This is from last Friday, but the NBR web site was "having problems".
03/05/04: Market Monitor-George Muzea, President of Muzea Insider Consulting Services
KANGAS: My guest market monitor this week is George Muzea, President of Muzea Insider Consulting Services. Welcome back to NIGHTLY BUSINESS REPORT, George.
GEORGE MUZEA, PRESIDENT, MUZEA INSIDER CONSULTING SERVICE: It`s great to be here, Paul.
KANGAS: As disappointing as last month`s new job creation was, the stock market was surprisingly resilient today. Do you think this is an indication that the path of least resistance for stocks is higher?
MUZEA: Well, Paul, we`re in this phase now where the market is getting a lot of momentum from the new money that`s coming in from the pension funds. And that usually peaks about the middle of February, and I think it probably has peaked a little bit. So, in my opinion, once this money kind of gets invested by these fully invested mutual funds, a lot of the bullets available to the bulls will be missing. So I think this is a good opportunity to be selling into this rally.
KANGAS: You think we`re going to lose this momentum type investing we`ve been seeing?
MUZEA: After --
KANGAS: We saw that in `99 before the crash, too, didn`t we?
MUZEA: Yes. After April 15th, of course, a big source of new funds for the mutual fund industry will be missing. And I think the market will then start to come down. And I think in October you`ll have a better buying opportunity.
KANGAS: So you`re very guarded in your predictions?
MUZEA: I`m extremely guarded and recommending some building of some cash. And if you`re going to play this market, play as it would a chartist, as a chartist, be a trader.
KANGAS: OK. What about the corporate insiders? That`s your specialty.
MUZEA: That`s my specialty.
KANGAS: What are they doing on balance these days?
MUZEA: Well, you know, in my book, "The Vital Few Versus the Trivial Many, the vital few are the insiders.
KANGAS: Right.
MUZEA: And they are not buying at these levels. And their selling peaked in August and so -- and they`re not buying. They could buy. They have a six month waiting period. So they`re not buying. That`s a concern. And then you have the public, you know, with all the speculation, look at the speculation today in the Martha Stewart case --
KANGAS: Oh, yes. Yes.
MUZEA: They were buying that stock on nothing, just with guesses. And so there`s so much speculation in the market. Momentum is strong, but I think that this is the kind of environment where one could easily, you know, find themselves owning stocks at highs.
KANGAS: So raise some cash?
MUZEA: Yes, raise some cash because the insiders are not buying.
KANGAS: Right.
MUZEA: And the public is and they`re part of the trivial many.
KANGAS: Now, the last time you were with us, which was August 15, you made some recommendations, two on the "buy" side, two on the "sell" side. The "buy" ones, look at this, Western Wireless (WWCA) you said buy at $15. It`s up 70 percent. And Baxter International (BAX) has done almost as well. Those were great calls. But you also recommended selling two issues, Insight Enterprises (NSIT) and High Drill, and both of those are higher, although nowhere near as good as the two "buys."
MUZEA: Right.
KANGAS: But what do you --
MUZEA: That`s why if we -- if you shorted them, you always put stops in.
KANGAS: OK. All right. So you were like a hedge fund in that situation?
MUZEA: Right. Exactly.
KANGAS: Yes.
MUZEA: If you were a market neutral hedge fund, you would have done very, very well.
KANGAS: Right. Yes, you would have.
OK, new recommendations?
MUZEA: Well, I like a few stocks. As you know, in 1994, I had trademark protection on the word stud insider and smart insider. And these are proven insider categories.
KANGAS: So there`s a lot of buying going on in Tyco?
MUZEA: Well, there`s some buying in Tyco, which insiders bought at $18, $21, and now they are buying up here at $28. I know the stock is in the broad up trend, but the good news must be continuing to come with this stock because the same stud insider who was buying at lower prices is buying at higher prices, always a good sign.
KANGAS: OK. All right, we have time for another recommendation. On the "buy" side, this one, too?
MUZEA: Yes. First Niagara Financial Group (FNFG). I own this one in my IRA. And this one has moving kind of flat, but I have a smart insider who was my next good category --
KANGAS: That`s the next category.
MUZEA: The next category of --
KANGAS: The stud insider is the really good one.
MUZEA: Is the real one, right, the stud race horse.
KANGAS: OK. I`ve got you.
MUZEA: And this other category is the next best to follow. And we have a good insider with a good track record on, with other companies, and this is his first purchase in this stock.
KANGAS: How about on the "sell" side?
MUZEA: Well, there`s this aQuantive (AQNT), if you have a chart on that.
KANGAS: Yes, we do.
MUZEA: Yes, there it is.
KANGAS: It looks like it`s kind of topping out a little.
MUZEA: Well, what was interesting with this one, the former president sold a very large block of stock. But he could have sold it at $13 and change. And the stock rolled over, it came down to $10, and that`s when he sold.
KANGAS: Yes.
MUZEA: And I don`t like -- that`s, I don`t like stocks that have insiders selling into price weakness.
KANGAS: Yes.
MUZEA: They should be buying, not selling.
KANGAS: Do you know Tyco?
MUZEA: No, I don`t own Tyco, although we have clients that are in the stock, because my institutional clients, many of them own the stock.
KANGAS: And you`re not short aQuantive?
MUZEA: No, I put it out as a potential short. I don`t know if any of my clients have shorted it.
KANGAS: But you do own the First Niagara?
MUZEA: Right. Exactly. And if anyone is listening and they`re going to short that stock, put the stop order in.
KANGAS: I`ve got you. All right, George, a little mixed picture there.
MUZEA: Yes.
KANGAS: But thanks very much. I hope your recommendations were as good as they were last time.
MUZEA: I hope so, too, Paul.
KANGAS: My guest, George Muzea, President of Muzea Insider Consulting Services.
Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by eMediaMillWorks. Updates may be posted at a later date. The views of our guests and commentators are their own and do not necessarily represent the views of Community Television Foundation of South Florida, Inc. Nightly Business Report, or WPBT. Information presented on Nightly Business Report is not and should not be considered as investment advice. Copyright (c) 2004 Community Television Foundation of South Florida, Inc. ALL RIGHTS RESERVED
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