WSW: Louis Rukeyser's Wall Street Summary &amp; Discussion $treet

Top 520. Jun 29, 2002 2:28 PM

» notbob - Re: Re: 6-28-02

I heard the same thing.I believe he also said "Leaders in their industry" which suggest to me small caps with cutting edge technology.

-- posted by notbob

Top 521. Jun 29, 2002 3:06 PM

» SteveT - Re: Re: 6-28-02

In response to message posted by ap305:

I do remember him mentioning something to that effect. Since he made no specific recommendation I neglected to include it.

-- posted by SteveT

Top 522. Jul 7, 2002 11:05 AM

» SteveT - 7-5-02

Lou opened with a tongue in cheek Patriotic statement. Investors are in the red, white with fright and blue. He also noted in the end even the bears took a holiday, as for the first time in a long while the market shook off some bad news to finish with a nice rally. A viewer passed on a quote credited to R. W. Schabacker in Forbes magazine as follows. "Our advice for the long-term investor is much more brief, but is also much more definite and much more important. We merely repeat our previous compromise policy, that the investor should be comfortably accumulated for the long term, but still with a minor portion of his capital held in reserve to protect and for additional purchases in case our current recession bottom does not hold and stocks suffer further intermediate recession prior to the next major up-swing." By the way that was written in October 1934 and the DOW was at 80 then. Lou noted it has gone up a bit since then.

Michael Holland said the Friday rally was more significant than many suspect. To him it confirmed the threat of another terrorist attack was holding us back. The fraud problem is not as big as terrorist fears in his opinion. As time goes on and people believe we are making progress in the war on terror stock prices should rise. Mike bought Citigroup (C) this week believing it will come out of this market funk as a winner. Other winners would be General Electric (GE) International Business Machines (IBM) Wal-Mart (WMT), and Microsoft (MSFT). Holland did recently sell Electronic Data Systems (EDS).

Gretchen Lash thinks we are at the start of a bottom in the market. Acknowledging it has been as hard for investors to stay rational and invested now as it was to be sane and sell in the autumn of 1999. In both cases a disconnect took place between the economy, earnings, and stock prices. She said the economy always wins. Lash feels the economy is turning. Profits should improve going forward and with no interest rate hikes on the horizon stocks should do well. Gretchen added the best time to buy is at the height of fear and we are there now. This is an excellent time to buy high quality stocks at bargain prices. Large high quality Pharmaceuticals look good to her. Her shopping list would include Pfizer (PFE), Johnson & Johnson (JNJ), and Wyeth (WYE). Lash thinks there is going to be a boom in refinancing homes as rates fall. To play this she would buy Lowes (LOW) and Target Corp (TGT). She recently sold Brocade (BRCD) saying it may not have any problems but stable margins while sales are dropping maybe a red flag to some closely watching accounting.

Harvey Eisen said many large cap stocks are down but still over valued. He is looking for mid sized companies with good managements and clean accounting selling at attractive prices. Harvey likes Cendant (CD), Value Vision (VVTV) and Reader's Digest (RDA). Eisen thinks we are near the end of the drop in long term interest rates and is not a fan of bonds. He also said he sold and was 100% wrong in selling stocks in the housing industry. (E.C. refreshing to find honesty)

Lou then introduced Ed Hyman of the ISI group. Intuitional Investor recently ranked Hyman for 22nd year in a row the number one economist. Ed said to him it looks like the recovery is on track. We are going to see an expected slow down in 2nd Quarter GDP to around 2%, but he thinks it will be accelerate to 4% the second half of 2002. Hyman predicts inflation should fall to zero early next year while unemployment rises slightly. He called this the perfect recovery. The disconnect between the economy and stock market he thinks is mainly due to the post bubble environment, other contributing factors are terrorist threats and a weakening Dollar. Ed sees Tech capital spending at 2% the rest of this year and making a full recovery next year. Hyman sees the Federal Reserve holding rates steady the rest of this year, while the 10-year treasury bonds yield falls to 4.25%. He predicted the Dollar could fall another 10%-20% vs. a basket of foreign currencies. He also said corporate profits should rise 20% but did not mention a time frame.

Mike asked where he sees the P/E ratio in the future. Hard to say was the answer but if long term rates fall it will make current levels comfortable. Gretchen asked for earnings estimates for 2003. Ed said 2002 estimates are for $45 (on S&P 500) and he expects them to be $60. Keep in mind 2 years ago they were $57. (E.C. This link may help you sort it all out.) Ed thinks a large part of the earnings recovery will be due to lower unit labor costs because of higher productivity. Harvey complimented Hyman on his correct recession and recovery calls. Eisen asked for more information on the perfect recovery. It will be a combination of steady 4% GDP, slowing inflation, and unfortunately for those looking for work slightly rising unemployment. This will keep pressure on wages and keep the FED from tightening.

Hyman closed saying the market reaction to accounting scandals should subside unless new charges surface.

Next week note. I will not be doing a summary so if you can not see the show set your VCR for special guest Bill Nygren of the Oakmark Fund.

-- posted by SteveT

Top 523. Jul 7, 2002 12:41 PM

» Felipe - Re: 7-5-02

In response to message posted by SteveT:

.
Thanks, as usual.

Did Ed Hyman really estimate 2002 S&P earnings at $60? Or was he talking about earnings reaching $60 in 2003? (I didn't see the show)

-- posted by Felipe

Top 524. Jul 7, 2002 12:44 PM

» SteveT - Re: Re: 7-5-02

In response to message posted by Felipe:

Felipe, thanks for catching that. Yes you are right he was talking about $60 for 2003.

-- posted by SteveT

Top 525. Jul 12, 2002 5:47 PM

» rasputin101 - 7-12-02

.
So, anyone feeling like they're getting any guidance from tonight's show other than "...take two aspirins and call me in five years."

What I oughta' do is look up Nygren's Oakmark funds to see how they've done relative to the market. Easy to be lulled into a false sense of security listening to him, without knowing how he's done.

And to the question, "Can we trust the numbers coming out of companies?" He answers, "Absolutely. 99.9% of companies...." Time will tell.

-- posted by rasputin101

Top 526. Jul 12, 2002 7:37 PM

» JeffChristy - Re: 7-12-02

In response to message posted by rasputin101:

ras

Nygren's performance looks impressive to me. Looks like he is one of the few who have outperformed the index funds in both bull and bear market conditions.

Yahoo! Fund Profile - OAKLX
:http://biz.yahoo.com/p/mp/o/oaklx.html

-- posted by JeffChristy