I can't imagine why they would fire him with such a fine record. -g- If you want to laugh your ass off, have a look at his "Uncommon Values" from 1999 and 2000:
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7/23/00 Applegate says the summer rally is pausing, and that until the market's leadership is renewed we'll get churning with no real progress.
7/31/00 His research notes stress upside earning surprises. He also says "…with labor costs still rising, perpetuating the need for substitution of labor with capital, and capital spending rising faster than GDP to meet that need, we still look for Tech to provide the leadership going forward."
8/7/00 He forecasts that by mid-year of next year (that's now folks) the S&P would be at 1700.
8/31/00 He says that the rich valuations in the best technology companies should persist for years to come. He got that right, the valuations are still rich. Guess he forgot about the earnings.
Then he says the stock market's positive performance that week, under the assumption that the Federal Reserve will leave rates unchanged at its meeting, was a good sign. "To us, the important messages to be gleaned from this week's market data are that the physical capacity is still increasing and spurts in tech industrial production growth are coincident with Fed tightening," Applegate writes. "This should mean that prospects remain good for a long business cycle getting longer."
Now what the hell does that mean.
He also said that demand for technological product is largely interest-rate insensitive, pointing out that tech spending exploded during periods of rising rates. Gee, looks like he got that right too. Rates are coming down, and so is tech spending. Guess he didn't count on that, though, huh?
8/31/00 - He forecasts a 1600 S&P by year end, and 1,800 by the end of 2001. Must have been smoking some good stuff. He also said investors should overweight in technology stocks because they are the least interest rate sensitive sector of the market. There he goes again.
9/11/00 Current stock market risk remains "well below where it was 10 and 20 years ago", says Applegate, despite the rising share of technology stocks in the S&P 500. (Again, the opposite of the truth.) "Lower risk is mainly the result of good conduct of public policy." He continues to see the Federal Reserve's interest rate policy as the "dominant variable that impacts stock market risk," adding that the outlook for this policy looks pretty good. "Our stock market risk model forecasts slightly lower market risk next year."
10/16/00 The S&P is fundamentally undervalued. "…unless oil goes to $90, it's hard to make an argument we have a serious inflation or valuation problem."
11/1/00 He exhorts investors to stick with tech, advocating a 47% weighting. He cites robust local and global demand, and says tech stocks are cheap, but that selection is important. He says you can't make a good case for value stocks, that growth out performance will return. Investors should plan for it in the fourth quarter.
11/20/00 Applegate reduced the cash position in his model portfolio to ZERO. Forecasts 12% equity returns over 12 months.
12/11/00 Says the market is significantly undervalued.
12/13/00 "Today, 60% of capital spending is on technology," Applegate says. "The spending continues, and that has been a trend in this cycle. I still think overweighting tech is the right call. The primary leadership in this recovery will be technology."
12/18/00 He forecasts a Fed rate cut and S&P 1675 and Dow at 13,000. Financials, short-term cyclicals, and tech will be helped by Fed easing. He says stick with big names that have been down big, like 50-60%, lately.
12/19/00 Forecasts at least 20% return on equities and earnings growth of 7% based on prospect of Fed easing. He says that capital spending is not crumbling, that it's growing at a multiple of GDP. Most tech stocks are undervalued and demand in rest of the world is good.
12/30/00 He says that a significant portion of the correction in the market and in tech sector is behind us and that the S&P 500 is priced 19%-20% below fair value and should move up sharply after such undervaluation. He says that S&P small cap index and Russell 2000 are overvalued, primarily due to reduced Treasury supply. (Huh?) He forecasts that P/E multiple expansion will propel the market forward and that the economy will not head into recession
He projects:
Dow: 12,500 by mid-year; 13,000 by year-end
S&P 500: 1500 by mid-year; 1675 by year-end
S&P 500 profit growth: 7% by year-end
10-yr T-Bond yield: 4.75% by year end
Now THAT's quite a record!
Strangely, in late January of this year he said he had a 30% portfolio weighting in tech. Gee, I wonder how it got from 47% to 30% in two months.
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