Acampora vs Tice; Courtesy - Barron's
Monday, October 13, 1997
The Ralph & David Show
A bull sits down with a bear in Chicago
By Sandra Ward
On the surface, no two market seers could be further apart than Ralph Acampora and David Tice. Arranged along the light spectrum, Acampora appears red, Tice violet. The two presented their contrasting views last week in a panel discussion at the Chicago Board Options Exchange, held to help promote the launch of index options on the Dow Jones Industrial Average.
No one appears more bullish than Acampora, a market technician at Prudential Securities who became a folk hero of sorts when he forecast 7500 on the DJIA in 1994 when the Dow was at the 4000 level. Not only did the barometer scale those once-unimaginable heights, it did so a full year ahead of Acampora's schedule. Now he sees 10,000 by next June. "This is a different beast," he declares. "It is a beast and it's going higher." He sees strong parallels with 1962-66, another dream period when slow growth and low inflation provided the one-two punch that pushed the market higher despite unsettling external forces that included a Presidential assassination and Cold War crises. Furthermore, by his analysis, the bull market is a mere three years old, not seven -- or 15 -- as many other market watchers contend. It makes sense, if you believe as he does, that 1994 represented a "stealth" bear market. And there's "at least another 12 months left" to the current bull market. There's no sign yet, in his view, of the speculative excesses that characterize tops. "Buy on the dips -- if you get the dips," he exhorts.
Expecting some choppiness amid earnings season, Acampora sees the market trading between 8250 and 7600 through the next few months, but ending the year at 8750 before heading to 10,000.
No one seems more bearish than Tice. Or as he calls himself, "the mosquito at the picnic." Best-known as an astute dissecter of corporate financials -- he's the publisher of the Behind the Numbers analytical service -- and a strict adherent to Graham & Dodd principles of value investing, Tice lately has taken on the role of a Chicken Little. While the sky hasn't fallen yet, the performance of his Prudent Bear mutual fund has -- like a rock: So far this year, it's off close to 18%, compared with a rise of nearly 31.5% in the S&P 500.
That's because 75% of his positions are on the short side. But Tice sticks to his principles (though he admits to the occasional hedge using call options on the S&P 500). Things are not different, he maintains, just extremely overvalued. "The market is the most extended it's been in any period in history," says Tice. "We are currently in a mania." He puts the Dow at between 3000 and 4000 in 18 months. "We're at the end of a bubble." The culprit: corporate earnings chicanery, exposed.
Yet, a little scratching beneath the surface reveals that Acampora and Tice are pretty much on the same wavelength once you get beyond June 1998. Indeed, the working title of Acampora's latest report is "The Prudent Call." If the market reaches 10,000 by summertime, as Acampora predicts, that's the whole bag of tricks as far as he's concerned. After that, look for a 20%-25% correction by December. Viewed in that light, the market makes a roundtrip back to 7500 by yearend. And that still leaves roughly six months for Tice's prediction to come true. Or not come true. |
