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

Top 540. Jul 27, 2002 9:28 PM

» F111Star - Re: 7-26-02

In response to message posted by SteveT:

IMHO, McManus raised a point that needs serious consideration: federal and state income taxes should be eliminated on dividends that flow from stocks held for at least one year. This would create healthy pressure on Corporate Boards to give back some of the profits to loyal shareholders. This in turn would add to the pressure for transparent accounting that CEOs and CFOs are now experiencing. Unfortunately, the class warfare lovers in government will resist such a straightforward change in favor of more grandstanding.........

-- posted by F111Star

Top 541. Jul 27, 2002 10:57 PM

» Kirk - Re: Re: 7-26-02

In response to message posted by F111Star:

federal and state income taxes should be eliminated on dividends that flow from stocks held for at least one year.

We as voters with working pens and pencils and emails should apply the screws.

It is time to end double taxation anyway.

-- posted by Kirk

Top 542. Jul 28, 2002 8:22 AM

» shallam - Re: 7-26-02

I was intrigued by the McManus appearance last friday 7/26. Both is bull/bear position and predictor variable seem very similar to Brinker's. Did anyone else notice a similiarity?
I believe that three out of the four were the same (see below). The fourth -- liquidity might be same but details were not provided. Whether or not their individual stock picks work out it might be interesting to see closely McManus and Brinker are correlated in their prediction and how accurate.

McManus thinks it is possible to see a few more rotten corporate apples before August 14th. Lou asked why he has been increasing his stock allocation. He looks at value, economy, liquidation, and sentiment. Economic and liquidation are keeping him from raising it higher. Value and sentiment have improved hence the increase from 50 to 60% equities. McManus has a fresh money list and today that includes Consumer Staples Gillette (G), Avon (AVP), and Dial (DL). He agrees with Tom Gallagher about Freddie Mac and Fannie Mae in the financial area. McManus also likes Energy and Health care stocks. He is not so keen on Technology. He thinks many of them have a stock options anchor that eats up as much as 25% of their earnings. He has not had a Tech stock on his fresh money list since September of 2000. In his opinion Tech simply is not cheap enough to offer a margin of safety versus other stocks. McManus would sell small and mid cap value stocks after the run up they have enjoyed, he thinks they are now over valued. Ralph asked about sentiment and what to look for. This week it was VIX or Market Volatility Index, which hit a new high this week. To Tom this indicates we are running out of motivated sellers. Those selling are selling out of fear, not some knowledge the rest of us do not have. Barbara asked what are real earnings. There are so many measures; operating, GAAP, Pro Forma, and now core earnings. S&P 500 operating earnings peaked in 2000 at around $55.00. McManus is projecting about $50 for 2002 and four dollars more in 2003. Reaching a new high in 2004. Tom Gallagher asked if because of the accounting controversy we might see dividends come back into favor. McManus thinks dividends will go up and some companies that never have paid a dividend will start. It all depends on how they are treated from a tax perspective in future legislation. In the final segment McManus revealed he uses in part as a valuation metric dividend growth versus dividend yield. Tom said most corporate executives are good and he thought it a coincidence the market rallied after seeing executives hauled away in handcuffs. People are not looking for retribution but a way to invest. Next week Chris Davis of the Davis New York Venture Fund.

-- posted by shallam

Top 543. Jul 28, 2002 12:16 PM

» SteveT - Re: Re: 7-26-02

In response to message posted by shallam:
shallamm I am glad you commented on that. I used to follow brinker closely and thought there was some similarity too. I would say 3 of the 4 are close enough to call them a match. Liquidity being the unknown. If McManus meant liquidity with regard to money supply and policy then I would say we have a 4 for 4 match. If he means are there enough buyers for equities to match up with all the sellers then no.

I wonder if brinker copied McManus or is it the other way around? smile

I guess if a person were going to attempt to time the market this basic strategy is a simple and easy to track way to go. I still am not convinced it is possible to time the market accurately enough and often enough to make it pay over the long haul. I do think it could be of some use to adjust or vary ones allocation by small amounts. If right you could boost a return by a percent or two now and then. If you are wrong it is not the end of the World since you are not deviating away from your allocation plan by more than a few percent. For most people it still maybe best to "Go fishing".

-- posted by SteveT

Top 544. Aug 3, 2002 5:23 AM

» SteveT - Sorry

Last night I taped the show but once again the signal was poor. The entire show was unintelligible.

-- posted by SteveT

Top 545. Aug 10, 2002 7:22 AM

» SteveT - 8-9-02

This week Lou reminded us of the old movie sing along tradition of "Follow the bouncing ball" and thought it may apply to the stock market report as well. With all the recent economic reports and revisions to them it does make the job of FED policy makers a little like trying to follow a bouncing ball. Lou quipped it might be better left to Psychoanalysts rather than financial analysts. Finally Lou stated many want to know, have we made a bottom? He said only a fool would answer without hedging.

Laszlo Birinyi says the market has bottomed. Lou chimed right in "You are never foolish, not always right, but never foolish." Laszlo thinks we have bottomed for two reasons. 1. At bottoms the general public is always shorting more than the professionals. This happened in Mid July. 2. The market is acting pretty good on bad news. It seems investors are looking to the future rather than day-to-day. You still have to be careful what you buy warns Birinyi, this market will not reward you for excessive risk. He would buy stocks of a defensive nature such as Dow Chemical (DOW) and some banks like Bank of America (BAC) and Wells Fargo (WFC). Laszlo is not yet ready to jump back into NASDAQ stocks until we get more transparency like in the listed stocks. E.C. as most of you know the NYSE on August 1st announced some pretty stringent listing standards. This link will give you more details. http://www.nyse.com/abouthome.html?query... Laszlo looks closely at program trading and said two weeks ago it accounted for 51% of volume.

Liz Ann Sonders thinks if we are not at a bottom we are pretty close. She thinks tech capital spending will pick up early next year since we have had a couple years of under spending. Sonders thinks small caps have had a nice run and now it is the larger companies turn. Some of her favorites now are Johnson & Johnson (JNJ), Freddie Mac (FRE), and Apollo Group (APOL).

Brian Rogers has always liked stocks with both controversy and promise. He says right now there is so much controversy he is not sure you can measure it. Rogers thinks if investors are willing to make multi year commitments there are ample places to make a good return. Two stocks that fit the bill are Verizon (VZ) and Disney (DIS). Brian says it is time to take money off the table in defensive type stocks that have performed well, particularly in the consumer staples and aerospace defense areas. Some of these would be Hershey (HSY), any beverage stocks and Lockheed Martin (LMT).

Lou then introduced Bill Wilby Director of International equities for Oppenheimer Funds. Bill is an advocate of the contrarian growth strategy, which he says was doing OK until July. He said all stocks were taken down then and if you were a stock picker there was no place to hide. He says July was a time of real capitulation. His future outlook is foreign stocks will do better on average than US stocks because of lower valuations. He uses the P/E ratio to bond yield as a measure. Right now Japan, Europe, and Emerging markets are trading at 50% to 75% discounts compared to the US. His historic US allocation has been between 25% and 50% with it currently at 39%. Bill looks at the World as one market and does not focus on one region but companies. In the near term Wilby thinks Emerging growth markets will perform best. His criteria are first a great business with strong revenue growth over a multi year period. He also looks for sustainable margins and management that uses capital wisely. In the US, an area he likes is the Electronic design automation. These companies make the software engineers use to design semiconductors. R&D budgets and not capital spending fund these companies so they are less cyclical. The favorite companies in the sector are Cadence Design (CDN) along with Synopsys (SNPS). Bill would take money off the table on Fannie Mae (FNM). Wilby says currency fluctuations are important but he ignores them! His long-term view is the US Dollar will move + or - 10%-20% either side of parity with the Euro due to noise. It is not possible to predict and equities act as a hedge against currency risk so why worry about it.

Laszlo asked if individual investors could use his strategy to pick foreign stocks. Yes it is possible but would require a great deal of time. Of course he recommends a diversified fund instead. Liz Ann noted many US companies have been aggressively cutting costs to regain profitability and wondered if he has seen this overseas as well. Yes indeed, Europe went through massive restructuring in the 1990s as we did in the 1980s. We got rewarded for that in the 1990s and Bill thinks the next decade will see European companies rewarded similarly. Brian asked if there is one area or stock in the emerging markets he likes. Unilever has a subsidiary called Hindustan Lever that has grown for many years at 20% + and should continue to do so.

Lou said one reason people liked to invest in the US is we have the best accounting standards to protect investors, and is that still true? Wilby said we still have the best standards and disclosure in the World. Most of our problems came from the quest to have earnings always go up in a straight line and never go down. He thinks funds put company management under a great deal of pressure. Wilby thinks in the future we will see more realistic earnings, including more volatile earnings. This will cause stock prices to fluctuate and provide buying opportunities on bad news. Wilby loves the future prospects of the satellite radio business. The stocks sold off due to a financing crunch. If the stock market in general recovers these companies could be one of the top performers. He finished by saying he would not sell at these levels.

Next weeks guest Lawrence Lindsay White House Economic Adviser.

-- posted by SteveT

Top 546. Aug 10, 2002 7:57 AM

» Kirk - Re: 8-9-02 - William L. Wilby

In response to message posted by SteveT:

Thanks for the report Steve.

I am always amazed that funds like "Oppenheimer" are so popular despite their high costs. My guess is most all are "sold" to the public as they have high loads except for the "no load C shares" which have expense ratios over 2%.

http://biz.yahoo.com/p/o/oppax.html
Oppenheimer Global Fund seeks capital appreciation. Oppenheimer Global Fund seeks capital appreciation. The fund invests primarily in common stocks and convertible securities issued by U.S. and foreign companies. It ordinarily maintains investments in at least three countries. The fund may invest in securities of companies in cyclical industries and special situations.
Lead Manager: William L. Wilby

"A Shares"
Profile - Oppenheimer Global A (OPPAX)
Total Expense Ratio 1.12%
Max 12b1 Fee 0.25%
Max Front End Sales Charge 5.75%
Max Deferred Sales Charge 0%

"C Shares"
Profile - Oppenheimer Global C (OGLCX)
Total Expense Ratio 1.89%
Max 12b1 Fee 0.75%
Max Front End Sales Charge 0%
Max Deferred Sales Charge 1%

1.89% + 0.75% a year is 2.64% - they charge shareholders 0.75% to market the fund to new shareholders! Also, if you don't hold the fund long enough, they add an additional 1%.

Performance isn't that bad… until you subtract the loads…

On a 5 yr chart, it looks like he earned his fees as he got much of the NASDAQ run and then kept a good deal of it.
He is up about 33% since the October 1998 lows and is about even since January 1999… Good results!

-- posted by Kirk

Top 547. Aug 10, 2002 5:50 PM

» Slick - Re: Re: 8-9-02 - William L. Wilby

In response to message posted by Kirk:

Great job Steve and Kirk. What a one-two punch !

Slick

-- posted by Slick

Top 548. Aug 12, 2002 12:23 PM

» pgp - August 9 2002 - Wall Street Week

On this particular program a recommendation was given about a French Drug Company and the biggest drug driving their business but I missed what it was. It sounded like Sis Sis but I was distracted and was wondering if anyone knows what the company was and what the drug mentioned is for.

-- posted by pgp