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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (245488)	6/13/2003 5:47:46 AM
From: John	Read Replies (1) \| Respond to of 436258

Enjoy all the new, higher taxes... story.news.yahoo.com John

To: Knighty Tin who wrote (245488)	6/13/2003 8:06:40 AM
From: Pogeu Mahone	Respond to of 436258

June 13, 2003 Optimistic Investors vs. Pessimistic Bosses rom the top of corporate America, things look awfully glum. But those not in executive suites seem to be more optimistic. That divergence of opinion is the most striking thing about the current investment outlook. And odd as it may seem, there is a good chance that the bosses may be wrong. The current stock market rally is already the longest, biggest and broadest one since the great bull market ended in 2000 with a bursting bubble. It is also the only one that has been accompanied by a rising Treasury bond market. The Standard & Poor's 500 is up 24.7 percent since March 11, while the yield on 10-year Treasuries has plunged to 3.16 percent. And this has been a rising tide that has lifted almost all boats. About 95 percent of all stocks have gained. That kind of performance has been just what the doctor ordered for the spirits of newsletter writers. The latest numbers from Investors Intelligence, which has been surveying such writers for decades, show that bulls outnumber bears by 3.6 to 1, the biggest ratio since the spring of 1987. With stocks rising, long-term interest rates falling and the Federal Reserve hinting it will lower short-term rates again, what's not to like? Plenty, the bosses seem to think. Investors may see signs of an economic revival, but corporate America doesn't. The Fed's beige book this week found only a little evidence, in chats with company executives, of renewed economic growth. In the long-suffering information technology and software industries, the Boston Fed reported, "most respondents point to mid-2004 as the earliest date for an economywide expansion, but caution that clear signs supporting that expectation are lacking." Mid-2004, it is safe to say, is not when the market expects the economy to turn up. But much of corporate America is acting as if it thought no turn would ever arrive. Companies are keeping inventories lean and capital spending down. There is a great reluctance to add workers. And the statistics on stock sales by corporate insiders show a big increase over the last couple of months. The bosses have viewed this rally as a great selling opportunity. It takes a certain amount of hubris to assume that the bosses are wrong about such things. Indeed, David Coleman, the editor of Vickers Weekly Insider, says the selling has been so strong that he has sold all the stocks in his model portfolio, which is up 23 percent this year. He calls the insider selling "a strong indication that the market is susceptible to a significant retrenchment." But there are other ways to look at it. Bosses know their companies and are often right, but they can miss big turning points in the economy. They were big sellers in late 1982, as the big bull market began, and they were buyers at the top in early 2000. Phil Roth, the chief technical market analyst at Miller Tabak, was rightly alarmed by a surge in insider selling in the spring of 2002. Now he thinks the market can overcome it. In the spring of 2000, Alan Greenspan was speaking with great respect of the new economy and citing the buoyant opinions of technology stock analysts. Lately he has been talking of ways the Fed could hold down longer-term rates even after short-term rates have fallen as low as they can go. Investors now seem to be quite willing to believe that means long-term rates will not rise, just as in 2000 they were confident that technology stocks could not fall. Therein lies the real contrarian bet for this market. "I think we are going to have a better economy, and then a sell-off in the bond market," said Robert J. Barbera, the chief economist of ITG/Hoenig. If so, the big test for this stock market could come after interest rates begin to rise, not while we are waiting to learn whether the pessimism of the bosses is justified. Copyright 2003 The New York Times Company \| Home \| Privacy Policy \| Search \| Corrections \| Help \| Back to Top