Thread--http://www.smartmoney.com/smt/pundits/news/index.cfm?story=200004131
April 13, 2000
The Gurus Spot Some Bargains
By Stacey L. Bradford
IN THESE WILD and nervous-making times, you could argue that the corner bar is the best perch from which to observe the markets. But that doesn't mean that the guy on the stool next to yours is the best source to turn to for a view on where the markets are headed next.
We prefer to ask the pros (and we don't mean the bartenders). We checked in with a few of the SmartMoney.com pundits for their take on the current market turmoil, and their predictions of what's ahead.
With the Nasdaq now well into bear territory, we turned first to our Nasdaq expert, Joseph Battipaglia of Gruntal. Even with its recent 25% plunge, he is still feeling pretty optimistic about the Nasdaq. Where else, he figures, can investors buy 27% earnings growth?
In fact, Battipaglia now says the Nasdaq is oversold, and he'd be buying tech stocks. He still forecasts that the Nasdaq will end the year trading at 5500. That's an increase of nearly 50% from here.
Remember, he says, the Nasdaq shot up for 15 straight months. And it soared 24% just from the beginning of the year through March 10. Battipaglia says the historical pattern for the Nasdaq after such a run is for a sharp reversal. "This is no difference," he says. "In the end the correction should be justified as washing out speculative excess."
Long-term investors shouldn't be spooked. Battipaglia expects stock prices to be broadly higher by year end and says the volatility should subside by the second half of 2000. He sees the Dow Jones Industrial Average closing out 2000 at 12500 and the broader Standard & Poor's 500 finishing up at 1625.
And for investors who have some new money to put into the market, Battipaglia is recommending some large-cap tech names. "Microsoft (MSFT) has become cheap," he says. "I would get in there and buy these quality names. I'm not afraid of a Qualcomm (QCOM) and JDS Uniphase (JDSU)."
What about a short-term outlook for the market? Now we turn to our technical analyst, Ralph Acampora of Prudential Securities. He's feeling pretty optimistic, too. He says the Nasdaq is extremely oversold and ready to rebound. But he says so much damage has been done to confidence that many investors will be cautious for some time. But the good news is that traders are just moving their money around rather than taking it out of the market.
"We think the severity of the decline to date in the OTC arena is part of the rotation that is needed to keep a long-term bull market alive," Acampora says. "This shift is not without pain, in fact quite a bit of backing and filling is required in order to repair the damage that has been inflicted upon this market."
In this rough market, Acampora says investors should be selective. He likes a number of Old Economy companies like Avon Products (AVP), USX US Steel (X) and Goodyear Tire & Rubber (GT). In the New Economy, he's recommending Tandy (TAN) and America Online (AOL). (For more pundit stock picks, click here.)
And then there's Byron Wien, who has been forecasting a Nasdaq correction for some time. He was right, of course ? and he says the index still has further to go. Wien warns that any bounces are likely to be fleeting for a while. Still, even Wien doesn't think the Nasdaq's reversal is a sign of a long-term bear market. And he says the weakness has created some compelling buying opportunities.
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