RtS, this interview with 88 year old Seth Glickenhaus rings true. online.wsj.com
You must read the whole thing. Tell me if you want it e-mailed.
Excerpts
We're in a consolidation period, says an 88-year-old contrarian, and a depression lies ahead
An Interview With Seth Glickenhaus -- Not since the 'Thirties has the proprietor of Glickenhaus & Co., a Manhattan investment firm with more than a billion dollars under management, seen a bear market like the current one and, at age 88, Glickenhaus has just about seen it all. Many years of discerning the ins and outs and the ups and downs and the whys and wherefores of Wall Street have imbued Glickenhaus with a knack for sensing seismic shifts in the stock market.
That, along with careful research and a value discipline, has allowed him to deliver outstanding returns for his private clients through thick and thin. His longest-running (started in 1981) fund, the Dorchester Fund, has gained an average of 16% a year. Overall, his shop has produced average composite returns of 16.1% a year. And after toughing out the bubble years of 1998-1999, Glickenhaus showed he hadn't lost his touch; his portfolios gained 16.7% in 2000 and were flat in 2001, against two losing years for the Standard & Poor's 500. Always one to tell it like it is, Glickenhaus doesn't hold back now.
--Sandra Ward
[snip]Q: How low do we go?
A: The Dow could go down to 8000, possibly to 7000 or 6000, within a year or two. The multiples are too high and the averages are too high.
[snip]Q: How does this compare with other bear markets?
A: It's an entirely different market than any that has existed since the 'Thirties. The bear markets we've had for many years now have been very short in duration and often had a crisis involved. In the 'Sixties, the Cuban crisis triggered it, then there was the oil embargo in the 'Seventies. There were several wars. But this is different. This is a full-fledged business-recession-inspired bear market. This is going to be comparable to what happened in the 'Thirties.
[snip]Q: Do you put technology companies in your group of troubled industries?
A: No. Technology represents the best hope for the country. We are going to continue to use technology for production and manufacturing. It is an industry that will grow from this level. Unfortunately, technology is available to competing companies abroad
[snip]Q: Any others that come to mind?
A: Stocks like Altera and Texas Instruments have had huge clobberings, and their businesses are beginning to come off the trough. They are in a real growth area. They are dependent on some capital spending, but with all the huge military spending our government is doing -- needless spending in the wrong direction -- a good percentage is going into the technology for various armaments. These stocks are either a buy now or will be a buy a little bit below this. Nothing is clear-cut, but Texas Instruments is down to 23 from 99 and it is a beautifully run company with great products that are going to grow into the future, and its earnings are leveraged enough so, though its price/earnings multiple looks high today, it can turn around very quickly. You have to look for companies that are in industries that have abnormally high growth that will help them offset the recession/depression I see coming.
Q: You think this could be turning into a depression?
A: Not only could be, it will be. We are not there yet -- the unemployment rate isn't even at 6% yet -- but it is going to go much higher.[snip]
G. |
