08/04/00:"Market Monitor"-Robert Drach, "Drach Weekly Research Report"
PAUL KANGAS: My guest market monitor this week is Robert Drach, editor and publisher of the "Drach Weekly Research Report" and welcome back Bob. Great to see you.
ROBERT DRACH, PUBLISHER, "DRACH WEEKLY RESEARCH REPORT": Good to see you again, Paul.
KANGAS: You know it seems that the stock market is having a hard time sustaining any clear cut trend in either direction these days. Is it the summer doldrums or is it something else?
DRACH: Well, at this juncture, I don't think you have any credible data that perceives either major advance or decline.
KANGAS: So we're going to see some more of this for a while.
DRACH: Well, I don't know how much longer you going to see it, but it's been going on since basically the end of March.
KANGAS: And I know the data you look at, like what the specialists are doing, which side of the market they're on, what else?
DRACH: What the Fed's most likely to do or the impact of the Fed that hasn't worked its way through the economy.
KANGAS: Well, what do you think the Fed is influenced to do after today's report?
DRACH: I think they'll take off till after election.
KANGAS: OK.
DRACH: And the exchange data is neutral. You have a lot of sectors in the market that are too high. You also have some that are too low. So basically we move into 50/50 basically. No reason to abandon it and no reason to be overly aggressive.
KANGAS: You think we're going to see a lot of corporate earnings warnings continue?
DRACH: Yes. I think economy has slowed. But again, it's all relative to price. So you want to play individual issues at this juncture.
KANGAS: That's a real stock-pickers market.
DRACH: Oh, yeah. The last time we were here in February, it was very easy.
KANGAS: You were very bullish at that time. Let's go back over that. You gave us 12 buy recommendations, everything from Dollar General (DG), May Department Stores (MAY), Albertsons (ABS), Schering-Plough (SGP), Genuine Parts (GPC), Illinois Tool (ITW). Out of the 12, eight are now higher. Some of them very much higher. Only one down and that was First Tennessee Corp. Three basically unchanged.
DRACH: But basically getting back to March, we called about half of those to be straight. And it was easy then. You don't have the data now. Just wait for the data to come in. It could develop quickly, but it's not in place now.
KANGAS: You know, I think all of our viewers should know that since 1995, you have been managing on a day-to-day base basis the "NIGHTLY BUSINESS REPORT'S basic timing stock market portfolio, as featured on our web side. And we have a graphic of your results. Now, that is pretty impressive. Look at this. Out of 192 positions you've taken, 178 have been profitable. Look at the total gain, 131 percent over that period of time, annualized gain 25 percent. Congratulations Bob. I think you've done a great job.
DRACH: Well, thank you. But this is very elemental. It actually applies to this market, because all this is showing is shifts in rotational relevant strength. Some groups get too high, other ones too low. And if you alternate and watch that, higher quality issues, you have an advantage. This is only a 9-1 win.
KANGAS: Well, anybody that's followed those recommendations certainly is at an advantage.
DRACH: A little refinement, you get to 20-1 ratio.
KANGAS: OK. How do we do that? What are you buying now? What looks like it's a good buy?
DRACH: You want high-quality stocks and fortunately, you have a diverse industry sector that's giving you the opportunities. ServiceMaster (SVM), the janitorial stock. Federal Signal (FSS) I think is still good.
KANGAS: OK.
DRACH: If you like high techs beat up, Analysts International (ANLY), which is a NASDAQ stock, ANLY. In the banks, I think First Tennessee is still good . Retailers, May, Genuine Parts and there's scattered about. Teleflex.
KANGAS: Genuine Parts moved from 22 to the 30 range since you gave it to us in February. And you still like it?
DRACH: I'd still be there, another five or six months.
KANGAS: All right, Keep going.
DRACH: That's about eight or nine. I would look at any sector you're interested in, go to the higher quality ones that are discounted. That gives you a cushion if it goes down and if it goes up before it goes down, because are data is flat...
KANGAS: Well, how about some of the big ones like Nokia and some of these fallen angels in the high tech? That doesn't interest you?
DRACH: They don't have acceptable earnings predictability.
KANGAS: OK.
DRACH: I wait for them to come in so the earnings are predictable.
KANGAS: All right, well, the only loser you had was First Tennessee Corp. I don't want to harp on the one loser, but would you buy it here?
DRACH: Oh, yeah, I'm still there.
KANGAS: It's around $19. It was $23.
DRACH: If you really have courage, in the tobacco sector, I'd go after UST (UST).
KANGAS: OK.
DRACH: Yields about 12 percent. I could live with that. I'd have some diversity and stay half in. Let the data come into us as always.
KANGAS: Well, the proof of the pudding is in your portfolio and I want to thank you very much for being with us again.
DRACH: Thank you, Paul.
KANGAS: My guest, Robert Drach, editor and publisher of the "Drach Weekly Market Research Report." |
