Analysts, Gurus &amp; Pundits

Top 448. Jun 29, 2001 7:06 AM

» Rande - Re: Re: Re: Re: Re: Re: Re: Sir John Templeton

In response to message posted by KLR:

In 1974, Ibbotson and Sinquefield forecasted the DJIA would reach 10,000 in November of 1999. This forecast is only eight months shy of the actual record-breaking level hit on March 29, 1999. The forecast for the year-end 1998 DJIA was less than 50 points away from the actual close that year, 9,218 and 9,181 respectively.

Amazing, but true. Well, maybe not so amazing. They're not fortune tellers. They just understand the long-term nature of equity markets. Still, who in 1974 of all years was making such statements?

-- posted by Rande

Top 449. Jul 2, 2001 6:27 AM

» mord - EBAY to become extinct

Could software like this if released by QXL/MS(QXLC) threaten EBAY.

The other (combined) auction model.

How P2P software works and how it generates money for the company.

Person to Person (peer to peer) auction software works in the following way.

You are all familiar with instant messaging where you download messenger software. In P2PAuction you download the server and client software (in one) on to your machine.

As a client(bidder).
When you run the software in bidder *mode you simply enter the name of the item or items you are looking for. The software checks all available auctions on the network and returns the details to you. In order to bid for an item you must have been assigned a valid user name and password through the company as normal. In doing so you will have been given a digital certificate that identifies you and acts as a guarantee for your purchase if sucessful. This digital certificate is also used by the Escrow service to which you are automatically joined. This is how you pay for your item. See services such as i-escrow europe for example.

As an Auction

In auction mode you specify the details of your auction as with the existing system. You have the option of online or offline settings. For short duration auctions or auctions that are repeated daily i.e between 5pm - 10pm you will use online. Offline will send your auction to the auction website. (P2PBidder software also checks the offline website for auctions)
P2P in the past was seen to be of limited value as it was thought that users would have to keep their machines running all the time. We now know that this is entirely possible as 'always on' costs have dropped dramatically. However the home auction (car boot sale) lasts for a short period of time or repeats it self and does not require 'always on'. Companies selling items by auction can keep their machine connected 24/7. The auction can if costs dictate be hosted offline. In order to run an auction your digital certificate is used with the escrow company so that you may receive payment from successful bidders.

How does the 'software' company make money.
1. The company has a deal with the escrow company and takes a cut on each sale.
2. The P2P software contains advertising banners that are linked to items you search for or have search for in the passed. etc...

-- posted by mord

Top 450. Sep 9, 2001 4:48 PM

» JenL_2 - Year-end Predictions

This from 9/10 Barron's:

What Now?

Wall Street strategists are sharply divided on the outlook for stocks

By Jacqueline Doherty

As 2001 enters the home stretch, the major stock indexes find themselves underwater for the second year in a row. This year alone, the Dow Jones Industrial Average has lost 11%. The S&P 500 is down 18% and, after last week's intensive selloff, it is back to a level last seen in October 1998. Nasdaq has fallen 32%, continuing last year's decimation. The declines certainly entitle the few who were bearish at the start of 2001 to take a victory lap.

Thomas McManus, portfolio strategist at Banc of America Securities, expected the S&P to slip to 1250 by midyear, only a fraction higher than the 1224 level it actually reached.

Not far behind was Doug Cliggott, chief equity strategist at J.P. Morgan, who called for a 1300 S&P by June 30.

But even the most bearish of strategists have had to revise downward yearend expectations. McManus, who had the S&P rebounding to 1525 by yearend, now sees it rising to just 1250. And Cliggott's 1400 yearend target has shrunk to a mere 1100, close to where the index stands today. The biggest bull of the bunch was Christine Callies, Merrill Lynch's Chief U.S. Investment Strategist, who expected the S&P to close the year at 1700. Though she too has lowered her estimate, Callies still expects a 34% rebound to bring yearend levels to 1450.

In fact, the same group that was bearish at the start of '01 remain so today, and the folks who were bullish about the market's fortunes maintain their upward gazes. So, the question is: Will the bears be proved right again, or are they simply married to what has been a winning position? Or, should investors believe the strategists who missed the market's downturn, but now call for a rebound? Neither option seems ideal, but both sides have interesting arguments.

"I believe the economy may have seen its worst quarter in the second quarter, but it is not going to come roaring back quickly enough for companies to meet earnings expectations," warns McManus. He forecasts S&P operating earnings per share of $50 this year and $55 in 2002. That's close to the consensus among strategists of $49.61 for 2001 and $56.54 for '02, but below industry analysts' expectations for '02 earnings of $59.05, according to Thomson Financial/First Call. "There's going to be a significant downshift in expectations," McManus predicts.

Out of the bunch, J.P. Morgan's Cliggott sports the most conservative earnings estimate: $44 for this year and $46.50 for next. He remains in the bear camp because he doesn't expect corporate profit margins to bounce back as quickly as do the bulls. CEOs invested too much in their businesses, hired too many workers and took on too much debt. As a result, depreciation and labor costs are rising faster than revenues. And since companies are only able to control labor costs, Cliggott expects layoffs to continue and compensation to grow more slowly.

"It's going to be an uncomfortably long time before a meaningful earnings recovery kicks in," says Cliggott. "Believe it or not [corporations] are cutting costs very slowly."

His evidence: The unemployment rate has only risen by one percentage point to 4.9%. When corporate profitability has broken down in the past, the unemployment rate has risen by two to five percentage points from its lows. Companies this time around were slow to cut because they feared the economy might bounce back quickly, as it did in 1998, leaving them caught short of employees. So far, however, that hasn't been the case.

The bulls, meanwhile, are holding tight to their sunny projections, though a few of clouds have crept into their forecasts. In January, Abby Joseph Cohen, who chairs Goldman Sachs' investment-policy committee, thought the economy would start to reaccelerate by June. Though that didn't occur, she remains confident that the U.S. economy will return to a 2%-3% growth rate and a 10% earnings growth rate next year. Corporate America will benefit from lower costs now that layoffs have begun, interest rates have fallen and energy prices have receded, Cohen maintains. The inventory reduction that occurred over the past year will also help.

"Aggressive charges in '01 set companies up for easy comparisons in '02," she says. So, Cohen has lowered her yearend target by only 150 points, to 1500. She expects S&P earnings to come in at $51 this year and $56 next year.

To bolster their case, the bulls point to last week's National Association of Purchasing Managers report, released on Tuesday. The report's index of manufacturing activity rose to 47.9 last month from 43.6 in July. While a reading under 50 still indicates manufacturing is contracting, the August number implies that the contraction is occurring at a slower pace. In addition, the new orders component of the index jumped to 53.1 in August, after contracting for the 13 previous months.

After the news, Treasury yields rose as bond investors decided the economy might have hit bottom. Stocks rallied, but gave back almost all their gains by the day's end, suggesting a lack of conviction among stock investors that the economy is about to turn.

"Stock and bond investors don't necessarily reach the same conclusion from the same data," says Merrill's Callies. But by the end of last week, both investor bases decided the economy's woes would continue. On Thursday NAPM released a different report showing the continued decline in the service sector. The index hit 45.5 in August, down from 48.9 in July. Again, anything under 50 connotes contraction. And Friday, the unemployment rate jumped a surprising 0.4 percentage point to 4.9%.

Ironically, it's the equity market's pervasive pessimism that makes Thomas Galvin, Credit Suisse First Boston's chief investment officer, optimistic. "You have a market that loves to sell off on bad news and is skeptical about good news. It says to me that consumer confidence [in the markets] is just shattered," he observes. Money has flowed out of equity mutual funds four of the past eight months, and the cash in money-market funds and in savings accounts has ballooned. Buying on the dips is a phenomenon of the past, he argues, and day trading is passe. All indications that the bubble has deflated.

That said, Galvin warns, "Psychology is going to be hard and slow to turn."

So what will it take? Perhaps a group of major companies giving rosier-than-expected guidance, says Jeffrey Applegate, chief investment strategist at Lehman Brothers. Or perhaps an opportunistic acquisition motivated by the target's cheap stock will put a floor under stock prices.

"There's an 80% probability the economy has troughed and a 20% chance it will stagnate," says Galvin, who expects fourth-quarter earnings to beat analysts' lowered estimates.

Galvin doubts the U.S. will suffer through a Japan-like stagnation. Japan's bubble lasted for a decade, he notes, while ours popped after 1,000 days. Japan's excess capacity was in long-lived assets, like buildings, which can take years to fill up, while the U.S. has excesses in services and technology, which have shorter lives and become obsolete faster. Also consider that Japanese financial institutions owned the bubble assets, while the U.S. financial system remains healthy. Only 8% of the volume of commercial and industrial loans on the books of domestic banks are to technology and telecommunications companies. Finally, the U.S. Federal Reserve has aggressively lowered rates, which should help our economy rebound.

We have hopefully finished the downside of what Galvin believes is a three-year business cycle. He tracks the Organization for Economic Cooperation and Development's G7 leading indicator, in which the U.S. has a 40% weighting. The cycle peaked in 1995 and '98 and bottomed out a year later. Galvin hopes the pattern repeats and notes that the index increased in May for the first time in 12 months. He forecasts S&P operating earnings of $51.50 this year and $59 in '02.

Bulls also take comfort in the lower multiples stocks sport now that prices have fallen for more than a year. The forward price-to-earnings ratio on the S&P 500 is about 20, and fair value is about 24, says Lehman's Applegate. "We're not in the camp that says P/Es need to mean revert," to 14, he declares. For that to happen, the elements that effect P/Es, like inflation, interest rates and tax rates, would also have to return to their much higher levels of years past.

The telltale consumer

The health of the consumer also divides many bulls and bears. Bulls have faith that consumer spending will continue apace. Bears fear consumers will snap shut their wallets and go home empty-handed.

"The consumer to this point has done yeoman's work," says Goldman's Cohen. "It's not consumer confidence we're worried about. It's CEO confidence." CEOs will make the decisions on capital spending and job creation or job cuts. And they've personally felt the biggest impact of the negative wealth effect caused by falling stock prices over the past year.

Consumers, on the other hand, enjoy low unemployment, and when laid off, they're finding jobs quickly. The median duration of unemployment is 6.7 weeks. In 1994, the median unemployment period stood at 10 weeks. Says Cohen: "Consumer confidence is related to whether people think they can find a new job."

Galvin agrees. "Unemployment could go to 5%," he says, "but a few years ago that was considered full employment." He thinks consumers will continue to spend, despite layoffs and a falling stock market, because their largest investment, their homes, has risen in value. While there has been weakness in high-end homes, inventories for lower- to middle-class homes remain low and demand is still strong.

Consumer spending should remain strong because the Fed has had the flexibility to lower interest rates aggressively since inflation has remained tame, reasons Merrill's Callies. "What would concern me is if the U.S. Congress talks seriously about repealing the tax cut," says the strategist, who considers herself an independent. A repeal might be perceived as a tax increase by consumers and that wouldn't encourage spending or help the economy regain momentum.

The bears are much more concerned about the consumer's future. "I think the consumer will pull back, and it will be a bad Christmas," says Morgan Stanley's Chief U.S. Investment Strategist Byron Wien. This Scrooge, who sees layoffs intensifying as the year goes on, expects the S&P 500 to finish the year at 1300 -- roughly unchanged from 1320, where it started the year -- and rise, at most, by 10% in 2002. At the beginning of '01 he had expected the market to end the year flat or rise by up to 10%.

McManus fears the consumer has already begun to pull back. News stories about less airline traffic, fewer hotel bookings, and restaurants with empty seats have already begun. And shoppers seem to only want to buy bargains, causing suffering at the high-end retailers. Just last week Saks, which operates Saks Fifth Avenue and other department stores, posted a 2% decline in same-store sales in August, while Wal-Mart reported a robust sales increase of 7%.

The deterioration may continue since bonuses are sure to fall from last year's levels. And that, warns McManus, could be enough to prompt another round of belt tightening, knocking the final support -- consumer spending -- out from under the economy.

A dead split in sentiment? That's what makes markets, folks.

Subscribe to WSJ & Barron's Online @ http://www.wsj.com

.....Jen

-- posted by JenL_2

Top 451. Sep 9, 2001 9:15 PM

» dija - Re: Lehman 10 Uncommon Values®

In response to message posted by Kirk:

Interesting post, Kirk,
I noticed that Gabelli also touted Liberty Media on WSW last Friday. He seems to understand the industry pretty well so maybe that's a good stock to consider.

Interesting about WMI being on the list. The people at Longleaf rode that stock most of the way down (adding to it all the way) and all the way up. They recently said (in the semi-annual report):
"We have reduced Waste's weighting in the portfolio from 18% to 8% as the price has appreciated closer to appraisal."
They know this stock inside-out so I doubt if it's an "uncommon value."

Do you know how many of the stocks are carryovers from last year, if any? I wonder if they had Cisco on the list last year.

-- posted by dija

Top 452. Sep 22, 2001 10:31 AM

» JenL_2 - Yardeni & Galvin

The cover article from 9/24 Barron's

<img src="/files/mysites/jen3/bullpatriotic.gif" width=200 height=200 align="left">Buyer's Market

With share prices slipping and rates near three-year lows, stocks look undervalued

By Michael Santoli

Over the past few years, the stock market has been called a lot of names: exuberant, risky, an over-inflated bubble, a burst bubble and, since early last year, a bear. One thing it has rarely been called lately is a bargain. Yet stocks had fallen quite a bit in the months running up to the recent terrorist attacks in New York and Washington, D.C., and now some analysts are beginning to whisper that stocks may finally be cheap, especially after last week's selloff.

One reliable method for gauging the fair value of stocks shows the market to be undervalued by more than 17% right now. The last time the discount from fair value approached such a magnitude was October 1998, when the market looked 16% undervalued, thanks in large part to rampant selling fanned by fears of a global financial crisis. The crisis was averted, and it proved an excellent buying opportunity for intrepid investors.

We may be facing a similar situation now, according to the so-called Fed Model for valuing stocks. At its core, this model compares the interest rate being paid on 10-year Treasury notes to the "earnings yield" of stocks in the Standard & Poor's 500 Index. This earnings yield is simply the expected earnings of companies in the S&P 500 Index divided by the index's current level.

For the next 12 months, the collective earnings of the S&P 500 are expected to be $55 a share. Divide that by the index's current level of 965.8, and you get an earnings yield of 5.69%. That's well above the 4.69% rate being paid on 10-year Treasury bonds.

When the earnings yield on stocks exceeds the Treasury rate by such a substantial margin, stocks are said to be undervalued. This means that investors are assigning less value to corporate profits, which should grow over time, than to the steady yield on government bonds. Conversely, when the earnings yield sits below the 10-year Treasury rate, the market is viewed as overpriced.

As the nearby chart demonstrates, in recent years this model has indicated that investors were paying too much for stocks, even after the bull market faltered early last year and the indexes began hurtling downhill. Despite the fact that corporate earnings were sinking fast early this year, stock prices remained stubbornly high. This disconnect led strategists to conclude that stocks couldn't mount a rally until they sank to more realistic levels. The latest readings from the Fed model suggest that the market's seemingly chronic state of overvaluation has subsided.

The technique got its name after it was tacitly endorsed by Federal Reserve officials, who referred to it some year back in economic commentary documents. The model was later popularized by Deutsche Banc Alex. Brown's chief economist, Edward Yardeni, whose Website, www.yardeni.com, includes a calculator allowing anyone to determine the market's fair value.

Importantly, Yardeni himself stresses that the model is only as good as the earnings forecasts used to calculate stocks' fair value. He simply plugs in the forward estimates of stock analysts as collected by I/B/E/S, which, while not fully accurate, represent the Street's best guess, at any given time, of corporate America's future profit performance.

While the adverse economic impact of the terrorist attacks is not yet known, corporate profits could well turn out to be skimpier in the coming year than analysts currently are anticipating. Yardeni himself last week reduced his estimate for this year's earnings on the S&P 500 index to $40 a share from $45, which itself was among the lower estimates among Wall Street strategists.

Yet even amid the current economic tumult, Yardeni for the moment is standing by his 2002 forecast of $55 a share in S&P 500 profits, confident that the Fed's rate cuts and augmented government spending will prompt a sharp upturn in profits next year. "My sense is that even before the attack, economists were becoming increasingly pessimistic about a recovery next year because it was not clear what would cause it," he says. "Now, there's no doubt at all that there will be a huge increase in government spending for both defense and offense."

As a cushion against future business disruptions, he expects big companies to maintain larger inventories. Combined with the Fed's efforts to keep interest rates low, such factors could well help a strong economic recovery to materialize.

Clearly, the investors who were hurriedly dumping stocks last week were expressing profound doubt that such a rejuvenation of corporate profits is in the cards. But some market players who try to look beyond the momentary concerns of the harried investor and the inherent cycles of real-world businesses are themselves coming to the conclusion that stocks are cheap.

Jeffrey Knight, senior global-asset allocation strategist at Putnam Investments, coaxes from his computer models a "normalized earnings yield," a measure of profit-generating power that seeks to smooth companies' short-term earnings cycles. He then compares this with bond yields to determine the overall market's relative attractiveness. Knight declared last week that "the market is now as cheap as it has been in the last 10 years."

Likewise, Tom Galvin, chief strategist at Credit Suisse First Boston, points out that even if the optimists are off the mark in forecasting a big jump in earnings for 2002, stocks still appear reasonably priced. An optimist himself with a standing projection of $59 a share for next year's S&P 500 earnings, Galvin notes that if the economy remains slack and the number comes in at a mere $47, the earnings yield would still match the current Treasury-bond rate. Such an earnings performance would put the market at a price-to-earnings ratio of 21, not resoundingly cheap by historical measures but certainly justifiable given prevailing interest rates, he suggests.

"That argues for a shift out of Treasuries and into stocks," Galvin adds.

Beyond sheer valuation, the generally liquid state of financial markets and of investor balance sheets gives Galvin encouragement. The ratio of cash parked in money-market funds to the overall value of U.S. stocks is higher than it has been since 1982, he points out. "When the military clouds pass, the nominal returns on money market funds [now around 3%] will be insufficient for investors and will force them up the risk spectrum" and into stocks, Galvin contends.

It ought to be stressed that an undervalued reading on the Fed Model, or on any of its many variants, is not in itself enough to ensure that the market is about to sprint higher or even that it has finished going down. And, of course, a lengthy postponement of an economic rebound could erase the market's undervalued status in short order.

Even so, amid the fear and turmoil of these uncertain times, the market today is offering investors a better bargain than it has in years.

Subscribe to WSJ & Barron's Online @ http://www.wsj.com

......Jen

-- posted by JenL_2

Gurus Ponder the Obvious: Was That It for the Bear?

Top 453. Sep 25, 2001 12:02 AM

» JenL_2 - Bear Gone??

This from 9/24 TSC:

By Aaron L. Task

The most widely anticipated oversold bounce in recent market history arrived today with a splash.

Coming off the worst week since before World War II, the Dow Jones Industrial Average rose 4.5%, the S&P 500 gained 3.9%, and the Nasdaq Composite climbed 5.3%.

Predictably, and understandably, a big topic of discussion today was whether last week, and Friday in particular, represented the capitulation many observers say is necessary to complete the bear market cycle. (As discussed previously, there are many definitions of capitulation and it isn't an absolute necessity to end the bear. But it is something that's being closely watched.)

Several requirements previously cited for capitulation were met on Friday, notably the spike in the number of stocks at 52-week lows, according to John Roque, senior analyst at Arnhold & S. Bleichroeder and a RealMoney.com contributor. Additionally, volume was heavy last week and the 10-day moving average of the equity put/call ratio hit 0.98, the highest level since 1998.

But Roque, who correctly declared the midday bounce last Wednesday did not a sustainable reversal make, does not believe all necessary elements were evident last week to suggest the ever-elusive bottom is at hand.

"We'd be much more secure about writing [everyone was throwing in the towel] if the market had closed at or near its intraday lows," he wrote today, while also noting neither the CBOE Market Volatility Index nor the Arms Index produced a new high last week, despite all the alleged fear and loathing. The VIX reached an intraday high of 57.31 on Friday but fell shy of its peak of 60.63 in October 1998 and well below its intraday record of 172.79 in October 1987. Meanwhile, the one-day Arms Index did not even rise above 1.0 on Friday, much less approach its all-time high of 14.1 on Oct. 19, 1987.

Describing a bottom as "a process that involves stabilization" and retests, Roque reiterated a long-held recommendation: "Bounces should not be used to average into positions but as opportunities to reduce risk because we don't believe any developing rally/advance is going to be strong enough to assuage long-only investors."

Near and dear to GuruVision's heart is that the "unequivocal demystification" of Wall Street's prognosticators that Roque says must precede the bottom has occurred. Still, no major strategist has "thrown in the towel on their bullish forecasts," he observed.

The good news from a contrarian viewpoint is that previously defensive strategists such as Thomas McManus of Banc of America Securities, who added another 5% to his recommended equity allocation today, and Edward Yardeni of Deutsche Bank Alex Brown are getting more optimistic about stocks in the wake of last week's tumble.

Conversely, erstwhile permabull Jeffery Applegate of Lehman Brothers today cut his earning estimates for 2001 and 2002 and his rolling 12-month target for the S&P 500 to 1200 from 1375.

The bad news is the (still) most important bull of all, Abby Cohen of Goldman Sachs -- who last week "suspended" her year-end price targets and cut her 12-month S&P target to a range of 1250 to 1400 from 1550 -- today raised her recommended equity allocation to 75% from 70%.

Among Wall Street's other potential towel boys, Thomas Galvin of Credit Suisse First Boston lowered his 2001 S&P 500 earnings estimate to $45 from $51.50 but didn't alter his 2002 year-end price targets of 12,000 for the Dow, 1500 for the S&P and 2600 for the Comp.

Edward Kerschner of UBS Warburg last week cut his 2002 year-end target for the S&P to 1570 from 1835 but still sports a recommended allocation of 84% stocks, 14% bonds, and 2% cash; the most aggressive among so-called major strategists.

Then there's Don Hays of Hays Advisory Group in Nashville, Tenn.

Since his aggressively bullish call on Aug. 22, the Dow is down 16.3%, the S&P 13.9% and the Nasdaq by 19.4%, and that's after today's gains. Yet the veteran strategist has been unyielding in his belief a substantial rally is in the offing; a belief he repeated several times last week and again today.

Citing the recent spike in the VIX (which he previously described as a "good indicator" but "not a benchmark"), and other indicators such as the 15-day Arms Index, the equity put/call ratio and the McClellan Oscillator, Hays said a "historic buying opportunity" is at hand, on par with bottoms in 1987, 1992, and 1998.

"I believe that [the] bear market is over," Hays wrote today. "I certainly wish I had been able to call this catastrophe for you but I still believe that [if not for the events of Sept. 11] the decline would have already ended two weeks ago and the bull market would already be in place."

Whether he's considered a "major", "minor" or otherwise strategist, Hays cannot be considered a towel thrower.

Brass Tacks

Several readers have correctly noted that specific stock picking is more important than the endless groping for bottoms. Here then, is a rundown of the specific names being recommended by some of the "gurus":

Roque: "Investors will gravitate toward 'safe blue-chips' on any rally," including Citigroup (C), IBM (IBM), Tyco (TYC), Microsoft (MSFT), Intel (INTC), and Johnson & Johnson (JNJ). (Arnhold & S. Bleichroeder has done no underwriting for any of the above.)

McManus: Banc of America's "fresh money buy list" contains Johnson & Johnson, AmeriSource Bergen (ABC), Avon (AVP), Cardinal Health (CAH), Eli Lilly (LLY), Fannie Mae (FNM), First Health Group (FHCC), Freddie Mac (FRE), Gillette (G), and Pfizer (PFE). (BoA has done no underwriting for the aforementioned.)

Kerschner: Stocks "relatively positioned for high uncertainty" include IBM, Freddie Mac, Pfizer, American Home Products (AHP), AOL (AOL), Cinergy (CIN), Comcast (CMSCA), Cox Communications (COX), Energy East (EAS), Fifth Third Bancorp (FITB), General Mills (GIS), Kimberly Clark (KMB), Northern Trust (NT), PepsiCo (PEP), SAP (SAP), TXU (TXU), Walgreen (WAG) and Wal-Mart (WMT). (UBS has done underwriting for IBM, Freddie Mac, General Mills, PepsiCo, and TXU, and served as a financial adviser to Energy East.)

Applegate: Last Thursday, bought (for the firm's strategy portfolio, which was down 49% year to date through Sept. 19) AT&T Wireless (AWE), SBC Communications (SBC), HCA (HCA), Merck (MRK), and Kroger (KR) (Lehman has done no underwriting for the above.)

Finally, Douglas Cliggott, market strategist at J.P. Morgan, who believes fair value for the S&P 500 is now 900 based on the 10-year Treasury note's yield of 4.69% on Friday (it ticked up to 4.72% today), offered the following criteria for selecting stocks in the current environment: A beta, or measure of a stock's volatility, of less than 1.0; a dividend yield higher than the broader market's 1.6%; and a "modest, implied long-term earnings growth rate."

Aaron L. Task writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships.

.....Jen

-- posted by JenL_2

Top 454. Nov 20, 2001 8:24 AM

» Kirk - Barton Biggs

Just heard on TV that Barton Biggs says to go against the grain and buy bonds and energy stocks.

-- posted by Kirk

http://www.forbes.com/markets/forbes/200...

Top 455. Dec 3, 2001 7:26 AM

» Kirk - Ken Fisher Still Bearish

Portfolio Strategy
Bottoming Out
Kenneth L. Fisher, Forbes Magazine, 12.10.01, 12:00 AM ET

The year-end Investment Guide presents a great time to assess the overall market and where we are headed next year. I've been fully bearish throughout 2001, starting in January. The spring 2001 rally caused many to turn bullish. Not me. In the Sept. 17 issue (which was in your mailbox two weeks before the issue date) I expressed confusion that a market bottom was taking longer to arrive than I first envisioned. I then said the bottom might not be "until the end of the year or, heaven forbid, until early next year." I reiterated my rule about avoiding being bearish for longer than 12 months. Because I turned bearish at the outset of 2001, that year-end deadline is approaching.

So start buying soon, right? Longtime reader Graham Munro of Toronto e-mailed asking about how to allocate his investments now that it's time to invest again: value versus growth, country weights, etc. I advised Munro to slow down. It may be time to break my 12-month rule.

Let me begin by quoting from my Apr. 24, 1995 column: "Never stay bearish longer than 18 months; 12 months in any but the most extreme situations. Bear markets last about a year. If you are bearish and prices don't fall in a year, you are obviously seeing ghosts. If you do hit it right, and prices fall, force yourself back in after a year. You may not hit the bottom but will have missed plenty of the drop and won't miss the next bull rise." Well, until very recently, I've been right.

Good Graph in article http://www.forbes.com/markets/forbes/200...

And this is an extreme bear market, by any measure, lasting, as it has, 21 months. The bull market ending March 2000 was the second longest of the 20th century, exceeded only by the 1942-61 bull. Thus it isn't shocking to see a longer-than-average bear market following. Among the other weird factors present now that make things different: a President not elected by popular vote, the catastrophic terrorist attacks, the disruptive euro conversion and the long time it took for negative sentiment to spread wide among investors.

Despite the anomalies, you have to trust that historical patterns will prevail. This bear market is already 21 months old. Very old. Old bear markets burn themselves out. Price declines and time eat away positive sentiment. Only when positive sentiment is gone can the market reach a bottom.

Western markets do not like to be down three years in a row. And after huge down moves the markets reach the point where even the worst pessimists can't justify lower prices. As a result, next year will most likely have a positive return. But it may well have a few negative months first. That's why I'm expecting the bear market to continue for a while. I envision this bear market may be running out as late as June. Maybe and probably sooner.

Of course, you can't calibrate the bottom's arrival precisely. I don't mind some risk of slightly missing the bottom. Meanwhile, I'm content to remain bearish. Too many investors still remain optimistic for me to expect a near-term bottom.

Nevertheless, good investors must always ask themselves: What if I'm wrong? The trick is to avoid being stubborn. There are three signals that will show me I'm missing the market's recovery. Late in a bear market is one juncture where I evoke technical analysis, albeit in a very limited format.

I've got a phrase describing this approach: Three strikes and I'm in. If the S&P 500 climbs past three barriers, which the technical analysts call resistance levels, then it isn't just a sucker's rally. My bearishness would then be wrong. And I'll be back in.

The S&P, as I write, has been struggling to rise above 1100--which has been acting like a ceiling. That was last spring's low, before the sucker's rally. Getting past 1100 is the first step.

The second? Chart the fizzling of the rally in May through the market low point after it reopened in September, postattack: It fell from 1320 to 944. Recovering half that drop would be very odd for a short-lived rally at this late stage, implying a new bull is under way. So if the market rises much above 1130, that will be the second strike. This needs to last several weeks.

The third? Note that the market spent vast time this summer bouncing around 1200. Moving above 1200 for several more weeks is the third step. If I get back in before the market tops 1200 I won't mind missing the bottom by a little.

Right now, though, it's unclear if the market has the strength to surpass these mileposts soon. I'll publish my 2002 forecast in late January. Until then it's best to remain maximally bearish and defensive.

Kenneth L. Fisher is a Woodside, Calif.-based money manager. Find past columns at www.forbes.com/fisher.

-- posted by Kirk

Top 456. Dec 3, 2001 11:41 AM

» Fred2000 - Re: Ken Fisher Still Bearish

In response to message posted by Kirk:

"If I get back in before the market tops 1200 I won't mind missing the bottom by a little."

Kirk... 944 to 1200 is about 21%. No small miss. I have been buying for the last few months and will continue to buy in future months. If this isn't the bottom, I think it may be closer than 1200 will be.

-- posted by Fred2000