Analysts, Gurus & Pundits

» Rande - Re: Pundits on Junk Bonds

Kirk,

Add Ken Gregory at the "No-Load Fund Analyst" to the list of those eyeing junk bonds as attractive. Yes, should be interesting to see how it all turns out.

-- posted by Rande

» SteveT - Mary Farrell

SUSIE GHARIB: Our guest tonight is bullish on the markets, but she says the pain is not over. We're happy to have with us Mary Farrell, Senior Investment Strategist with PaineWebber. Happy new year. Nice to have you.

MARY FARRELL, INVESTMENT STRATEGIST, PAINEWEBBER: Thank you very much, Susie.

GHARIB: All right, so you say the pain is not over. How much more pain do investors have to endure?

FARRELL: Well, it's very tough because right now there's two major issues for the market. One is earnings and the other is a potential for a recession and, of course, they are both quite related. But if you look at the market right now, we are clearly responding to the fact that there is a lot of slowing in the economy. The Federal Reserve has started to do its part but a lot more will have to be done before we can say the pain is behind us.

GHARIB: Can you get a time frame for this?

FARRELL: It depends really on the Federal Reserve. This was a very strong statement a
month ahead of their meeting reducing rates by half a percentage point. They're going to follow that up at that January 30th meeting with some more and possibly even follow up after that.

GHARIB: So what's going to be more important, what's going to be the driver for the markets? Is it going to be these interest rate cuts or is it going to be earnings?

FARRELL: I think it's going to be, immediately looking ahead, we're just going to, starting to
get the reports for fourth quarter earnings, which will dominate the next two weeks. They're
going to be disappointing by and large. First quarter earnings will also be disappointing,
probably negative. But we should start, if we get another, you know, another rate cut, I think
you'll see the market looking ahead and third and fourth quarter should look pretty good.

GHARIB: Mary, investors have gotten so used to, with the exception of last year, of getting a year end returns of 20 percent, 30 percent on the Dow. What will be a more reasonable expectation now?

FARRELL: Well, I think that's a crucial question because I think we'll look back at the decade of the '90s as an aberration in stock market history. Those returns were unprecedented. But what we essentially did was reprice the market from high inflation to low inflation. We're not going any lower. So I think future gains for the market will be much more in line with earnings gains and that will be much more closely tied to the eight to 10 percent we've gotten historically, not 20 to 30.

GHARIB: But now your forecast for the Dow is 12,500 by the end of the year 2001 and for the NASDAQ 4,600, which are just about double where it is now. So, your Dow forecast actually was a little more bullish?

FARRELL: Yes. Dow is where we are expecting that the market right now is showing very good valuation. Now, an under valued market is different than market timing because under
valued markets can get more under valued. But clearly if you look at the history of the stock
market in the last few decades right now is showing very attractive valuations. So I think
investors who step up to the plate here, even though we could see a lot more volatility
maybe even down further, will find themselves well rewarded.

GHARIB: But that is the issue, stepping up to the plate. Investors now have money from like, maybe it's tax selling they had from last year, 401K decisions that they have to make and it's a really tough call. What would you say and what are the sectors you're looking at, what are some of the stocks that you like right now?

FARRELL: That's a shift I like. I think investors should get away from the market and focus on sectors and companies, because that's really how you build wealth, not timing the market. I think there's a couple of areas that are very attractive. Financial services, this is an
age of affluence. Secondly, health care, an aging population uses more health care. Telecommunications has some good areas and also technology has been beaten down.

GHARIB: Can you name a few stocks?

FARRELL: Sure. Citigroup, American Express(AMEX), Johnson & Johnson (JNJ), Verizon Corp. (VZ) and then in the tech area companies like JDS Uniphase (JDSU), Cisco (CSCO) would all be good long-term holdings.

GHARIB: Does your firm, by any chance, have any investment banking relationships with any of these stocks that investors should know about?

FARRELL: I'm glad you asked that. Investors are entitled to full disclosure. As you do know,
PaineWebber was acquired by UBS (UBS) recently and they're a very large global firm. We have relationships with probably half the companies I've mentioned.

GHARIB: OK. Something for investors to keep in mind. Mary, just to wrap it up, I mean, you have a bullish scenario. What could break the back of this bullish scenario that you have?

FARRELL: I think the biggest issue, inflation is not an issue. If we went into a full fledged recession, if the Federal Reserve did not act strongly enough and soon enough, that, I think,
would really devastate earnings and that would be the problem. But I don't think that's going to happen. I think at best we'll get a slowdown, at worst a modest recession. But the bull market should reassert itself.

GHARIB: I think you've made a lot of investors hopeful tonight. Thank you so much for coming-

FARRELL: Thank you for having me.

GHARIB: -- and talking to NIGHTLY BUSINESS REPORT.

FARRELL: Thank you.

GHARIB: And we've been speaking with Mary Farrell, Senior Investment Strategist with PaineWebber.

-- posted by SteveT

» JenL_2 - Bull Paperdolls

....Jen

-- posted by JenL_2

» CaptRon - Pick a Guru, any Guru....8-)

-- posted by CaptRon

» Kirk - Milunovich on CNBC

Likes storage emc, etc.

Has semi's now on market weight, TXN...others

Internet, intel and NOK still have tough time ahead.

Feels tech will rally for two months then fall again.

Visit my pay-per-click sponsors ------ PLEASE -----------------\/

-- posted by Kirk

» Rande - Guru by committee:

(excerpted from current market commentary at CBSM)

The S&P Investment Policy Committee voted to increase its recommended equity exposure in a model portfolio to 65 percent by reducing its cash allocation to 10 percent while leaving its bond exposure intact at 25 percent.

S&P said reasons for the increased allocation into stocks include expectations of sharply lower interest rates, an improvement in the market's reaction to negative news and the likelihood that further advances could attract sidelined cash back into the market.

Near-term sector rotation, S&P said, favors the tech, telecom and consumer cyclical sectors at the expense of the energy, healthcare and utilities.

-- posted by Rande

» DennisL - To Rande re: Guru by committee

Rande, who is the "S&P Investment Policy Committee"? Is this the same group of people who select which stocks comprise the S&P 500, 400, and 600 indexes? Are they supposed to be impartial and objective?

...DennisL

-- posted by DennisL

» Rande - Re: To Rande re: Guru by committee

Yes, they select the stocks in the index. S&P also puts out a newsletter with investment recommendations -- "Outlook."

-- posted by Rande

» Kirk - Al Goldman's Targets

AL's Year End (2001) Targets

           12/31/01    Today (01/19/01
.
DJIA      = 13,000         10,600
S&P500    = 1,600           1,341
NASDAQ    = 3,600           2,773

Visit my pay-per-click sponsors ------ PLEASE -----------------\/

-- posted by Kirk

» Will_L - Re: Al Goldman's Targets

The figures Goldman offers seem much inline with what many thought would be the year end 2000 levels --if the Nasdaq fell off a cliff LOL

The market does have a way of humbling those who take their predictions too seriously.

Seems like Al is kind of inline with the lower end of Garzerlli's prediction for the S&P for 2001--saying 20-40%.

Let's hope they are correct. In fact I think the lower end of that range might be healthier but what I think or Al or Elaine doesn't matter a whole lot.

-- posted by Will_L