Jack Applegate, Lehman Brothers' Chief Strategist
The TSC Streetside Chat:
By TSC Staff
6/24/00 7:58 AM ET
Goldman Sachs' Abby Cohen is Wall Street's resident guru
and DLJ's Thomas Galvin is the financial media's latest
favorite. But market professionals know Lehman Brothers'
chief investment strategist Jeffrey Applegate deserves at
least as much praise for the simple reason that he's been
uncannily right about the market for several years
running.
Applegate has consistently ranked among the top stock
pickers on Wall Street in recent years thanks to his
consistent bullishness on technology stocks. He has been
optimistic about the sector since he became Lehman's
chief strategist in 1995, and hasn't deviated from that
view since.
Having gone through the financial version of hell and
back this past spring with the group, Applegate thinks
the road ahead is a lot smoother. He is bullish overall,
but technology remains his favorite, thanks to a belief
in the sector's continued growth prospects and ability to
positively affect everything from productivity to profit
margins.
In our conversation with him, Applegate used history as a
guide to put April's frightful market action in
perspective, noting the market has had a habit of hitting
a low and then rebounding in advance of the final Fed
tightening. Recent action seems to fit that pattern,
given that the Fed last tightened on May 16, while the
10-year bond hit its nadir on April 10 and the S&P 500 on
April 14.
But whereas a prior model exists for observing the
relationship between financial markets and central bank
cycles, the so-called New Economy is uncharted territory,
he admits. Just a few years ago, for instance, it would
have been difficult to imagine a company such as
Razorfish (RAZF:Nasdaq - news - boards), or a business
model along the lines of priceline.com's (PCLN:Nasdaq -
news - boards), Applegate concedes.
Similarly, new divisions such as fiber optics now account
for a substantial portion of revenues at more-established
tech companies, such as Cisco (CSCO:Nasdaq - news -
boards). He may not know what technologies will emerge
next, but Applegate is confident industry leaders will
rapidly adapt to the changes, and that new bellwethers
will emerge.
Calling the latest business cycle
"extraordinary," Applegate thinks we are in the
same bull market that started in late 1990. Of course,
there will be "risks and bumps" along the way, he
says, but going forward 12 months, stocks should do
better than other asset classes.
Critics might charge that Applegate will playing the same
old note, but those who've followed his advice in recent
years have heard the sweet sound of the cash register
ringing, over and over again.
Participating in the chat were Aaron Task, Eileen
Kinsella and Justin Lahart.
Disclosure: Both Applegate's portfolios -- the U.S.
Strategy Portfolio and the Virtual Economy Portfolio --
are also Lehman Brothers Asset Management products. In
short, Lehman is long these stocks. |
