Fred Hickey gets respect from the Wall Street Journal - an excerpt -
>> Big Bear Studies the Past, Tells Buyers to Hibernate
By SUSAN PULLIAM
Staff Reporter of THE WALL STREET JOURNAL
Sure, it has been a rough year in the stock market. But we haven't seen
anything yet, at least in the view of Fred Hickey, who publishes a widely
followed, and very bearish, technology-stock newsletter.
Just how bad could it get in Mr. Hickey's gloomy view? Try the Dow
Jones Industrial Average at 5000, the Nasdaq Composite Index below
1000 and the Standard & Poor's 500 at about 600, about half the current
levels for all three indexes. And that is just for starters, he says.
....................
Mind you, Mr. Hickey, who composes his
missives in Nashua, N.H., and dispatches them via
the U.S. Post Office, is a veritable grizzly
compared with the average bearish investor. And
his views are a far cry from the ones generally
found on Wall Street, which mostly says that the market is near its bottom.
But some well-timed -- albeit dire -- prognostications, particularly
concerning technology stocks, have earned Mr. Hickey a following not
only among big investors on Wall Street but among small investors as well.
"Nothing will save the computer industry" from high saturation levels, he
told subscribers in March 2000, a prediction that was borne out later in the
year when demand for computers plummeted. Later in the year, he warned
for the first time in an interview that the Nasdaq would drop below 1000 in
the coming year.
Now, Mr. Hickey's bleak predictions made at the height of the tech bubble
are starting to look prescient. And -- in true bear fashion -- Mr. Hickey is
convinced the worst is far from over. "I don't think anyone knows if we are
going to have a depression," Mr. Hickey says. "But I think, for sure, we
are going into a recession," he says. "It all depends on where we end up on
the scale between recession and depression. It's clear we are going to be
in this for a very long time."
So, fine. The good times are over. But what does that mean for investors?
Is it too late to sell? Too early to buy? Too scary for words?
All of the above, to a certain extent, in Mr. Hickey's view. While it may
seem a little late to sell, especially if you buy the consensus view on Wall
Street, Mr. Hickey believes you could still save a bundle by getting out
now. That is especially true for the Dow, which has farther to fall than the
Nasdaq, according to Mr. Hickey, making it worthwhile for investors to
consider bailing out.
But, he cautions investors, "Don't do what most do, which is to sell at the
bottom. We haven't had capitulation yet," he says, suggesting that the
worst time investors could choose to sell would be in a panicky, rapidly
declining market.
On the other hand, he says, it is way too soon to be bargain hunting. "I've
been telling people it is too soon to buy. You should be in cash. There is
nothing wrong with a 5% money-market fund when your mutual fund could
be down 50%. I personally have no money in the market in this time of
turmoil. I don't want to be in a market that is as overpriced as this."<<
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