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To: Rif Kamil, M.D who wrote (73085)	10/20/1998 2:37:00 PM
From: Mohan Marette	Read Replies (1) \| Respond to of 176387

'Crash' with Gazarelli or Acampora or both. Rif: Great article thanks for posting it,what I gather from these articles is that a tough road lies ahead of these S.E.Asian countries but at least now there are sings of some improvement such as lower interest rates,a stabilizing currency,current account surpluses /improved foreign currency reserves in countries like Thailand and S.Korea, a Japan finally showing some resolve etc etc etc.... I don't know you guys get NBR there up in Canada,in case you don't here are the opinions of couple of 'overated' and possibly over paid 'pundits'. ===================================== (Source:NBR The 1987 Crash With Elaine Garzarelli SUSIE GHARIB: So, could the crash happen again? We decided to check- in with two top forecasters. Our first guest this evening is Elaine Garzarelli. She is famous for predicting the crash of '87 and is now president of her own investment firm. Hi, Elaine. ELAINE GARZARELLI, CHAIRPERSON, GARZARELLI INVESTMENT MANAGEMENT: Hi. GHARIB: Well, you sure called it right, back in '87. Could a crash happen again, like that? GARZARELLI: Yes, it could happen again. Any time, you know, if the same situation were apparent. I mean, we need to have rising interest rates in a very, very overvalued stock market. GHARIB: And what do, how do you assess, then and now, right now? GARZARELLI: Well, I think there is a tremendous amount of difference. First of all, the inflation rate is... GHARIB: Right. GARZARELLI: ... only zero percent now. Probably going to minus a half a percent. Interest rates are below 5 percent, probably going on a 10-year bond, to, I'd say, 3.8, 3.9 percent. I think the budget will probably stay in surplus for the next three or four years. And back then, we had terrible deficits. And you know I think it will stay, I think the international economies will pretty much stay in a bad framework for the next three or four years. Which will help to keep inflation down. GHARIB: Well, by contrast to your position back in '87, you are awfully bullish right now. Tell us why. GARZARELLI: Well, our indicators went to 75 percent, which is the reading we usually get at major bear market bottoms or correction bottoms. And when it gets to 75 percent, usually the stock market will just go up like a rocket ship for at least six months, nine months, 12 months. But at least for the first six months, it just roars ahead, and it's very difficult to get in. We only recommend to our clients at those particular times, and the last time was September of 1990, the last bear market bottom, recommended going into certain sectors that generally ... GHARIB: Tell us about that. GARZARELLI: ... go up two or three times more than the market. GHARIB: Yes, you were telling me earlier that ... GARZARELLI: Yes. GHARIB: ... your allocation for investors now is 75 percent stocks. So what are the groups that you like right now? GARZARELLI: Yes. 75 percent stocks and that is the maximum amount. If it's an all equity account, then 100 percent. So this is really high. The groups that do the best, first of all, the brokerage firms have crashed. They're down 50, 60 percent. Merrill Lynch (NYSE:MER) is still down nearly 55 percent. That stock looks excellent. Home builders always outperforms after a bottom like this, a stock like Centex (NYSE:CXP). The banks, the financials, were murdered. Especially the regional banks. For no apparent reason, Bank of Boston (BXB). I'd say, Chase Manhattan (NYSE:CMB) had some problems, but it's discounted it in the stock price already. And I'd stay away from groups like the drugs and the oils and a lot of the non- durables, the ones that were safe and did well during the correction. GHARIB: We just have a few seconds left so let me just ask you. How good do you think it could get? What's your forecast for the Dow and the S&P, in just a few words. GARZARELLI: Well, in the 12 to 18-month period, the S&P at 1400 which would be approximately 11000+ Dow, something like that. GHARIB: All right. Well, that's a nice way to end it all. GARZARELLI: Yes. GHARIB: I hope you're right on all of that. GARZARELLI: Thank you. GHARIB: Thanks a lot, Elaine. We've been speaking with Elaine Garzarelli of Garzarelli Capital. -------------------------------------------------------------------------------- The 1987 Crash With Ralph Acampora PAUL KANGAS: Joining us now for his perspective on the outlook for stocks is widely followed market guru, Ralph Acampora, the chief technical analyst for Prudential Securities. And welcome, Ralph. RALPH ACAMPORA, CHIEF TECHNICAL ANALYST, PRUDENTIAL SECURITIES: Good evening, Paul. KANGAS: This is hardly your first appearance on NIGHTLY BUSINESS REPORT. The fact is that your debut on our program was on March 12, 1982 when the Dow Industrial Average with a 750-range and you were correctly bullish at the time. ACAMPORA: Yes. KANGAS: And you've made many great calls, since which have earned you the guru status. ACAMPORA: Well, I can't believe I'm that old. KANGAS: On this, the eleventh anniversary of the '87 market crash, Ralph, do you see any similarities in the current market condition? ACAMPORA: Not really, Paul. Interest rate environment was much, much different. The stock market was much, the economy was very, very different in those days. But you know, the whole decline in '87 took six weeks from peak to trough and took about a year to bottom out. So, we had a lot of damage here, so I would suspect it would take us a few months to bottom out. KANGAS: Well are we in the midst of a bull trap rally in a bear market, or vice versa here? ACAMPORA: Well, you know, when the Fed steps in and does their thing, which they did last week and you get a nice follow through in the marketplace, you never fight the Fed. You never fight a market trend. So I don't think this is a bull trap. I think this is the real thing. It might slow down a little bit and base out like I said, but the turn is here. KANGAS: But no 10,000 by year end? ACAMPORA: You know, I was calling for that earlier this year. I'm not sure. I don't think so yet, Paul. KANGAS: Now, you have changed your stance on stocks with increasing frequency in recent times, no doubt because of the rise in price volatility. Which of the indicators that you use are most responsible for these frequent changes in your Dow predictions for example? ACAMPORA: You know, Paul. We technicians have a whole host of indicators. But the one thing that really, really, I lean on more than anything else is individual stock chart patterns. In other words, Sunday evening, I sit down, and I look at those 30 Dow stocks. They make up the movement of that average. If they start looking suspicious, I get suspicious and that's what happened in early August. KANGAS: Well since you believe that we're out of the worst part of this downturn, what type of stocks or stock groups do you have here on the buy side? ACAMPORA: Well, taking that same philosophy, looking at the Dow stocks, I see them bottoming out. I see 3M (NYSE:MMM), IBM is at a new high, Johnson & Johnson's (NYSE:JNJ) at a new high. KANGAS: How about the hard-hit financials? ACAMPORA: The financials are starting to stabilize. A lot of the local banks are looking very, very good. I think the brokerage stocks need more time, but I think you've seen the worst. KANGAS: OK and what would you stay away from here? ACAMPORA: I think the ones that were harbingers of defensive nature, not that I would sell the utilities. But I think they're going to back off a little bit. Not that I would sell all the golds. I think they'd back off. And even some of the energies might back off a little bit. KANGAS: So basically, you're now very positive in your stance on this market. ACAMPORA: Well, I think we were all taught a lesson in the last couple of months. I think a lot of us are going to approach the market with a sober viewpoint. KANGAS: OK. ACAMPORA: So, I think you'll have a wide trading range for the next six to 12 months. KANGAS: Very good Ralph. Thanks very much for being with us. ACAMPORA: Thank you Paul. KANGAS: My guest Ralph Acampora, chief technical analyst for Prudential Securities.