07/27/01: Market Monitor-Robert Drach, Editor & Publisher of the Drach Weekly Research Report
PAUL KANGAS: My guest market monitor this week is Robert Drach. Editor and publisher of the Drach Weekly research report. Welcome back, Bob.
ROBERT DRACH, EDITOR, "DRACH WEEKLY RESEARCH REPORT": Thank you, Paul.
KANGAS: You know the stock market has been staging rallies with greater frequency lately but it just can't seem to hold the gains very long. What do you think is lacking in the bullpen, so to speak?
DRACH: I don't think you have standard credible data that precedes a significant advance yet.
KANGAS: What are you waiting for? What kind of data are you looking for?
DRACH: The missing link basically is professional support. I'm not talking about conventional institutions. I'm talking about buying support from exchange members, corporate insiders, market makers in general. It's rare for the market to go up without these guys on the long side before it goes.
KANGAS: You don't see the amount of that that you want but is it trending toward an improvement?
DRACH; Not really. But that can change swiftly, unfortunately it's not in place today.
KANGAS: So basically you're not about to go in with both feet at this stage?
DRACH: Well, there's always some... There's always rotational shifts within the market.
KANGAS: Right.
DRACH: But if you're relying on the broadly based averages of course not. I want all the data to be on my side. You don't need the averages to win, you know.
KANGAS: That's true. You've proven that. As a matter of fact, the last time you were with us February 9 of this year, the Dow was up around 10,000, almost 10,800. Now we're below 500. Yet the stock you selected were not bad. You gave us Pitney Bowes which is nicely higher. It was 34. Now it's around the 40 range. You gave us Avery Denisen (ph) at 52, it's about the same. Casey is up nicely. McDonald's and AFLAC are about the same as they were. The only real loser you had was Hewlett-Packard. It was 33. Now it's around 24 or 25. What are you doing with those stocks?
DRACH: I like Hewlett. I sell the ones that go up and go back into the ones that are down are always the highly quality stocks.
KANGAS: Well in that period of time to have any winners at all is pretty good. But speaking of your records you know you've been doing our NIGHTLY BUSINESS REPORT model portfolio since 1995. We have a record of how you've done compared to the popular averages. Look at that. Up 209 percent since May 5th of '95, compared well up from the other major averages. That's good work, Bob. It's on our web site. Now let's look at the number of positions you've taken. 231 of those 217 or almost 94 percent have been profitable. Once again nothing but kudos from us to you, Bob.
DRACH: Well, thank you, Paul. But so much for Index funds.
KANGAS: Well you've proven that.
DRACH; It also shows that you really don't need the popular averages on your side. That's why it's so easy for us to outperform them. There's no reason for the average investor or anybody else to be tied to the popular averages.
KANGAS: Well I know that you like to look for stocks that are deeply discounted from their normal levels. Can you give us a few ideas of what looks that way now.
DRACH: Well, at this juncture I would say, well, Hewlett-Packard obviously.
KANGAS: OK.
DRACH: I would certainly stay there. And two that position is in a gain. In the advertising sector, Inner Public Group.
KANGAS: Oh, yes, they had earnings out. I think that the stock went down on the earnings report.
DRACH: Oh, yes they don't like that one, so I'd buy that one. General Electric and Emerson Electric are also showing some relevant discounting.
KANGAS: OK
DRACH; And in the retail sector, maybe Walgreen and May department stores. There is not a whole lot out there. [INAUDIBLE] avoiding in the financial stocks.
KANGAS: Well and speaking of that, we just have a few seconds left but what about the bond market here?
DRACH: I think it's extremely dangerous. If the market is going to get in another leg of trouble I think it is going to come from the financial sector. The bonds aren't yielding enough today. It's risk rewards has gotten very poor in the bond market. There's very little more the Fed can do. They have spent too many bullets too soon in my view.
KANGAS: All right. Fair enough there. OK, Bob, we'll pay attention to those stocks you mentioned as deeply discounted and good buys at this level. Speaking of good buys, we're going to have to say that to you. Thanks very much for being with us again.
DRACH: A pleasure to see you, Paul.
KANGAS: My guest Robert Drach, editor and publisher of the "Drach Weekly Research Report." |
