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Biotech / Medical : PFE (Pfizer) How high will it go? -- Ignore unavailable to you. Want to Upgrade?

To: BigKNY3 who wrote (4297)	7/13/1998 8:17:00 PM
From: Anthony Wong	Read Replies (2) \| Respond to of 9523

From Smart Money: Bull and Bear Funds July 13, 1998 7:32 PM NEW YORK (Dow Jones)--Fund managers tired of being drubbed by the S&P 500 Index are now quick to promise they will outperform in a bear market. Don't be so sure. The truth is that fewer funds consistently outperform in bad times than in good. We constructed a screen to identify stock funds that have beat the S&P 500 in four down months dating back to 1990. Only four funds were able to do that, and still outpace the S&P 500 over that nine-year span. Theoretically, a smart stock picker should be able to sidestep the pitfalls of a floundering market. Just pick the lesser of the 500 evils in the S&P. Or, go to cash. But there are few fund managers that are able to do that each time the S&P slides. And even fewer who can beat the S&P when it is climbing and when it is falling. To identify our bull and bear funds, we screened for funds that beat the market in each of the three most recent one-month periods in which the S&P January 1990 (-6.72%). The funds also had to outperform during this May's 1.72% decline. What we found was that many managers outperformed in each individual bear month. But only 80 (excluding gold, balanced and bond funds) outperformed in all of them. "There will always be 15% or 20% of funds that will beat the index at any given time," says financial planner Jeff Buckner of Zero Alpha, an investment group that only buys index funds. "But it's a different batch of funds each time." It gets worse. Of those 80 bear-beaters, only four managed to outrun the bull - Oppenheimer Main Street Income & Growth (MSIGX), Vanguard Specialized Health Care (VGHCX), Fidelity Growth and Income (FGRIX) and GMO Core III (GMCTX). Each has beaten the S&P's exceptional 18.1% average annual return since the start of 1990. Of those, only one - Vanguard Specialized Health - has kept pace with the index year-to-date, returning 23% compared to the S&P's 20.3%. Not one of these managers beat the market by timely moves into cash. That's a risky and generally unsuccessful strategy. Instead, they held positions in industries like health care that are growing quickly but also have recession-resitant earnings. The Durability Of Aspirin Demand Why is Specialized Health inoculated against bear markets? Vanguard's Brian Mattes has a theory: "People will stop buying boats and houses, but they won't stop buying aspirin. It's a durable kind of purchase." So the earnings at core holdings like drug-makers Warner-Lambert (WLA), Pharmacia & Upjohn (PNU) and Pfizer (PFE) are recession resistant. And their stocks are less volatile. Consider that when the S&P dropped 6.7% in January of 1990, Pfizer fell just 1.4%, and when the market fell 9% the following August, that stock lost only 6.5%. During this May's mini-bear, Warner and Pharmacia & Upjohn actually rose in price. Forrest Berkley comanager of GMO Core III also holds Pfizer among his top ten positions. Echoing Mattes, he says, 'Even in a down market, people get sick." And the stock fits Berkley's strategy of buying companies whose earnings will hold up during a recession. "You want a company that people are going to use its product even if times are tough," he says. "Microsoft (MSFT) is the perfect example of that. People are addicted to their computers worse than cigarettes. They've got to have their fix." The fund also own Intel (INTC), which, Berkley admits, "has its ups and downs, but it doesn't swing wildly from one quarter to the next and it has very little debt." Our two remaining bear-beaters are growth and income funds. In fact, 28 of the 80 that beat each bear month fall in that category. Why does that group hold up? Because they often buy securities that pay dividends, and thus provide a cushion in a bear market. But Oppenheimer Main Street Income & Growth and Fidelity Growth & Income don't have big yields. Instead they get their ballast from health care stocks - just like Vanguard Health and GMO Core III do. Oppenheimer and Fidelity have 11% and 17% of their respective portfolios tucked into health care stocks. We can't promise that these managers will beat the next bear. But, their stockpicking skills so far have clearly separated them from the pack. For more information and analysis of companies and mutual funds, visit SmartMoney Interactive at smartmoney.com