Don't Miss the Forest Stocks for the Trees
thestreet.com
By Justin Lahart
Associate Editor
10/29/2001 02:55 PM EST
If you're like most people, no sooner does someone start yammering about paper and forest companies than you have to stifle a yawn.
Who wants to think about these outfits when you could be throwing money into the company that has "The Next Jack Welch" at its helm, or when there's just been a report detailing "The Coming Rally in Chip Stocks"? Paper stocks in general have been dead money for so long that most investors have forgotten they even exist.
But all that is part of the point. The best time to invest in something is not when everybody hates it, but when hate has given way to a lack of interest. People forget, but money market funds -- not stocks -- were the rage when the bull market started in the early 1980s. Technology stocks were all the rage in the 1990s, but people forget that in the early part of the decade, Wall Street firms were cutting away at tech research.
Paperless Society?
Lately, it has been paper analysts who have been getting dropped from research departments. Over the past four years, for example, the number of analysts covering International Paper (IP:NYSE - news - commentary - research - analysis) has plunged to 12 from 18, according to Thomson Financial/First Call. Small wonder there -- trading volume in the company and its brethren has been tepid. Average daily volume in IP has fallen 14% from last year. Boise Cascade's (BCC:NYSE - news - commentary - research - analysis) is down 10% and Weyerhaeuser's (WY:NYSE - news - commentary - research - analysis) is down 21%. Meanwhile, combined average daily volume on the New York Stock Exchange and the Nasdaq Stock Market is up 12%.
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Onto the typical cyclical upturn, says Morgan Stanley strategist Byron Wien, add the investor neglect for the basic materials companies in general, and you could end up with something powerful. They make up for only 2.6% of the S&P 500's market capitalization these days |
