HERE IS SOMETHING I JUST POSTED ON THE RB BOARD
HI TIGRESS AND ALL--Below is an interview that took place on Jan 4th--Paul Kangas from Nightly Business Report doing the interviewing=========MSN recommendation.
Market Monitor- Robert Drach, Editor, "Drach Weekly Research Report"
4 Jan 2002, 10:00pm ET
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PAUL KANGAS: My guest Market Monitor this week is Robert Drach, editor and publisher of the "Drach Weekly Research Report." Welcome back to NBR, Bob, good to see you.
ROBERT DRACH, EDITOR, "DRACH WEEKLY RESEARCH REPORT": Thank you, Paul, good to be with you again.
KANGAS: Here we are three days into the new year and three days of gains on Wall Street. Do you think it's just a temporary January effect rally, or the start of something big?
DRACH: I think this is the January effect category. I think it's your last push off the September lows. When this one peaks out here in mid to late January, you'll get another correction on the down side.
KANGAS: So the institutional investors are just putting some fresh money to work on the buy side, is that it?
DRACH: Yes, as far as I can see, it's the only support mechanism it has at this juncture.
KANGAS: And you're not too impressed with what you see in the way of economic reports about this comeback in the economy supposedly?
DRACH: The earnings projections we see aren't that great. I think your entry point for this year is going to be after the first correction, 8 to 10 percent down from whatever level that is.
KANGAS: OK. But you think the year overall will be on the up side?
DRACH: Probably because it's rare the market loses three years in a row. It's only happened twice before this century.
KANGAS: Well, we have a graphic here that shows your results in the year 2001 compared to the major indices, and you're the only one that had a gain of 7 percent in our model "NIGHTLY BUSINESS REPORT" portfolio. Congratulations, a very nice performance.
DRACH: Well, I didn't think it was going to be an easy year. I thought it would be profitable, because they all are...
KANGAS: But let's go back over the last two years, 2000 and 2001, and see how you did. Drach NBR model portfolio up 42 percent, all the majors way down. Once again, very impressive, Bob.
DRACH: Well, thank you. But 2000 was quite easy. And it shows the value of staying with high quality stocks that are relatively discounted.
KANGAS: OK. Now, do we have that same situation now? I know you don't like the market until we see an 8 percent correction or so, but are you doing anything now on the buy side?
DRACH: Well, there's always something relatively discounted with the caveat that it's not the best entry point. Your high quality drugs would be the top group, the Schering-Plough (NYSE:SGP), Merck (NYSE:MRK), Pfizer (NYSE:PFE) types, and maybe in the insurance category, American International Group (NYSE:AIG) and AFLAC (NYSE:AFL). But the big difference between the market now and say September was that you don't have professional price support here.
KANGAS: When you say professional price support, for those viewers that aren't familiar with what you consider professional price support, explain what that is.
DRACH: Well, it's certainly not your conventional institutions. I'm talking about corporate insiders and exchange members, primarily the specialist system on the New York Stock Exchange.
KANGAS: And right now they're not doing any buying that impresses you?
DRACH: There's no support. It's not inhibited selling or anything, it's just that's support lacking. And also next year I think it's going to be erratic because you're not going to get Federal Reserve support. You should have interest rates increase. The Federal Reserve spent too many interest rate bullets too soon, so you're just not going to have a stellar market, I think. You're going to have an erratic pattern that will be easily tradable and I think it will be easily profitable. I think the side will easily make double digits next year - this year.
KANGAS: And when we see an 8 to 10 percent correction sometime this spring, apparently, is when you think it's going to happen, that's the real entry point to come in with all of your ammunition, correct?
DRACH: I would think so, yes.
KANGAS: And at that time we can't predict what the stocks that are the best bargains are, but right now you do like some of the depressed pharmaceuticals?
DRACH: Yes, you always want to move to depressed high quality stocks. That gives you consistent profit ability. That's why the side's so far ahead is profit consistency.
KANGAS: When you were - we just have 30 seconds left. When you were with us last July 27 you gave us Hewlett-Packard (NYSE:HWP), Interpublic Group (NYSE:IPG), GE (NYSE:GE), Walgreen (NYSE:WAG) and Emerson Radio (AMEX:MSN). Every one of those is up at this stage except for GE. Do you still like them all?
DRACH: I would switch over to the ones that are relatively depressed, constantly rotate. But GE I would still find in that category as acceptable.
KANGAS: Acceptable but the rest of them have had their major move?
DRACH: I'd take the money where you can get it and move over to what's relatively depressed, in that way you get the consistent profitability. That's why the side's sold.
KANGAS: All right, so pick and choose, be selective, that's your motto, I guess.
DRACH: Absolutely, and stay high quality.
KANGAS: Thanks very much, Bob, my guest, Robert Drach, editor and publisher of the "Drach Weekly Research Report."
===============Tony==================== |
