Here's Stovall transcript, let's find 3Com needle!
12/24/98:Market Monitor-Robert Stovall, 21st Advisers
KANGAS: My guest market monitor this week is Robert Stovall, president of Stovall 21st Advisers, the well-known New York City-based investment management firm. Welcome back, Bob.
ROBERT STOVALL, PRESIDENT, STOVALL/21ST ADVISERS: Thank you, Paul.
KANGAS: Calling upon your 45 years of experience on Wall Street, can you tell us why this stock market has been relentlessly rising against such potentially damaging factors as the Clinton impeachment, the growing Mid East tensions and the recent rash of corporate earnings warnings?
STOVALL: The simpler we keep it, Paul, the better off we are. If you used almost no imagination and just went with the top five or 10 stocks on the NASDAQ, the Dow, the S&P 500, you had a great year. That's because investors globally are focusing on the giant U.S. stocks. That's where they want to be. That's where the money goes, irrespective of short-term wrinkles or problems.
KANGAS: OK. So, stay with the momentum.
STOVALL: I think so. The momentum is your friend.
KANGAS: What danger signals would cause you to get out of your stock holdings in a large way?
STOVALL: I think if commodity-based value type stocks-copper, steel, timber, oil-began to rally, that would be a sign that the momentum may be leaving some of these great stocks-the GEs (GE) and the Intels and so on. That hasn't happened. I don't expect it to. But that'll be a signal.
KANGAS: Do you view the incredible gains in many of the Internet stocks as a chance to get rich in a hurry? Or, perhaps as a sign of a market top with that kind of froth
STOVALL: It's an early sign of a market top. Perhaps it's really more of a sign though of speculation on the part of day traders, mainly individuals buy these things. I call them "perpetual options" they have very shaky fundamentals but they just go on and on as long as the Fed is there.
KANGAS: All right. Now the last time you were with us, April 9th, you recommended Intel at 73. It's up nearly to 130. You staying with it?
STOVALL: Still like it.
KANGAS: Staying with it?
STOVALL: Still like it, yes.
KANGAS: OK. Momentum's your friend there.
STOVALL: Yes.
KANGAS: And Hewlett-Packard (HWP) didn't do so well although it's up nicely from 61 to about 70.
STOVALL: It'll catch up next year, I think, Paul.
KANGAS: St. Joe (JOE) paper, a big winner, it had a 3-for-1 split and also I think, sold off Florida East Coast (FLA). Stay with that?
STOVALL: Yes. That's a long-term workout in real estate and theme parks.
KANGAS: And Altramar , that was your clinker. It was around 34, now about 23.
STOVALL: It's an oil stock and I haven't done well. Nobody has with commodity stocks. But it pays a good fat dividend. Dividend seekers are having a hard time finding yield. You might even think about buying some more at this low level.
KANGAS: All right. Your strategy now. New recommendations.
STOVALL: New ones. I think you'd stay with the technology stocks, that's where the action is. I like 3Com (COMS). I also think that if you want a participation in the great consumer stocks, buy Berkshire Hathaway B (BRKb) stock. They're acquiring General Re (GRN), a big insurance company. There'll be more shares, more liquidity. Berkshire may make it to the S&P 500 during the new year. I like that one a lot.
KANGAS: All right. And the bond market you still like? You did back in April.
STOVALL: I think so. I like the 5- and 10-year bond market. The yields are still too skinny for me but I think you have to have some of that. I believe though that if this economy is stronger than the economists are predicting-and the economists have been wrong, undervaluing the economy the last four out of five years. If the economy is strong, we could see rate increases, at least one by the end of the year. Not many people think that might happen but it could.
KANGAS: Bob, if you like going with the momentum, how about some index funds or something similar to that?
STOVALL: Yes. The Standard & Poor's Spyders MidCap Index Fund on the American Stock Exchange (MDY) gives you that 400 stock index without you having to do any research on the issues.
KANGAS: OK!
STOVALL: I think that's a great way to participate.
KANGAS: What's your Dow year ending close? What do you think's going to happen.
STOVALL: I think that a year from now plus Paul the Dow will be up at least 9 percent. I think it's going to get to 10000+ sometime during the year and that's a good target.
KANGAS: Next year. All right. And very, very finally-we only have a few seconds-your Super Bowl predictor is going to be wrong because the market was supposed to be down since Denver won last year.
STOVALL: That's right. It's the fourth error in 32 games so far, Paul, which is a great track record, 88 percent. But also, the market gave us a good scare in October.
KANGAS: Yes it did.
STOVALL: It was down below the year-end close.
KANGAS: But maybe this will be the exception that proves the rule.(LAUGHTER)
STOVALL: It might be.
KANGAS: OK. Bob, thanks very much. My guest, Robert Stovall, president of Stovall 21st Advisers.
STOVALL: Thanks, Paul.
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