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

» allancoleman - Re: Re: 1-16-04

i feel for lou too pbradfort6 . i can see why he's hesitant to get back in front of the camera if he's in pain and can't get in and out of his chair without showing his distress . i miss lou . the other guys are o . k . but they're not lou .

-- posted by allancoleman

» Normxxx - Re: Re: 1-16-04

Yes, Steve, I second pbradford6's thanks.

Sounds like Lou has not had the 'best' outcome (noticeable reduction or elimination of chronic pain). Let's hope he has at least had the next best outcome: no increase in pain, and a good recovery.

Mostly, I hate that this makes the smug 'dancing bugs' on pbs look prescient.

-- posted by Normxxx

» SteveT - 1-23-04

Kim Goodwin thinks the market is due for a breather but should finish the year strong. She is confident we are in the early stages of an economic recovery. So far 88% of companies are meeting or beating earnings estimates. This bodes well for further capital spending and a strong market. Goodwin likes cyclicals such as Nordstrom Inc. (JWN), United Technologies (UTX), and Applied materials (AMAT).

Harvey Eisen says the market is overbought and due for a correction of 5%-10%. This has not been a bear market rally. Harvey would sell anything you have a substantial profit in and are not comfortable with. He would also sell a mistake that is enjoying a bounce. The key is to focus on companies you really want to invest in for the long term. Eisen worked with Jamie Dimon and really likes what he brings to the table in the JP Morgan Chase Bank One merger. He would play that by buying Bank One (ONE). He also likes Johnson & Johnson (JNJ) and Ivax (IVX).

Beth Dater expects attractive but moderating returns over the next year. She likes companies that keep costs under control and have spectacular franchises. Some of her favorites are Chicago Bridge & Iron (CBI), Herman Miller (MLHR), and DeVry (DV). Beth thinks these are good long-term investments and would buy them on any correction.

Tyler then introduced special guest Doug Cliggott, President B&P Research. Doug’s biggest concern is it is hard to imagine things could get any better than they already are fundamentally. Rates and inflation are low while earnings are exploding. He is very uncomfortable, saying things are perfect and it can’t stay that way very long. He would lower his equity allocation and look for areas left behind. Cliggott expects 2005 economic growth to slow and would look to sectors that do relatively well in a slowing economy such as Utilities, consumer staples, and health care. These types of companies don’t need a lot of rapid growth to have steady earnings growth. Sectors Doug would back away from are Technology, Industrials, and consumer discretionary.

Kim wants ideas on where to invest money taken out of those richly valued sectors. Doug thinks there are wonderful opportunities in fixed income outside the U.S. He thinks the Dollar still has 15% or 20% downside so European Government bonds look good. Kim asked for an outlook on corporate profits. The next two Quarters should be awesome, but slowing by mid year and significantly slower in 2005.

Harvey congratulated Doug on calling the market top nearly four years ago and wanted to know what it would take for Doug to change his outlook and believe the market was going to continue to go up. He is skeptical compared to the early 1980’s when we had Low P/Es, and we also had high interest rates, high inflation, and higher taxes. Now all those are the opposite. Over the next two or three years all of those metrics are going to move the wrong way for good equity performance. Harvey wanted to know when and how much rates were going up. Doug reasoned with an economy growing around 5.5% and short-term rates at 1% this spread is unheard of in recent history. Long term Treasuries yielding 4% and economic growth at 5.5% is also unheard of. Usually Treasuries are1% higher than growth in times of Government deficits. Doug thinks the bond market has got it right and growth will slow. Tyler then interjected what will the FED do? With no signs of inflation and slowing growth Cliggott thinks the FED will have no reason to raise rates for a couple years.

Beth wanted to know how much of an issue deficits are going to be. Over the short term there is a slight risk Japan and China quit buying our Treasuries. The bigger risk long term is Government spending is about 20% of GDP and rising. Tax revenue is around 16% of GDP and falling. Cutting spending maybe nearly impossible. At some point taxes may have to go up and that is an anchor on the economy and markets. Cliggott did offer an opinion that would be the least painful, a consumption tax. Saying that would encourage saving and be spread pretty evenly across the economy.

Tyler asked for a GDP forecast the next 18-24 months. It depends on employment growth but around 3% to 4%. This will be a drag on the markets and Doug expects the DOW and S&P 500 to be lower a year from now.

Next week Maria Bartiromo will be sitting in for Lou. Special guest will be Martin Sognoff, CEO Atalanta / Sognoff Capital. The panel has yet to be posted.

-- posted by SteveT

» allancoleman - Re: 1-23-04

appreciate your work here Steve T . glad to see you got in the part about lou returning next month maybe . i really want to see lou on his first show back under the camera .

i thought Doug was very well spoken last nite . i liked his style . i can see why lou calls him his " bearish friend " .

-- posted by allancoleman

» SteveT - 1-30-04

Ed Brown does not pay any attention to the January barometer. He believes in using fundamentals like earnings and interest rates for guidance. Earnings have been terrific. Brown is not to excited about telecommunication companies at this stage. For now it is hard to get a handle on spending by the major carriers. Stocks Ed likes now are Harley Davidson (HDI) SunGard Data Systems (SDS), and Texas instruments (TXN). He would sell long term bonds.

Brian Rogers thinks 2004 should be a good year, saying it should be an irregular path upwards. Investors went into the year expecting rate hikes so the market shouldn’t be affected all that much when rates tick up. In fact it signals underlying firmness in the economy. He expects the market to react to earnings and dividend growth. Rogers thinks now is the time to have your equity allocation near the upper end of your own reasonable range. Stocks he likes are Newell Rubbermaid (NWL) and Baxter International (BAX).

Bob Stovall has studied market reaction to expected rate increases. Since 1970 seven rate hikes have been heralded, as will this one. In the six months prior to the first increase the market has been up on average 8%. In the six months following the increase the market has dropped on average 4% and no sectors went up. Interest rate sensitive stocks were hit hardest. Bob thinks the market is somewhat over extended so his stock picks are long term. He likes Nova Gold Resources (NG), Sasol (SSL), and Union Pacific (UNP).

Maria the introduced special guest Martin Sosnoff, CEO Atalanta / Sosnoff Capital. Martin starts the stock selection process by taking a global macro point of view. He looks at fundamentals and the economic cycle. He uses that to spot inflection points for certain sectors. Then he looks to money mangers and analysts to select from their best ideas. As of now he has 50% of his money invested in Technology and Financial Services. He bought some of the Mutual Fund management companies right in the eye of the storm. He also bought HMOs when they were unattractive to the majority on Wall Street. Other stocks he likes for purchase now are Echostar (DISH and InaMed (IMDC). Stocks he is selling down to buy others are Time Warner (TWX) and Viacom (VIAb).

Ed asked which area would show leadership in the market going forward. Sosnoff thinks we are at an inflection point where growth will outperform value. Brian asked for the prospects for mergers and acquisitions. Martin foresees tremendous M&A activity with much of it coming from foreign Multi National companies due to the weak Dollar. Also there will be many leveraged buy outs going public. This should keep the Brokerage houses and underwriters busy and very profitable. Bob mentioned India and China building huge credits due to their exports. Much of that money is buying U.S. Treasuries and cash equivalents. Bob wanted to know if eventually they might start buying U.S. companies and what that might do to Treasuries. Sosnoff doubts they will buy equities, they are focused on broadening their industrial base at home. He doesn’t think Japan and China will stop buying Treasuries. They have bought $200 Billion in the last 18 months and that is not going to change. It is good for them to keep their currencies on parity with the U.S. Dollar, that is why bond yields have not increased. He isn’t too worried about the FED increasing short term rates. Saying the Treasury department policy on the Dollar is “benign neglect”. Other nations don’t care how much our Dollar depreciates and neither do we.

Next weeks guest will be Chuck Royce Chief Investment Officer the Royce Funds. The panel will be Tom Gallagher, Gretchen Lash, and Nick Sargen.

-- posted by SteveT

» Kirk - Atlanta Sosnoff Funds

ASFGX Atlanta Sosnoff Focus Fund Inc Nasdaq Large Blend

ASVFX Atlanta Sosnoff Value Fund Nasdaq Large Growth

http://finance.yahoo.com/l?s=Atalanta+So...

1 yr
<img src=http://pvcharts.quicken.com/images/chart...>

3 yr
<img src=http://pvcharts.quicken.com/images/chart...>

5 yr
<img src=http://pvcharts.quicken.com/images/chart...>

         PERIOD                Kirk  Wilshire5000  Delta
1 Year Return to 12-31-2003    +77%     +31%         46%  
3 Year Return to 12-31-2003    +25%      -7%         32%  
5 Year Return to 12-31-2003   +171%      +2%        169%  

 

Total Return:
                                  Kirk   S&P500+  NASDAQ 
5 Yrs 12/31/98 through 12/31/03  171.0%  ( 3.0%)  ( 8.6%)
Annualized Annual Return          22.1%  ( 0.6%)  ( 1.8%)
 
Click for a free issue of my newsletter 
Suitable for the aggressive growth part of your
  diversified investment portfolio. 

-- posted by Kirk

» SteveT - 2-6-04

Nick Sargen said this weeks jobs report will keep the FED on hold for a little while longer. Nick recommends a very diversified strategy. Stocks he likes are Kimberly Clark (KMB), Tyco (TYCO), and Teva (TEVA).

Gretchen Lash thinks last years tax cuts will propel stronger consumer spending for the next couple Quarters. Business capital spending should increase as well due to accelerated depreciation. She think semiconductors and some tech are overvalued but using the FED model the broad market is still around 20% undervalued. Stocks Gretchen likes are Marsh & McLennan (MMC), Hewlett Packard (HPQ), and Amgen (AMGN).

Tom Gallagher talked about the interrelationship of the economy and politics in election years. He believes the jobs picture has to improve for President Bush to prevail this fall. Tom thinks the FED is fine tuning their message. The past 18 months they have been encouraging investors to take on more risk. This explains in part why the lower quality and high risk securities have outperformed. Gallagher believes going forward high quality stocks with predictable earnings and dividends will be market leaders. Stocks he likes are Northrop Grumman (NOC) and UTStarcom (UTSI).

Bill then introduced Charles Royce, Chief Investment Officer The Royce Funds. Chuck focuses on small cap stocks and has enjoyed the past three years. Saying small caps typically do well in a low return environment. He thinks a correction is coming soon and market leadership will shift to higher quality stocks. Stocks he likes now are Ritchie Brothers (RBA), Nuveen Investments (JNC), Kelly Services (KELYA), Keane (KEA), and Timberland (TBL).

Nick asked what a value oriented investor is to do these days. There are no deeply undervalued sectors so it is a stock by stock process. Nick then asked if as a shareholder of small caps Chuck tries to influence managements. Not really if they do something he don’t like he usually sells the stock. On occasion he will speak out on excess options or issuing a second class of stock. Gretchen asked if he looks for themes or in certain sectors. Royce looks for out of favor stocks so that could be his theme but mostly he looks stock by stock. Gretchen then asked about his sell discipline. It is primarily valuation but that is tricky and not always precise, currently he is selling some tech, lightening up as much as 50% from his recent peak in allocation. Tom asked if he spends a lot of time on research since not much is available on the stocks he owns and if that limits the number of companies he owns. He spends all most all his time on research and it is critical, this is how you find inefficiently priced stocks. Chuck also revealed he enjoys it. Tom then asked why non dividend payers were outperforming and if this would continue. It is a mystery, Royce thinks it will change and dividend payers will be stellar performers the next 2 or 3 years.

Bill followed up by asking if dividends are criteria for stock picking. Yes, Chuck looks for an ability to pay a dividend. Royce thinks the Mutual Fund scandal is largely behind us. It is a horrible example in an industry that had been clean. He can’t explain how those things could have taken place. He believes regulation will start the clean up, but it will be a self cleansing process.

Next weeks guest will be Vince Farrell, Chairman Victory Capital Management. The panel has yet to be named.

-- posted by SteveT

» Kirk - Re: 2-6-04: Chuck Royce - Royce Funds CIO

Boy, they hvae a fund for every occasion:

List of Funds: http://biz.yahoo.com/p/fam/royce.html

Royce Micro-Cap Inv (RYOTX) Small Blend
Total Expense Ratio: 1.49%

Royce Opportunity (RYPNX) Small Value
Total Expense Ratio: 1.17%

Royce Low-Priced Stock (RYLPX) Small Blend
Total Expense Ratio: 1.49%

Charts of Royce Small Cap funds vs the fund I've had my money in (for small cap value) since 1998, FLPSX. (I do my own stock picking for small cap growth... see my newsletter for examples).

<img src=http://pvcharts.quicken.com/images/chart... width=470 height=250>

<img src=http://pvcharts.quicken.com/images/chart... width=470 height=250>

Royce Funds have put in some good results!

         PERIOD                Kirk  Wilshire5000  Delta
1 Year Return to 12-31-2003    +77%     +31%         46%  
3 Year Return to 12-31-2003    +25%      -7%         32%  
5 Year Return to 12-31-2003   +171%      +2%        169%  

 

Total Return:
                                  Kirk   S&P500+  NASDAQ 
5 Yrs 12/31/98 through 12/31/03  171.0%  ( 3.0%)  ( 8.6%)
Annualized Annual Return          22.1%  ( 0.6%)  ( 1.8%)
 
Click for a free issue of my newsletter 
Suitable for the aggressive growth part of your
  diversified investment portfolio. 

2004 YTD: As of 2/1/04 my newsletter portfolio is up 3.8% YTD vs. 2.9% for VFINX, Vanguard's S&P500 fund. My portfolio uses asset allocation and stock selection with a current allocation roughly 70% equities and 30% fixed income.

-- posted by Kirk

» SteveT - 2-13-04

Liz Ann Sonders thinks the market direction will be up this year but it will not be as easy as 2003 was. She expects some consolidation and volatility, which is healthy. For now the FED should be on hold but watching inflation, employment, and capacity utilization. Stocks Liz Ann likes now are Marathon Oil (MRO), United Technologies (UTX) Express Scripts (ESRX), and Intel (INTC).

Mary Farrell says fundamentals look terrific. She thinks 2005 could see a slowing economy and the market may reflect that the second half of this year. Over all the market over shot to the down side in 2002 and is now fairly valued. Still there are some bargains to be had. Stocks Mary likes are General Electric (GE), Coach (COH), and Pepsico (PEP).

Mike Holland is encouraged by the attitude of the proposed Comcast Disney deal. He doesn’t know if it will happen but says it signals a sense of value and a focus on future earnings returning to Wall Street. Holland believes the recovery will be global and we will see low inflation and rates continue. Stocks he likes are Schlumberger (SLB) or for those interested in more diversity Oil Service HOLDRS Trust (OIH). He also likes ExxonMobil (XOM) and ChevronTexaco (CVX). On an overvalued basis Mike would sell Sina Corp. (SINA).

Tyler then introduced Vince Farrell, Chairman Victory Capital Management. Vince was sanguine about Alan Greenspan’s remarks this week and thinks rates will remain low for sometime. He would be more worried if deficits continue to grow the next year or two. Last year lower quality stocks led the market and he thinks that will be transitioning to higher quality dividend payers leading the way. Farrell thinks the S&P 500 is due for a health restoring correction. We have moved from 800 to over 1100 without even a 5% correction. He thinks once complete a correction will set the stage for a better rest of 2004. Stocks Vince likes now are General Electric (GE), Microsoft (MSFT), and Pfizer (PFE).

Liz Ann asked him to pick an asset class that will be market leader this year. Large cap quality if he had to pick one. Last year many small caps that have had no earnings did well. But Vince warned not to get hung up on that. He advised take a look at the overall value. Look for dividends and increasing dividends. Look for companies that can benefit from a weak dollar. Liz Ann then wanted to know if the transition would be more apparent in the rallies or corrections. Vince said most of the time they take place in corrections and he expects that to be no different this time. He did say he could be wrong this time because of the tremendous liquidity of cash in money markets. Mary asked if he prefers foreign or U.S. markets. Vince shies away from foreign markets due to accounting concerns. He gets foreign exposure by investing in U.S. Large caps, some of which get as much as 60% of earnings overseas. Mary then asked for some advice to those with large cash holdings. Put in a little now and hope for some consolidation after which the market should do very well. Mike wanted to know what viewers should watch out for. Over exuberance on good names that have gotten too rich. The broad tech sector is trading at ten times sales, which is bubble level territory. Sometimes you just have to sell a good company due to over valuation. Mike then asked over the next four years will the surprise on inflation be up or will it remain low. Vince thinks the next surprise on inflation will be upward, but not soon. We still have excess capacity in the system. He thinks rates will inch up this year but that is OK. It signals the economy is doing well. Inflation fears are always a concern and he expects and that won’t change a few years from now.

Next weeks guest will be William Fries Portfolio manager Thornburg International Fund. The panel has yet to be named.

-- posted by SteveT

» SteveT - 2-20-04

Frank Cappiello expects a correction at some point but feels the bull has very strong legs. He says four factors will keep this bull going. They are; 1) the mood or high sentiment 2) money availability, there is $2 Million in money markets and some of that is bound to go into the market 3) Government spending and the weak Dollar 4) Mergers and the momentum that goes along with them. Frank likes Large Caps Home Depot (HD) and Marsh & McLennan (MMC)

Barbara Marcin thinks there is a broad range of values in the market now. She thinks as long as the economy is good earnings can grow for another year or two. Stocks she likes are Hewlett-Packard (HPQ), Citigroup (C), JP Morgan Chase (JPM), and Merck (MRK).

Lou Holland fears we are in another bubble. He says the NASDAQ is very expensive with a P/E about four times the growth rate. He believes the correction has started and more is coming. He thinks 2004 will show returns of about 6%-8%, which is decent. Holland does like the financial services sector with stocks like Hartford Financial Services (HIG), American International Group (AIG). He also likes Pfizer (PFE) and Kohl’s (KKS). Lou would sell any high priced NASDAQ stocks without earnings.

Sue introduced William Fries Portfolio manager Thornburg International Fund. Bill’s goal is to buy promising companies and buy them at a discount to intrinsic value. At the time of purchase a sell price target is established, usually at least 30% to 40% above the buy price. As the target approaches it is reevaluated. If nothing has changed his discipline takes over and the stock is sold. Stocks he likes now are HSBC Holdings (HBC) and CNOOC (CEO).

Frank asked if he is looking at or owns and stocks in India. Yes he owns Dr. Reddy's Laboratories (REDY.BO) and is looking at a couple more. Then Frank asked what it would do to the markets if the 10 year treasury yield rose to 5% or 5.5%. Bill does expect the FED to get it right and short term rates will rise slightly and that will have the desired affect. He believes long term rates won’t go that high. Barbara asked if Japan is finally going to see a sustained recovery. Fries thinks the excesses have pretty much worked through Japan and things will improve. Barbara then wanted to know if we will see more mergers overseas particularly in Europe. Yes, the Europeans have the advantages with their higher currency and we can expect Some European companies buying some American companies. Lou asked what are the chances outsourcing will cause enough deflation to be bad for financial stocks. Bill thinks we have reflated the system The Dollar performance and commodity prices indicate this is so. Fries thinks the FED will bump up rates sooner than most think. Also he thinks the ECB will lower their rates to stimulate and this will help stabilize our Dollar.


Next weeks guest will be Jeff Auxier Portfolio manager Auxier Focus Fund. The panel has yet to be named.

-- posted by SteveT