11/17/00:"Market Monitor"Robert Robbins, Chief Market Strategist, Robinson-Humphrey
PAUL KANGAS: My guest market monitor this week is Robert S. Robbins, Chief Market Strategist for the Robinson-Humphrey Brokerage, based in Atlanta. And welcome to NIGHTLY BUSINESS REPORT, Bob.
ROBERT ROBBINS, CHIEF MARKET STRATEGIST, ROBINSON-HUMPHREY: Hi, Paul. Great to be here.
KANGAS: Let's cut right to the chase and get your view on what kind of a stock market we're dealing with here. Is it a bull, is it a bear, or is it some kind of a hybrid?
ROBBINS: It's a Super Bowl. I think this market is going straight up to all time highs by year end and I think we're going to continue the same 16 percent compound annual growth rate over the next five years that we've had over the last 18.
KANGAS: What makes you so bullish?
ROBBINS: That would mean the stock market would double over the next five years.
KANGAS: Right.
ROBBINS: I am super bullish because right now you've got the Fed that's stopped hiking rates and inflation pressure is easing. You've just been through the worst seasonal period of the year because of tax loss selling. You're now going to anticipate the new funds flows that come in with the new year's IRAs and pension accounts. You've got the uplift of moods with the holiday season coming from Thanksgiving, Hanukkah, Christmas and New Year's resolutions.
KANGAS: Everybody is talking about, however, the slowdown in corporate earnings. Doesn't that matter?
ROBBINS: You know, it's amazing. It's really important to understand that robust earnings growth is very negative to the stock market because it brings with it inflation which is worse than anything else. So you've got to look at that. And that's why the market was down in the first 10 months of the year. With that inflation worry going away and earnings coming down to a healthy but not robust growth rate, you have the best of both worlds, just like in 1995 when the stock market went up 34 percent. We could do that over the next year.
KANGAS: Do you think the next move by the Fed might be to lower rates?
ROBBINS: I do, but I don't think we need that to rally sharply through year end. Just the continuing perception that inflation pressure is less and that we're moving towards a neutral bias some time in the next couple or three Fed meetings followed by maybe midyear, next year, roughly, a cut.
KANGAS: All right, so we get, before we get into your strategy and I, you know, this question has been asked a million times recently, but it doesn't mean we don't want your answer, namely, what's best for the market, a Bush or a Gore presidential victory?
ROBBINS: I think Bush is a little better because most investors pay some pretty high taxes and Bush would cut and reverse that tax hike that we had that lifted rates from 33 to 39 percent. Getting back to 33 would help. Also, I think investors tend to prefer a little less tax and spend overall.
KANGAS: All right, what are your allocations percentage wise with respect to stock, bond and cash holdings right now?
ROBBINS: Very, very heavily in stock, have only 15 percent in bonds, the practical minimum of five percent in cash and 80 percent in stocks, essentially reversing what we did a year ago, favoring a very hefty weighting in bonds, fearing that this inflation worry would hurt the stock market more than it would hurt the bond market.
KANGAS: All right, let's get specific. What kind of stocks are you holding here, and buying, for that matter?
ROBBINS: I think the finance sector now is absolutely the best place to be. There you've got the banks, the thrifts or S&Ls, the insurance companies, the financial services companies and the investment broker dealer companies.
KANGAS: Can we get specific?
ROBBINS: Sure. In the insurance area, Jefferson-Pilot (JP). Insurance companies benefit from annuities. In this case, they'll play on a, they're a play on this Super Bowl move that I'm expecting ahead. National Commerce Bankcorp. (NCBC) is a regional bank, should benefit from interest rates being in control. That's their cost of funds and less worry about the old inflation recession cycle, so their loans will be good.
KANGAS: OK, let's move into some other areas. We only have a minute left, Bob. ROBBINS: Fine. Equifax (EFX) in a hybrid area of services, sensitive to finance and a little bit of technology. That's a credit card reporting and processing company.
KANGAS: OK.
ROBBINS: Sirner healthcare, I'd be very heavily overweighted in healthcare, just like finance. Sirner is a hospital services information software company. MTechnology - be very selective here. Technology may under perform, typically outperforms in a big market move up, but being selective, a turnaround, QUALCOMM (QCOM).
KANGAS: QUALCOMM, all right. So you're not afraid of the stocks that have been hit badly? You think they're bargains?
ROBBINS: Well, I'm afraid of the ones going straight down. QUALCOMM's done that but built a big base and is turning up.
KANGAS: All right, interesting. So heavily weighted in stocks. And new highs by the end of the year?
ROBBINS: Yes, new highs, straight up. Would not be unusual to-
KANGAS: It's going to be a wonderful Santa Claus rally.
ROBBINS: I think so.
KANGAS: Thanks very much, Bob.
ROBBINS: Thank you.
KANGAS: My guest, Robert S. Robbins, Chief Market Strategist for Robinson Humphrey. |
