Kirk - Thanks Steve for another GREAT summary.
Thanks Steve for another GREAT summary.Below is some good info on Blodget and his performance over the last year.
Henry Blodget was an unknown until he started to make these huge predictions for the share price of Amazon.com AND the stock would then go on to double in weeks to meet the prediction rather than take a year or two.
I have not been able to figure out if Blodget was lucky (to be assigned the internet stocks) or if the silly market used it as an excuse to run the share price higher to sillier pricing. Blodget COULD be blamed for the poor performance of the B2C companies as they were at bubble valuations on his predictions and perhaps have corrected back to less silly levels?
What is funny or interesting is Blodget STILL likes Amazon.com, but for 3 years out. Of course he has to like it as he was pushing it to record prices and it has come down.
Don't you LOVE the internet? I just found a story from a year ago. It says that Blodget was predicting Amazon.com would hit $400 a share and then Barrons ran "Amazon.bomb"
http://www.forbes.com/tool/html/99/Jun/0...
(Remember that Amazon split 2 for 1 on 2-Sept-99 so Blodget was predicting this NOW $58 company would be worth $200 a share over 1 year ago! )
http://finance.yahoo.com/q?s=amzn&d=b
June 01, 1999
Wall Street defends Amazon.com
By Om Malik
EW YORK. 12:10PM EDT—An eye-popping article in financial newsweekly Barron’s has sent online retailer Amazon.com (nasdaq: AMZN) tumbling, but the Seattle-based company is getting a lot of support from Wall Street analysts.
Amazon.com shares are down 6%, or $7.25 a share, to $111 after a scathing article in the publication questioned the viability of the bookseller and CEO Jeff Bezos’ business acumen. Amazon.com’s slide has dragged down the entire Internet sector as well. The American Stock Exchange’s Internet Stock Index is down 10.27, or 3.45%, to 287.30.
The article, which was the subject of light-hearted banter on CNBC’s Squawk Box morning show, has also brought out a unified response from Wall Street, and several analysts have jumped to the defense of Amazon.com.
"Barron’s revisited most of the persistent concerns about Amazon.com, including the lack of profitability, increasing investments in bricks and mortar, competition, valuation, and slowing growth. Although all of these are logical concerns, they aren’t new," wrote Henry Blodget, Internet analyst with Merrill Lynch, and a longtime Amazon.com bull.
For those who do not remember, Blodget placed a $400 price target on the company this winter, and within a few weeks the stock topped that target. The bold move made Blodget a household name and secured him a position with Merrill Lynch after a stint at CIBC Oppenheimer. No wonder he is defending Amazon.com.
Dismissing the Barron’s report, Blodget wrote: "The only issues of real concern to us with regards to Amazon.com’s stock performance are slowing growth and the challenge of expanding into additional product categories." Nevertheless, he still rates the stock a "long-term buy" despite near-term weakness in the stock.
Even more sanguine in their support were BancBoston Robertson Stephens’ analysts Lauren Cooks Levitan and Keith Benjamin. In their morning note, the San Francisco-based e-commerce duo wrote: "Barron’s wrote a scathing review of AMZN’s prospects. We respectfully disagree."
"We see AMZN evolving from that of a pure-play e-tailer of books, etc. to a future shopping portal," Levitan and Benjamin write. "We believe this leverage and scalability will drive a superior business model with multiple high-margin revenue opportunities. We stand by our view that Amazon.com has a great strategy and see every reason to give the management the benefit of the doubt as it executes on its strategy."
They, too, rate the stock a "strong buy." But from the looks of it, their opinion does not really count for anything. This Amazon is beginning to run a little dry.
Here are 1 and 3 year charts on Amazon.com
<img src=http://chart.neural.com/servlet/GIFChart... width=450 height=250>
<img src=http://chart.neural.com/servlet/GIFChart... width=450 height=250>
The comparison to the NASDAQ should be telling. Remember I was telling people here and in my newsletter to buy certain semiconductor capital equipment stocks and companies like Intel rather than the big, over valued companies like Amazon…. Amazon has been dead money the last 1 yr if you bought and held.
LRCX and Intel have slaughtered Amazon in performance the past year and even my Financial Stock Pick, Citigroup -C, has matched the QQQ index in performance over that period.
<img src=http://chart.neural.com/servlet/GIFChart... width=450 height=250>
Still, if you want to know about internet stocks, Blodget is someone to listen to for what he thinks is important. I just don't act on it as I often think "The street" uses people like him to get their firms new attention and to sell stock to an unwary public.
-- posted by Kirk
» Rande - Double-dose of Uncle Lou (don't bother if you're looking for s
Double-dose of Uncle Lou (don't bother if you're looking for short-term-counter-trend rally trading advice, tips on market timing, or how to sidestep the 17-year secular bear market):-- posted by Rande
» SteveT - Friday June 9, 2000
Lou opened with commentary about Ex- Atlanta Braves pitcher John Rocker and his earlier in the week comment about giving up baseball to become a stock broker. Due to inflation being in almost in everyone’s thoughts but not in the data the Elves index gave Halos to the bulls this week.Panelist Mary Farrell is feeling better about the markets and thinks the lower volume is due to above average volume last year and is now returning to more normal levels. Also shows less trading and more thoughtful investing.
Harvey Eisen sees a good second half to this year for historic reasons related to the Fall Presidential Elections but thinks one more shot down may come in July. Likes MSFT, T and LE.
Kim Goodwin is focusing on fundamentals and has been bargain shopping. Likes the Radio Broadcasting sector. Is avoiding slow volume areas( unsure what she meant although I think she was referring to sales) PG and KO
Lou reviewed the DOW over the last 20 years and the number of days of 2% changes or more. The peak was 1987 with 46 days but noted we have seen 3 days in the last 6 weeks. The NASDAQ never had over 19 days until 1998 when it had about 45. In 1999 we saw 61, and have seen 66 so far in 2000. In addition the NASDAQ has seen double digit changes Month over Month in the last 3 months. Then Lou introduced guest Tyler Smith Manager of Alliance Growth Fund.
Tyler said he has never seen anything like the .com speculation and don’t think we will see it come back. Describes himself as a GAARP investor (growth at a reasonable price) not a momentum guy. Thinks the market is not over valued. He tries to pick the right sectors and companies. Currently likes the Telecom industry because of its fast growth. Likes VOD, Sprint (unsure if it is FON or PCS), USW, Liberty Media, NTL British Telecom. Also likes Financial services AIG, C CMB, MBNA Corp. (KRB) all long term. Financial, Telecom and other tech make up about 2/3 of the fund.
Mary asked about turn over and which exchange he likes? About 50% turn over and exchange don’t matter to him he focuses on the company not the exchange they trade on. Harvey asked about Financials? Tyler thought they are recovering from being over sold and sees recent strength as some proof the FOMC is about done raising rates. Kim asked about his sell discipline. He relies on fundamentals and does not try to rationalize. Valuation will also trigger a sell, example CSCO. He rode it up as the P/E expanded but started selling it off little by little with call options and one day it was all gone. Lou finished asking about foreign investing. His prospectus permits up to 15 % foreign and he is at about that level. Most in Europe Telecom. He sees no reason to discriminate against a company just because it is not a US company.
Next week Chief Global Investment Strategist from Merrill Lynch David Bowers. With Panelists Laszlo Birinyi, Michael Holland, and Marty Zweig
-- posted by SteveT
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