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

Top 793. May 8, 2004 5:54 AM

» SteveT - 5-7-04

I too would like to extend my wishes for Lou to return as soon as feasible. We all miss his special brand of wit and common sense.

Bill Griffeth served as guest host. He did read a statement from Lou concerning his health and it seems we be without Lou for several more months but he does plan on returning as soon as his doctors permit it. Bill spent sometime reviewing the recent Sotheby’s auction of the Picasso painting “Boy with a Pipe”. It sold for $104 Million, a new record. Griffeth seemed to enjoy reporting the price of Art often has a correlation with other assets.

Mike Holland says for now the market is declining on good news and this can provide opportunities. Interest rates rising is an excuse but Iraq and China is also in the back of investors minds. Mike predicts the FED starts increasing rates in June. Stocks he likes are Varian Semiconductor (VSEA) ChevronTexaco (CVX). He would sell interest rate sensitive companies.

Liz Ann Sonders said today reminds her of the market environment of the period from the lows of October 2002 until about a week before we went to war wit Iraq. Now instead of worrying about war the FED is the concern. She thinks once the FED does move, that will provide the catalyst the market needs to move upward. The uncertainty will be behind us. Liz Ann also thinks they begin raising rates in June and expects 2 or 3 additional moves by years end. Sonders thinks now the market is readjusting valuations to reflect higher rates and inflation, both of which impact valuation. She thinks second Quarter earnings growth will exceed first Quarter earnings growth. Stocks Liz Ann likes are Sierra Health (SIE), Motorola (MOT), Carpenter Technology Corp (CRS), and Ameristar Casinos (ASCA). She would sell Treasuries.

Ed Brown in the past thought the FED would start raising rates later, now he has changed his mind. He believes they start in June. The strong jobs report is what changed his mind. He thinks the economy is strong but not excessively so. Ed does think the market will be wobbly, with neither a sharp decline or dramatic gains. Stocks Brown likes are Covance (CVO), Jabil Circuit (JBL), and Affymetrix (AFFX).

Bill then introduced special guest will be Margaret Patel, Portfolio Manager, Pioneer High Yield Fund. Margaret thinks now the environment is good for high yield bonds because the economy is good. The FED is going to increase rates but is committed to liquidity and that is the most important thing for high yield bonds. Even as rates move upward for now high yield should do better than Treasuries due to the higher income. Bill said 1994 was not a great year for high yield bonds as the Fed was increasing rates and wonders why it might be different now. Patel said in 94 they were too aggressive and she thinks they learned from that mistake. Bill said now with yields so low many might be tempted to reach for a little extra yield and take on more risk than they otherwise would. He wanted to know if she was doing that and what kind of yield you could get now on the highest risk bonds. Now you can get about 3.5% to 4% above the same maturity Treasury. That is pretty low by historic standards but justified due to low default rates of about 3% , in 2002 the default rate was above 10%. It maybe OK to invest in the bottom tier this year but as 2005 unfolds and the economy slows she thinks it wise to invest in the higher tier high yield bonds. She does own the bonds of the following companies Freeport McMoran Copper & Gold Inc (FCX) Tesoro Petroleum (TSO), and HCA Inc. (HCA).

Mike said many viewers have bad memories of high yield bonds and asked how to best use them. They could represent up to 10% of a fixed income portfolio and be used to get a little extra yield keeping in mind they will be about as volatile as common stocks in the short term. Mike then asked how to identify and avoid sectors like she did with telecom. Patel suggests looking at the big picture. Which sector will be in demand, do they have growth potential, are they low cost producers, do they have foreign competition, and look for inflection points. Liz Ann wanted to know what sectors look good now. Economically sensitive sectors such as Basic Materials, Technology, and Health Care. Liz Ann then asked what would change her view and take on less risk. If Margaret saw a dramatically slowing economy, but she is not expecting that this year. Ed asked for her current structure regarding maturity and quality. The average quality is single B. The maturities are in a 5 to 10 year range and the duration is 4.25 years.

Next weeks special guest will be Gene Henssler, Portfolio Manager, Henssler Equity Fund. The panel will be Frank Gannon, Frank Cappiello, and Nick Sargen.

Louis Rukeyser, Louis Rukeyser, Louis Rukeyser, Louis Rukeyser, Louis Rukeyser, Louis Rukeyser

-- posted by SteveT

Top 794. May 15, 2004 5:39 AM

» SteveT - 5-14-04

Consuelo Mack served as guest host. She quickly reviewed the major financial news of the week including oil prices reaching new all time highs while global demand is increasing. Russia reported for now their oil production has hit a ceiling. Treasury yields are up and so are corporate earnings.

Frank Cappiello is bullish but concerned about the price of oil. If we break through $50 a barrel that would worry him. Like most people he is keeping an eye on the Federal Reserve wondering when and by how much rates will increase. Frank would like to see them bump rates up prior to the next scheduled meeting at the end of June. He recommends owning stocks, saying this is a period of transition from small to large caps and advises being patient. Stocks Cappiello likes are Intel (INTC) and Johnson & Johnson (JNJ).

Nick Sargen thinks the market will continue to move sideways. He believes by years end the FED Funds will be at 1.75%. Next year he thinks it will be 3.5% to 4%. The markets are worried about that and higher oil prices. Sargen recommends being diversified and waiting for pullbacks to add to positions. Profits are growing and so are margins. Cash Flow is at record levels and that is a reason not to be bearish. Nick also likes Intel (INTC) along with Amgen (AMGN) and Radian Group (RDN).

Frank Gannon says the market is looking for a reason to go up. Lower oil would certainly help and so would Iraq calming down. He thinks it is possible that earnings could be better this year than last. Frank recommends taking a look at your asset allocation and making sure the equity level is up to where you want it, saying a real opportunity is ahead. He is watching fund flow data to see how that will affect equities. Stocks Gannon likes now are Kohl’s (KSS), Capital One (COF), and Xerox (XRX).

Consuelo then introduced special guest Gene Henssler, Portfolio Manager Henssler Equity Fund. Gene invests across the broad market and is currently over weighted in Health Care, Consumer Staples, and Financials. He is slightly under weighted in Technology and completely out of Telecom and Utilities. In the U.S. companies have a three-year supply of capital expenditures in cash. They are just now starting to spend some of it. Henssler says this is a very bullish sign. His biggest worry is something happening no one expects. Stocks Henssler likes are American International Group (AIG), Pepsi (PBG), Target (TGT), Pfizer (PFE), and Bank of America (BAC).

Frank Cappiello asked if Gene has any election jitters. No he doesn’t invest with politics in mind. Take health care, it is an easy target but no matter who wins the Presidency they aren’t going to want to screw up the best health delivery system in the World. Nick asked what he focuses on. Gene starts looking at quality ratings. He looks for growth plus dividends of 12% or more. He isn’t willing to pay too much either. He adds the growth rate + dividends and divides by the P/E and will buy when that is under 1. Frank Gannon asked if now could be compared to the 1993-4 period when the FED was tightening. Henssler hopes so, the market was flat but Banks and Health care did well.

Next weeks special guest will be Jim Moffett, Portfolio Manager UMB Scout Worldwide Funds. The panel will be Harvey Eisen, Kim Goodwin, and Bob Stovall.

I will be taking the next two weeks off. The scheduled line up is as follows. May 21st Special guest will be John Rogers, Chairman & Chief Executive Officer, Ariel Capital Management. The panel will be Rich Bernstein, Mary Farrell, and Barbara Marcin. May 28th special guest will be Don Hays, President & Chief Investment Strategist, Hays Advisory Group. The panel will be Alison Deans, Lou Holland, and Brian Rogers.

Louis Rukeyser, Louis Rukeyser, Louis Rukeyser, Louis Rukeyser, Louis Rukeyser, Louis Rukeyser

-- posted by SteveT

Top 795. May 16, 2004 9:17 AM

» mac1946 - Website or info on Frank Gannon

Does Frank Gannon have a website? If not, who is he associated with at this time? Thank you

-- posted by mac1946

:http://finance.yahoo.com/q/pr?s=SEIAX

Top 796. May 16, 2004 11:22 AM

» JeffChristy - Re: Website or info on Frank Gannon

In response to message posted by mac1946:

Mac

Francis Gannon is a portfolio manager for Sunamerica. Here is a fund that he manages.

When anyone appears on radio or television purporting to be a stock market expert it pay to check out their performance numbers before placing any faith in their recommendations.

-- posted by JeffChristy

Top 797. May 16, 2004 11:41 AM

» pbradford6 - Re: Re: Website or info on Frank Gannon

In response to message posted by JeffChristy:

I wonder why/how Gannon was invited. It certainly wasn't because he runs a successful mutual fund!

Thanks Jeff.

-- posted by pbradford6

Top 798. Jun 4, 2004 11:03 AM

» SteveT - Update Stock Picks

May 21, 2004
Jim Moffett, Portfolio Manager, UMB Scout Worldwide Funds
1. Coca-Cola HBC S.A. (CCH)
2. Smith and Nephew (SNN)
3. Canon (CAJ)
Panelists:
Harvey Eisen, Chairman, Bedford Oak Partners
1. Abbott Laboratories (ABT)
2. Reader's Digest (RDA)
Kim Goodwin, Chief Investment Officer, State Street Research
1. Harman International Industries (HAR)
2. Polo Ralph Lauren (RL)
3. Biogen (BIIB)
Bob Stovall, Investment Strategist, Wood Asset Management
1. Freeport-McMoRan Copper & Gold Inc. (FCX)
2. Fluor Corp. (FLR)
3. Genuine Parts Company (GPC)

May 28, 2004
John Rogers, Chairman & Chief Executive Officer, Ariel Capital Management
1. Northern Trust (NTRS)
2. Markel (NJK)
3. St. Paul Traverlers (STA)
Panelists:
Richard Bernstein, Chief US Startegist, Merrill Lynch
1. Exxon Mobil (XOM)
2. Johnson & Johnson (JNJ)
3. Microsoft (MSFT)
Mary Farrell, Chief Investment Strategist, UBS Wealth Management
1. Boston Scientific (BSX)
2. Comcast (CMCSA)
3. Prudential Financial (PRU)
Barbara Marcin, Portfolio Manager, Gabelli Blue Chip Value Fund
1. Dow (DOW)
2. Alcoa (AA)
3. Ingersoll Rand (IR)

-- posted by SteveT

Top 799. Jun 4, 2004 11:37 AM

» Kirk - Re: May 28, 2004 John Rogers, Chairman & CEO Ariel Capital

.
In response to message posted by SteveT:

I like John Rogers quite a bit as he is a good value manager. I even recommend one of his funds in my newsletter that is doing quite well this year. I was a bit surprised that he said he felt the market as a whole would pretty much go nowhere for the next 5 years and could be significantly lower many times over this period. I guess I should not be too surprised as he is a value manager from the East Coast where few think George Bush's economic plan will work... so it colors their outlook. smile

Louis Rukeyser Fan Club Hosted by Suite101.com

-- posted by Kirk

Top 800. Jun 4, 2004 1:47 PM

» Normxxx - Re: Re: May 28, 2004 John Rogers, Chairman & CEO Ariel Capital

In response to message posted by Kirk:

What is George's economic plan? Eliminate all taxes, especially for the rich?

Oh, and print as much money as needed-- but that needs Greeny's cooperation.

If worse comes to worse, we could always invade Syria ... or Iran. We'll probably have to restart the draft for that, but that will certainly reduce the unemployment situation. Not to worry, with only the rich kids now being able to afford college, a college deferment would keep them out of the war.

-- posted by Normxxx

Top 801. Jun 5, 2004 5:30 AM

» SteveT - 6-4-04

Maria Bartiromo filled in as guest host this week sharing her views on the news that affected the markets. The big story in this holiday shortened week was the jobs report, which shows jobs are slowly but surely coming back.

Brian Rogers says inflation is on the horizon but a small bump up should be something investors can deal with. He believes the FED will act preemptively to keep inflation at bay. Rogers is looking for high quality companies with sustainable earnings selling at reasonable valuations. Companies that fit the bill are Wyeth (WYE) and Viacom (VIA).

Alison Deans is slightly worried about inflation, saying it is hard to imagine the market doing really well in a rising rate environment. She thinks the FED will be increasing rates the next 18 months and that will put pressure on the market. After having a great run Alison is leery on small caps, financial services, and grocery stocks. Deans does think mid caps will do well. She likes Arch Coal (ACI), Career Education (CECO), and Staples (SPLS).

Lou Holland is a bottom up investor and pays little attention to the economy. He is always fully invested and doesn’t market time. He does however think valuations are a little rich and expects a choppy market this year with a strong finish, up about 6-8% for the year. Lou likes the energy sector and health care. Stocks picks include Pfizer (PFE) Teva Pharmaceuticals (TEVA), and American International Group (AIG).

Maria then introduced special guest Don Hays, President & Chief Investment Strategist, Hays Advisory Group. Don says oil prices do affect the economy but as of now, personal income increases more than compensate as demonstrated by retail sales figures. Hays said in January the market was vulnerable so he raised cash levels to 15%. He put half that money back into the market in March and the other half a couple weeks ago. He believes the low a couple weeks ago will be the low for the year. He expects a so-so market the next four to six weeks and for the tempo to pick up after the Democratic convention. In all categories he has maximum stock exposure and minimum cash and bonds. His long-term growth allocation is currently 100% equities. Don says bottoms happen when value investors buy. We are now in the mid stage of the cycle where value and growth/momentum are essentially in balance. Late in the cycle growth/momentum investors take over. Hays expects the late cycle to last throughout this year. Maria asked what groups of stocks to sell as rates rise. Don did say he is not avoiding financials. He would if rates were rising to slow the economy, but they’re not. Rates for now will be going up just to get them to a neutral state and he expects banks to have good earnings.

Brian asked for advice to fixed income investors. Yields will come down so now is the time to be switching towards dividend paying equities. Don believes we will revert to the tradition of a generation or two ago when dividends were what people depended on for income. Brian then asked how investors should think about the Elections this autumn. We are coming to an important time in history. Next year has to see major reforms in Education, Health Care, and Social Security. That won’t happen with the gridlock we have often seen in the past. Hays predicts the Republicans maintain control of the White House and both houses in Congress. Alison asked which sectors are most attractive now. The key is Global companies with the best earnings growth. To get that you need to look at technology stocks. Alison then asked what Don looks at to determine if the market is going up or down. Three “shock absorbers” 1) Psychology 2) Monetary 3) Relative Valuation. No One has perfect answers to all the problem in the world but Don has found if all three shock absorbers are in good shape it buffers bad news. Lou asked about stock selection criteria. Firstly Hays is a top down Asset Allocator. Next he searches for the best combination he can find in three areas. 1) Relative Strength 2) Relative Valuation 3) Earnings Momentum.

Next weeks special guest will be Byron Wien, Investment Strategist, Morgan Stanley. The panel will be Elizabeth Dater, Tom Gallagher, and Michael Holland.

Louis Rukeyser, Louis Rukeyser, Louis Rukeyser, Louis Rukeyser, Louis Rukeyser, Louis Rukeyser

-- posted by SteveT