Analysts, Gurus &amp; Pundits

Top 478. Sep 7, 2002 9:01 AM

» Jen_ - Still Bullish

this from 9/9 Barron's... Chart added from BigCharts.com.....

Still Bullish

Despite having been too optimistic, Street strategists still see gains ahead

By ANDREW BARY

Bloodied but still bullish. That describes nearly all of the Wall Street strategists Barron's interviewed at the end of last year , who were overly optimistic about the stock market's prospects for 2002 -- as they had been about the two preceding years ("Outlook 2002," December 31, 2001).

Most saw the Standard & Poor's 500 rising to a range of 1,200 to as much as 1,570 by the end of this year. Even the low end of that range seems out of reach with index at 893.92. Indeed, this year's punishing bear market, which has dropped the S&P by 22% from 1148, has forced most bullish strategists to scale back their targets.

The group, nonetheless, remains upbeat with most expecting the S&P to hit at least 1000 in the next 12 months, an 11% gain from current levels. The one naysayer is Doug Cliggott, the former J.P. Morgan strategist who made the bold prediction in late 2001 that the S&P would fall to 950 and the Dow Jones Industrial Average would decline to 8,500. Cliggott says the S&P could drop below 700 owing to a lackluster economy and the index's high valuation based on reported profits, as opposed to so-called operating earnings that exclude the large writeoffs that have been taken by Corporate America.

The Dow finished Friday at 8,427.20 after hitting a low of 7,702 on July 23. It began 2002 at 10,021. Most strategists don't maintain Dow price targets because the S&P is the institutional benchmark.

The prevailing view among the 12 prognosticators (we added Jim Paulsen of Wells Capital Management to the group) is that the combination of the market drop and the sharp decline in interest rates has created a major buying opportunity in stocks. A bullish Ed Yardeni of Prudential Securities thinks the S&P could hit 1100 by year-end. "With a 4% bond yield and my view that inflation isn't an imminent risk, we could see a rally in price/earnings multiples like the P/E crash we've had so far this year," he says. Inflation, as measured by the consumer price index, has run at just 1% in the past year.

The so-called Federal Reserve stock market model popularized by Yardeni, compares the relative allure of stocks and bonds. It suggests that the S&P is more than 30% undervalued and that the index should be trading over 1325. The Fed model posits the market's forward P/E should equal the inverse of the yield on the 10-year Treasury note; with yields at 4%, that suggests a market P/E of 25.

"It's not that stocks are so attractive, it's just that bond yields are so low," says Ed Kerschner, strategist at UBS Warburg. Kerschner and others aren't crazy about high-grade bonds. "One good day in the stock market will give you a year's worth of T-bill returns and one good week will give you more than government bond yields," he says. Kerschner, who has maintained some of the most aggressively bullish S&P price targets in recent years, has a more muted view now, pegging current fair value of the S&P at around 1050.

Kerschner calls the current decade the Tepid Naughties -- as in naught, or zero -- given his view that combination of "constrained consumers, conservative corporations" and limited technology innovation will restrain economic growth. The result is that corporate profit growth, as measured by S&P 500 earnings, could expand at 6.5% annually, below the historic 7% growth rate and the headier gains that prevailed in the mid-to-late 1990s. Yardeni believes the profit growth rate could be just 5% a year.

Cliggott also has a downbeat economic view but thinks it will be reflected in stock prices. "It seems to me that the best-case scenario a year from now is that equity prices remain where they are, with the S&P at about 900, and we could easily see the S&P with a six in front of it," says the strategist, who left J.P. Morgan in February to form New York-based B&P Research, an arm of a Swedish asset manager, Brummer & Partners. "Our view is that the economy and earnings won't be doing much better next year than this year."

Cliggott differs from his more bullish brethren because he focuses on actual corporate profits, not one of the many definitions of operating earnings accepted by most strategists and institutional investors.

Corporate charge-offs have been enormous in the past 18 months due to huge writedowns of goodwill by companies like WorldCom, JDS Uniphase and AOL Time Warner and all the restructuring and other charges taken by such companies as Lucent Technologies, Nortel Networks and Verizon Communications.

In 2001, for instance, operating profits per share for the S&P 500 totaled $38.85, but reported profits after writeoffs were under $25. This year, operating profits are estimated at about $49, including a $3 benefit from the end to goodwill amortization. But including projected writeoffs, reported earnings may total just $36.

Cliggott says that to continually exclude these sizable charges over an economic cycle amounts to a form of "mulligan golf," a game in which players exclude bad strokes from their score. He argues that since corporate writeoffs are large and ongoing, they ought not be excluded from profit calculations.

By Cliggot's math, reported S&P profits could be $36 in 2002 and $40 next year. Put a P/E of 16 on $40 in earnings produces an S&P level of 640. That multiple seems reasonable, he says, because it's around the long-term average. Even if a P/E of 18 is accorded $50 of "operating profits," it results in an S&P of just 900, he adds.

Richard Bernstein of Merrill Lynch carries a reputation as a bear, but he notes that he was "cautious, but not cautious enough" at the start of 2002 when he forecast that the S&P would rise about 5% to 1,200 this year. Bernstein probably is the Street's biggest champion of reported S&P profits -- a position that hasn't endeared him to some of Merrill's bullish institutional clients.

That emphasis on actual earnings buttressed his caution because the S&P looks much pricier based on reported profits than operating profits. "The S&P is trading at 32 times the trailing earnings of $27 in the past four quarters. Everyone pooh-poohs that relationship, but our conservatism has proven warranted," Bernstein says.

Nor does he buy the bullish argument predicated on low interest rates. "People love to focus on interest rates and inflation, but who doesn't know they are low?"

Bulls like Abby Joseph Cohen of Goldman Sachs also cite a low investor risk tolerance, which is reflected in a high risk premium embedded in stocks and lower stock valuations. Bernstein says that the low risk tolerance is warranted partly because of the uncertainty of reported profits.

"The volatility of earnings is extremely important in setting the risk premium and earnings growth has been the least predictable in 60 years," he says. To Bernstein, the spate of corporate scandals and accounting fraud "is symptomatic of the fact that the environment is weaker than people thought. Remember the V-shaped profits recovery that was widely predicted for the second half of 2001? We're in the second half of 2002 and we're still waiting for it."

The bullish interest-rate argument for stocks is being questioned by many investors who argue that current rates, the lowest in 40 years, portend poorly for the economy and corporate profits. On that score, Yardeni says clients tell him that "if we get into a deflationary environment, why should we pay 25 times forward earnings that are being depressed by deflationary pressures?"

The Fed model, for instance, hasn't worked in Japan, which has been bedeviled by weak growth for a decade. Japanese stocks recently hit a 20-year low, extending a 13-year bear market, despite super-low rates of about 1%. One of the big issues concerning institutional investors is the specter of deflation and the Japanese parallel. Yardeni doesn't think the U.S. will follow the Japanese path because the American economy is more dynamic, with healthier demographics and a stronger financial system.

Yardeni calls the Fed model "a useful guide" in the past 20 years, but notes there have been "manias of irrationality" when the S&P has diverged radically from levels the model indicated. At the market peak in 2000, the S&P was about 70% overvalued. "We're now in a mania of excessive pessimism that could last for a while."

"Most people don't realize that the market is almost never at fair value," adds Kerschner. "I've been doing this 27 years and the market has never been where I thought it belonged," he says.

Steve Galbraith, domestic strategist at Morgan Stanley, says he incorrectly anticipated a 6%-to-8% gain in the S&P 500 this year, roughly in line with his projected S&P profit gain. "If you had told me that my earnings forecast for the S&P would be off by just $2, the long Treasury bond would be down one percentage point in yield and that the S&P would be down over 20%, I would have said 'No Way.' " He notes that he projected $50 to $51 in S&P operating profits for 2002 at the start of this year, below the consensus of $56. The current projection is for 2002 operating earnings to total about $49, little changed from last year when the goodwill-amortization benefit is included.

Galbraith, like Cohen, says that while the public may focus on predictions for the S&P, he doesn't. "You can help institutional clients better by focusing on the trees rather than the forests, such whether they should be in growth versus value stocks, large versus small stocks and sector allocations," he says.

Galbraith has gotten more bullish this year. "I don't find stocks egregiously expensive," he says. Galbraith thinks that $56 in S&P operating profits in 2003 looks achievable from both a top-down perspective and a bottom-up approach of summing earnings for all the companies in the index.

Galbraith says that if you went back to the S&P in 1940 and expanded profits at a 6.8% annual rate from that base, it would produce $58 in 2003 earnings. He thinks it's reasonable to assume that the S&P could be around 1075 a year from now, 19 times his 2003 profit projection.

A.G. Edwards's Stuart Freeman carries a similar target, at 1100. "The earnings recession was a deep one but it's over," he says. During the second half of this year, eight of the 10 major sectors of the S&P should show profit gains, with possible exceptions being technology and energy, he says.

Jeff Applegate of Lehman Brothers, who has steadily brought down his 2002 year-end target to a current level of 1075, says the "market is extremely undervalued" and that he thinks that next year will be a good one for stocks. Noting that the S&P is on pace for a third straight year of negative returns for the first time since 1940-1942, he says that "to consider a fourth year of negative equity returns is a very extreme view if you look at the broad sweep of history."

Cohen, whose steadfast bullishness in the late 1990s made her the Street's most prominent strategist, has seen her star dim in the past three years as she continued to maintain an upbeat market view. She carries the highest price target among the 12 strategists at 1,300, which she thinks can be achieved within a year. "Companies have cleaned up their accounting," she says. "This is a lot like the early 1990s" when companies were writing down factories and other tangible assets, while the current writedowns often involve intangibles, like goodwill stemming from failed acquisitions.

One of the ironies about Cohen's optimism is that she carries one of the lowest earnings estimates among the bulls. She projects $47 in 2003 S&P operating profits, up 12% from this year. Her methodology is a cross between those who focus reported profits and those that exclude nearly all the corporate writeoffs. Cohen includes many chargeoffs in her earnings numbers, including asset writedowns and severance charges.

How does she get to a 1300 S&P target with just $47 in projected 2003 profits? Cohen says she doesn't pay a lot of attention to P/E ratios. She believes that stocks have been bedeviled this year by investors' increased aversion to risk. "The risk premium built into stocks is the highest in 15 years," she says. Cohen is betting that risk tolerances will increase in the coming year, allowing stock prices to rise.

A bullish Jim Paulsen says that the real earnings yield on the S&P 500 (the inverse of the P/E, less inflation) stands at 4.5%, the highest since 1986. "More than 75% of the stocks in the S&P have earnings yields in excess of the 10-year Treasury. That's the highest proportion since the bull market began in 1982," he says. Paulsen uses a profit estimate in the next 12 months to calculate the earnings yield.

Paulsen says that even in range-bound markets, there are good opportunities for investors. He notes that in the infamous 1966-1982 period in which the Dow Industrials didn't post a net advance, nimble investors who bought at bottoms in 1970 or 1974 did very well. "I think we're at the low end of a trading range," Paulsen says. "The prolonged period of bonds beating stocks is over," he adds.

Tom McManus of Banc of America Securities also is a bond bear. "Something that might be the right idea at the right price is the wrong idea at the wrong price," McManus says. "I'm kind of amazed at the inflows into bond funds. It seems to me that investors will be disappointed again."

Tom Galvin of Credit Suisse First Boston says he's not worried by the recent outflows from equity mutual funds. "People should realize that flows follow performance and don't lead performance," he says. Galvin notes that after the 1987 market crash, there were 14 straight months of outflows from stock funds but the S&P rose 25% over that span.

One reason for Galvin's optimism is heavy mortgage refinancing, which is reducing debt payments and putting cash in the hands of Americans. His firm estimates that consumers will take out $250 billion of cash through refinancing this year as higher housing prices allow homebuyers to get bigger loans with lower rates and extract equity.

Most strategists are advising investors to emphasize defensive sectors such as consumer staples and health care. McManus says it's notable that since the S&P bottomed on July 23 at 797, consumer stocks have outperformed economically sensitive issues. The Morgan Stanley consumer index is up 9% since July 23.

<img src="http://chart.bigcharts.com/industry/bigc..." width=527 height=316>
Consumer non-cyclical index (NCY), Health care index (HCR), S&P500, DJIA 3 YR Chart

One of the strongest stocks in the group is Anheuser-Busch, which hit a 52-week high last week. Anheuser expects 14% earnings growth this year, in part because consolidation in the beer market has allowed it to hike prices. With beer prices rising and stock prices falling, it's no wonder that investors are depressed.

One Market - 12 Views

Jeffrey Applegate - Lehman Brothers

S&P 500 Target: 1075
Time Horizon: Year End

"The last time we had three down years in a row was 1940 to 1942. To think that we could have a fourth year of negative equity returns in 2003 is a very extreme view."

Richard Bernstein - Merrill Lynch

S&P 500 Target: 950
Time Horizon: 12 months

"We were cautious at the start of the year, but we weren't cautious enough. At 32 times trailing earnings, the S&P isn't cheap."

Douglas Cliggott -Brummer & Partners

S&P 500 Target: 750
Time Horizon: 12 Months

"I'd don't think we've seen the bottom. Looking out a year, the best possible outcome for the S&P 500 is that we're at 900 or so -- where we are now. But we could easily be at 600."

Abby Joseph Cohen - Goldman Sachs

S&P 500 Target: 1300
Time Horizon: 12 months

"The risk premium built into stock prices is the highest in 15 years. We thought investors would be more accepting of risk this year. The stock market is undervalued. Those investors with a longer-term view are approaching the market with enthusiasm."

Stuart Freeman - A.G. Edwards & Sons

S&P 500 Target: 1100
Time Horizon: Late 2003

"The earnings recession was a deep one but it's over. Eight or nine of the 10 sectors of the S&P 500 should show earnings growth in the second half of this year. Given the inflation and interest-rate environment, the S&P can trade at 19 to 20 times earnings in a year."

Steve Galbraith - Morgan Stanley

S&P 500 Target: 1075
Time Horizon: 12 months

"I don't find stocks egregiously expensive, especially compared with bonds. There could be 20% upside potential to the S&P to 1050 to 1100 in the next 12 months. It's reasonable to expect that S&P operating earnings next year will run in the mid $50 range."

Thomas Galvin - Credit Suisse First Boston

S&P 500 Target: 1250
Time Horizon: 12-18 months

"Our forecast of 1250 for the S&P 500 in 12 to 18 months clearly is aggressive. People are worried about mutual fund outflows. But after the crash of 1987, there were 14 straight months of outflows from equity funds but stocks rose more than 25%."

Edward Kerschner - UBS Warburg

S&P 500 Target: 1050
Time Horizon: Now

"Most people don't realize that the market is almost never at fair value. I've been doing this for 27 years and the market has never been where I thought it belonged. It's not that stocks are so attractive. It's just that bond yields are so low."

Tobias Levkovich - Salomon Smith Barney

S&P 500 Target: 1000
Time Horizon: Year end S&P 500

"In order to avoid questions about what definition of earnings to use, we're focusing on the S&P price/book ratio. Based on history and the current rate of inflation, the S&P ought to be valued at 3.2 times its book value of 310 [giving a target of 1000."

Thomas McManus - Banc of America Securities

S&P 500 Target: 1000
Time Horizon: Year end

"The S&P 500 seems to be finding support in the 800 range. It's interesting that the leadership coming out of the market bottom in July has been from defensive stocks like consumer and health care, not economically sensitive issues. Tech, in particular, has been weak."

Jim Paulsen - Wells Capital Management

S&P 500 Target: 1175
Time Horizon: 12 months

"I think we're at the low end of a trading range. But people have to realize that in range-bound markets, there are great opportunities. In the next 12 months, we could see the S&P at 1150 to 1200."

Edward Yardeni - Prudential Securities
S&P 500 Target: 1175
Time Horizon: 12 months

"We're still using 1100 as our target for year-end 2002. That's still a pretty optimistic outlook. With a 4% Treasury yield and my view that inflation isn't a problem, you could see a P/E rally the way we saw a P/E crash."

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

.....Jen

-- posted by Jen_

.
http://www.siliconinvestor.com/stocktalk...

Top 479. Nov 1, 2002 9:03 AM

» Kirk - Thomas Kurlak - Longtime Bear Jumps Back Into Tech

.
another long time bear getting bullish
This Longtime Bear Jumps Back Into Tech
>
> By Thomas Kurlak
> Special to RealMoney.com
> 10/31/2002 01:16 PM EST
> Click here for more stories by Thomas Kurlak
>
>
> It's not too early to get ready for the next up cycle. I'm now starting to
> build positions -- specifically, in semiconductor and cell-phone stocks.
> Remember that this down cycle in tech started in cell phones, then went to
> personal computers and lastly affected telecom equipment. For the past few
> months, I've been seeing a pickup in cell-phone sales, which Nokia
> (NOK:NYSE
> ADR - news - commentary - research - analysis) recently confirmed.
>
> Soon, I expect we'll be hearing about better PC sales. They usually pick
> up at year-end, and despite weak consumer sentiment, I expect the same thing
> to happen this year because of the length of this slowdown and better product
> pricing. Perhaps as more capacity is burned off, we may even hear of
> improving telecom sales by late 2003.
>
> With tech now broadly shunned by investors and most observers and analysts
> positioned for more bad news, now is probably a good time to begin leaning
> into the negative consensus. And the best way to do that is with
> semiconductor stocks: They supply parts to all tech sectors, so they can't
> miss a recovery, no matter where it starts.
>
>
> Leading the Way

> For my money, Intel (INTC:Nasdaq - news - commentary - research -
> analysis) will lead again in this cycle because of its superior management and
> balance sheet and its still-high profitability. (It's had a 10% net margin in a
> recession.)
>
> Despite the poor reception that Intel's third-quarter earnings initially
> received from the Street, I was encouraged by its very good inventory
> control. In fact, I was aware of inventory buildup over the summer, which
> was worked off by quarter-end. This caused the gross margin to decline
> below 50%, as wafer starts were cut back and the factories ran at lower output
> levels. But Intel shows good cost control and is poised for strong
> gross-margin improvement on higher sales. Plus, a PC replacement cycle is
> overdue.
>
> Applied Materials (AMAT:Nasdaq - news - commentary - research - analysis)
> is completing its fiscal fourth quarter this week, and results will be
> depressed as expected. More layoffs are likely soon, too.
>
> But Applied Materials lags the cycle, as does any capital-goods company.
> As the No. 1 semiconductor capital-equipment supplier in the world, Applied
> Materials just can't miss a new semi cycle. I think problems at the big
> foundry customers in Taiwan are overplayed as a negative: It appears that
> these chipmakers are beginning to lag somewhat on new technology
> implementation due to the severity of the downturn. But this means only
> that the integrated manufacturers will need to do more of their own investments
> in new capacity. Too much concentration of capacity in Taiwan isn't good
> for the industry anyway.
>
> With semiconductor inventories low going into the fourth quarter and wafer
> starts being cut, it seems certain that lead times will increase. Once
> lead times go out, orders will jump quickly as customers move up their buys to
> prevent an out-of-parts condition.
>
>
> The Wireless Connection

> I don't follow Nokia as closely as Intel and Applied Materials, but the
> company has clearly retained its No. 1 worldwide position. Its newest
> phones are quickly catching on with consumers just in time for the holiday
> shopping season. The phone with a built-in camera that can send digital pictures by
> email wirelessly is going to be a big seller this year.
>
> The worry about when third-generation technology takes off isn't too
> important right now, because 2 1/2 G is starting to carry the load anyway.
> What matters most is that the handset market is getting off the 400
> million plateau and growing again. Most importantly, it's becoming apparent that,
> in the telecom world, wireless wins in the long term. For the first time that
> I can remember -- and perhaps ever -- the number of phone lines into homes
> is decreasing. More people are adding phones by going wireless, and in-home
> wireless networking adds to demand for the technology.
>
> Valuations are now a stumbling block for investors looking at tech. But
> earnings multiples are always highest at cycle lows, so look at
> price-to-sales. Here we see that Intel, Applied Materials and Nokia recently
> fell to the 2-3X range, associated with bear-market lows in the past.
>
> So, after a year and a half without tech in my portfolio, I'm getting back
> in. I'm looking out three to five years for three to five times my money.
> I see this period as another one of those great opportunities that come along
> in the market every decade.

-- posted by Kirk

Top 480. Nov 2, 2002 9:43 AM

» JackSwanson - Look what Donald Rowe is forecasting

Its a little different than the bad news bear Stinker isn't it!!!!!!!

FORECAST ONE
1. The Dow Industrial Average and the S&P 500 will post new record highs by the end of 2003. The Dow Average will close above 12,000 and the S&P 500 will close above 1,500.
FORECAST TWO
1. A Global Economic Boom will begin in 2003. The new bull market will soar well past the 1995–2000 bull market highs.
FORECAST THREE
1. Inflation will fall to historic levels in 2003.

-- posted by JackSwanson

Top 481. Nov 2, 2002 9:57 AM

» zbidnizmin - Re: Look what Donald Rowe is forecasting

In response to message posted by JackSwanson:

HAHAHAHAHAHAHAHAHA! HOHOHOHOHOHOOOOO! (wiping away tears). Cut it out, Jack! Yer killing me!

-- posted by zbidnizmin

Top 482. Nov 2, 2002 10:08 AM

» SteveT - Re: Look what Donald Rowe is forecasting

In response to message posted by JackSwanson:

We will know in only 14 months if he is right. I suspect the actual numbers will be in between stinker and Donald. If the S&P don't close 2003 over 1000 maybe he will win your award? smile

-- posted by SteveT

Top 483. Nov 3, 2002 12:06 AM

» Happy - Re: Re: Look what Donald Rowe is forecasting

In response to message posted by SteveT:
I am not aware of any level that Brinker is predicting. I have never heard Brinker say, " the SP500 will be at X level by the end of 2003 etc."
The swarmy Brinker never goes out on a limb like this.

-- posted by Happy

http://www.siliconinvestor.com/stocktalk...

Top 484. Nov 3, 2002 6:47 AM

» Kirk - Zeev Hed Calls the Top in 2000

.
This guy in Silicon Investor has gained quite a following. I believe much of it is due to this very good prediction back in 2000 FOR a bear market near the top AND his prediction that the bear would last longer and go deeper than many (like Brinker and Don Hays) thought. BTW, Zev has been bullish for this latest rally we are in.

To:George S. Cole who wrote (47738)
From: Zeev Hed Sunday, Apr 23, 2000 11:30 AM

George, I did not respond to you on Don Hays' prediction of a Naz at 1400 before the end of this year. I believe that Don contradicts himself, in one place he is forecasting a huge bear market, but in essence assumes the bottom will be reached quite rapidly, that is not how bear markets and changes in psychology traditionally evolve. Psychology takes a long time to change (as Don himself notes), and psychology by itself needs a nudge from either the economic or the monetary environment, but preferably, both. Now, we have had the nudge from the monetary environment for quite some time, but I do not think that so far it has affected liquidity much. Yes, some measures of money supply have contracted (or actually, I should say the growth rate has contracted and in some cases, become negative, but the actual aggregates are still above the levels of a year ago). The problem is that we are a much more open world economy than in the past, and until the bulge in liquidity injected by the liberalization of the Japanese Postal system is absorbed (and that may take a good additional six months), the efforts of the FED's will only be partially successful, IMTO.

I can summarize my "thesis" of a continuation of the bull market, past the next nadir (probably late May for a new low on the NAZ?) till about November or year end and a bear market next year based on few basic principles:

Political:

a. Election year, the current government has a lot of freedom of injecting liquidity into the market so as to create the "good feelings" required for them to stay in power ("it is the economy, stupid" still works). That will be in effect over the next few months once the campaign resumes in earnest. That effect will be absent after the election.
b. Recognition by any new administration (R or D), that market excesses must be wrung out of the system, and it is best to take the bad tasting medicine early in the four years cycle.

Economic: (just two, there are many more, including housing slow down, car market saturation etc.)

a. This year's earnings will still look pretty good as compared to last year due to the extremely high growth rate of the economy in the past few quarters. Next year's comparison to this year will be difficult, as the growth rate slow down induced by the Fed, finally takes its toll on earnings.

b. The BTB ratio of the Semi equip sector often peaks few months before the whole chip sector peaks (first the equip makers than the chip makers themselves), it has reached 1.44, which i believe is a record high, it cannot go much higher than that. Thus I get a peak in the equipment sector sometime in the second or third quarter this year, followed by a peak in the chips and the rest of technology late this year or early next year.

Liquidity:

The FED's efforts to soak liquidity are currently balanced domestically by the budget surplus (I know many believe it is a phantom surplus, but the fact remains that the treasury is in the market buying long term treasuries), as the economy slows, these excursions by the treasury will wane. This current excess liquidity coupled with excess liquidity discussed above, will fuel the "last gasp" in this Bull for a good two to three quarters, and after that, will dissipate.

Valuation: there is no question in my mind that current valuations by any historical standard are high, but I do not know how much higher they could go (the Nikkei at its top sported a PE of 80, and many claims that due to Japanese accounting principles, these PE were understated and were actually much higher, so a PE of "75" as Hays claim, may not be the peak of the mania.

Once the three forces cited above combine to break the bullish psychology of the market, then we could be ready for a bear market, and not a three months severe correction. These are some of the major reasons my long term outlook is a market locked in a trading range of 6000 to 13,500 on the Dow and possibly a range of 1900 to 5200 on the Naz. It will take a good many years (five to ten, maybe 16 like in the 1966 to 1982 period?) before the growth in earning finally catches up with current valuations.

Zeev

PS, having said all this, I still will be looking at the technical underpinnings for actual timing and corrections to this broad range view of the markets (VBG). You got to remember, those turnips reserve the right to be wrong, change their mind, and change their mind often.

-- posted by Kirk

Top 485. Nov 5, 2002 3:43 PM

» KLR - Cramer news program gets the ax

In response to message posted by Kirk:

Cramer news program gets the ax (TSCM) By Russ Britt

Premiere Radio Networks will cancel "Jim Cramer's Real Money," a one-hour daily talk show, MediaWeek.com reported Tuesday. The cancellation of Cramer's show is part of a plan by Premier to cut 15 programs that weren't profitable from the company's lineup.

The cuts will result in the loss of 100 jobs by the end of 2002. "Real Money" was syndicated by Premiere in summer 2001. Cramer is founder of TheStreet.com (TSCM) , an online news service that competes against MarketWatch.com, the publisher of this report.

-- posted by KLR

Top 486. Dec 5, 2002 1:11 PM

» Kirk - Radio Celebrities Draw Ire From Financial Advisers

.
Sent via amail from a "competitor". smile

Radio Celebrities Draw Ire From Financial Advisers

By LYNN COWAN
http://sg.biz.yahoo.com/021204/72/35dmz....

Of DOW JONES NEWSWIRES WASHINGTON -- If the bear market and headlines about Wall Street business practices weren't enough to make financial advisers' lives miserable, then personal finance radio show hosts may finish the job.

When they're not dishing out advice for free, some of the nation's top personal finance celebrities like Suze Orman, Ric Edelman, Bob Brinker and Ken and Daria Dolan are driving ordinary financial advisers crazy. Several, like the Dolans and Orman, dis brokers and planners on air. Most provide snippets of advice to people who have explained their financial problems in 30 seconds or less. And some of their advice can be controversial.

"I can only listen when I'm alone," said Mike Gorman, a financial planner at Wiiken and Gorman in Petaluma, Calif., whose wife banned him from listening to financial radio programs after he had too many angry outbursts. "It kind of drives me crazy, because Brinker in particular gives advice without knowing the whole picture of the people he's talking to."

Michael Dubis, president of financial planning firm Touchstone Financial LLC in Madison, Wisc., said the more celebrity financial experts there are, the more time he has to spend listening to them so that he knows what his clients are talking about when they repeat on-air advice. His wife, too, hates it when he listens because his reaction is so vociferous.

"A 30-year-old calls and lays out the variables, and gets advice, and the 65-year-old retiree listening at home recognizes one variable and wants to act on it. But there's no way you can apply the same solution to different people," said Dubis. "I often think of calling and saying, why are you giving this advice? But I know I'll be screened out."

For many financial advisers, listening to celebrity money mavens is the equivalent of a marriage counselor trying to sit through Dr. Laura Schlessinger's relationship show without breaking the radio. Some controversial financial advice doled out over the years includes the assertion from Washington, D.C., radio personality Edelman that investors shouldn't diversify in their company retirement plans, and that they can successfully take out home equity loans to invest in the market. Orman, who is heard on more than three dozen stations and broadcast on CNBC television, has taken her lumps for advocating that nearly everyone should have a trust, and for selling long-term care insurance and other products on her Web site.

Even The Dolans Get Cold Calls.

Brinker refused a request for an interview about his radio show, [Kirk Comment: COWARD! ]but Orman and others defend what they are doing, saying they provide unbiased and free information to an investing public that sorely needs help.

Orman, who has also authored several bestsellers, including "The Courage To Be Rich," said she sells the long term insurance product on her Web site because she believes in it, clearly discloses the commission she makes on the product, and doesn't push it during her radio program. Edelman, who has also penned several bestsellers, including "Ordinary People, Extraordinary Wealth," said he rarely receives criticism from other financial professionals, and that many advisers provide his materials to their clients.

Edelman, a financial planner who founded Edelman Financial Services Inc. in Fairfax, Va., is one of the few radio personalities who advocates that listeners should always use a professional broker or planner to manage their portfolios. Orman and the Dolans, all of whom were stockbrokers in prior careers, say a good financial adviser can be invaluable. But they take great pains to warn that there are also many rotten ones out there.

The Dolans, a husband-and-wife team whose show is broadcast on more than 200 radio stations and who are releasing their latest book, "Don't Mess With My Money," in January, recently began a program relating one cold call they received at home from a broker who promised a 75% return on the investment he was pushing.

"I said, 'Young man, are you actually telling that to people?'" Ken Dolan recalled. "The phone line went dead. That is what America is coping with. "

Orman said she cautions people about the profit motive behind many financial advisers' recommendations, and behind Wall Street firms in general. Particularly irksome to Orman are the fees that some discount brokerages are levying against investors who don't trade in the current bear market, and the push by insurance salespeople to get investors into ill-suited variable annuities. She adds that she is deluged by e-mails from naive investors - some of whom are recently widowed or divorced - who feel preyed upon by the insurance and securities industry.

That kind of stuff bothers Orman, she said, "because people deserve better than this."

While Orman and the Dolans say financial advisers are useful for some people, they also maintain that investors who educate themselves and are willing to devote the time to managing their own finances can do just as good a job, if not better. Edelman begs to differ.

"Nobody should do this on their own, ever," said Edelman. "The first problem is, you're too close to the situation. You cannot look at the situation objectively. Second, you don't know what you don't know. There's no way you can know all aspects of personal finance."

Edelman advocates that all investors need a financial adviser, but that radio programs help educate them to ask the right questions.

"It's not that I dispute or disapprove of what Suze or the Dolans do, it's just that it's ridiculous to assume you can listen to a radio show and live happily ever after," said Edelman. "Yes, read books, listen to these shows, and use all that information as a basis for your conversation with your financial planner."

Competition Or Coexistence?

While they don't think that everyone needs a financial adviser, Orman and the Dolans agree that their programs should ultimately help the securities industry by creating better educated investors. The problem is, even the celebrities can't agree on the quality of the education listeners are receiving on air.

"Some people on radio and television are dangerous, and there are several of them. Some people doing radio advice are just into pop finance," said Ken Dolan, refusing to name specific shows that he feels are dangerous.
[Kirk Comment: I wonder how many of these shows were telling people the business to business internet sector was a great investment right at the top? ]

The Dolans believe that advice given by people who are currently running financial services firms is too biased.

"Let's face it, they never have anything bad to say about the business. I think those people should be banned from the airwaves," Daria Dolan said.

Practicing financial planner Edelman doesn't see it that way. Financial celebrities who aren't in the day-to-day business have their own set of conflicts, whether they are trying to make money off their books or investment products they lend their names to, he said.

"They are authors and talk show hosts who sell products. They regard themselves as being in competition with the financial advisory community," said Edelman. "I don't agree. I think they are complementary. I think they can peacefully coexist with the financial advisory community."

-- posted by Kirk