eadline: Robert Stovall Of Stovall/21st On The Market Mayhem
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SUSIE GHARIB: Well, our guest this evening says that the sell-off in the
stock market is overdone, and he should know. He's been a money manager on
Wall Street for more than 40 years. Joining us now is Robert Stovall,
president of Stovall/Twenty-First Advisers. Nice to have you with us, Bob.
ROBERT STOVALL, PRESIDENT, STOVALL/TWENTY-FIRST ADVISERS: Thank you, Susie.
Thanks for asking me.
GHARIB: Well, what's your take on these markets?
STOVALL: Today, it looked to me like the beginnings of a selling climax, a
washout type of a day. But it rallied toward the end so maybe this isn't the
end. Actually, we haven't really seen the third quarter earnings yet. All we
have heard are these pre-announcements, in general. So, I think there's more
fear and trembling ahead.
GHARIB: Although we did get those Motorola earnings that came out better than
expected. Could this be a positive spin for tomorrow perhaps, especially for
those tech stocks?
STOVALL: Oh, sure. We haven't had much good news in the tech area. See how
Nokia (NOK.A) and Ericsson (NASDAQ:ERICY) behave tomorrow. They compete with
Motorola
in cellular telephones. Also, there's some rumblings that maybe the
semiconductor situation is finally bottoming out, may turn around. So watch
National Semiconductor (NYSE:NSM) and Texas Instruments (NYSE:TXN), and those
for early
signs of a bottoming in that very important group.
GHARIB: Bob, what should investors be doing because you look at a lot of
these stocks, the bluest of the blue chips. They've been really cut down to,
some of them, to their 52-week lows. Tempting to want to jump in and buy it.
Is it too soon?
STOVALL: I don't think so, and everybody knows that when the bottom has been
reached and the rally is starting, it's sort of too late. Over the years,
I've started, when I get an idea that's, I'd like to add something to
portfolios such as: IBM (NYSE:IBM) today down another handful of points, I buy
some of it. And then if it goes down again, well, OK, that meant it was too
soon, then I'd buy a little bit more. And the same with AT&T (NYSE:T). AT&T
and
IBM just got a huge contract from Banc One (NYSE:ONE) and in general, they are
the
kind of stocks you want in your portfolio for the long term.
GHARIB: What about bonds?
STOVALL: Bonds, I think, have been great. And just look at the new high list
of, not many stocks on it, but, or instruments on it, but bond funds are
there, particularly, tax-free bond funds. The Van Camp and the Nuvines and
the rest of them. I have a lot of those in my portfolios for my tax-sensitive
accounts and clients. Also, look at the utilities which the index has been
making advances while the industrials are being crunched. And there are quite
a few utilities that I like. I like, for example, MarketSpan (NYSE:MN), it used
to
be called Brooklyn Union (BU) and Long Island Lighting as they've been merged.
And I like Sempra (NYSE:SRE) from California. And right across the country,
there
are lots of utility stocks that are safer than tech stocks that have huge P/E
multiples with no dividends.
GHARIB: I see on this sheet here that you have all these stock names. Are
there any financials or brokerages on that list?
STOVALL: Well, I'm sort of disturbed or discouraged that the brokers and
others keep putting each other on the "sell" list. I mean, Merrill Lynch
(NYSE:MER) put a whole bunch of broker and bank stocks on the downgrade list
today.
Where were they last week, or the week before last? Of course, they,
themselves, were put on the downgrade list then.
GHARIB: So what do you think?
STOVALL: I think it's too soon to bottom fish in some of those. But I noticed
today that some of the stronger stocks beside the drugs that still look good
to just about everybody, you'll find some natural resource companies like the
oils, the Texaco (NYSE:TX) and Exxon (NYSE:XON) and the paper stock,
International Paper
(NYSE:IP).
STOVALL: So maybe, looking ahead to next year, when the quarter, the quarter
comparisons will be easier, maybe it's time to start looking at some of these
natural resource stocks.
GHARIB: You've given us a lot to think about. Thank you so much, Bob.
STOVALL: I hope so. Thank you Susie.
GHARIB: And we've been speaking with Bob Stovall, president of
Stovall/Twenty-First Advisers.
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