CEO of Kobrick Funds Sees Profit Taking in 1999; Long-Term Outlook for Internet Stocks is High
Business Wire - February 23, 1999 12:04
BOSTON--(BUSINESS WIRE)--Feb. 23, 1999--The President and CEO of Kobrick Funds foresees increased breadth in the stock market in 1999, as well as opportunities for profit taking in equities that have reached full valuations and purchase others with improving earnings that have simply lagged.
"This is a superb environment in which America continues to thrive. We believe selectivity, not investing in a broad wave of stocks, will once again rule in 1999," said industry veteran Frederick R. Kobrick, founder of Kobrick Funds and portfolio manager of the company's Capital Fund and Growth Fund. "And for good stock pickers, profits can be substantial."
Overall market valuation may only appear to be high compared to historical averages, Kobrick said, but it is underpinned by two "very healthy" factors. "First, low interest rates, which mean high valuations relative to historical averages. Second, a very different mix of companies is now dominating the S&P 500. In 1964, the top 10 companies were 40% of the index, and were slow-growing, mature companies. AT&T alone was 9% of the index.
Today, the top 10 are half that 40% weighting, at 20%. They, like others below the top 10, are more vibrant and growing much faster. The largest companies include Microsoft (MSFT), Intel (INTC), Dell (DELL), Lucent (LU) and Cisco (CSCO). We are transitioning to a technologically driven economy, with almost half of national growth recently generated by the technology sector. So the S&P is heavily weighted by fast-growing technology companies."
Kobrick said he believes profits in 1999 will be mixed, but substantially higher in some areas such as select financial companies, retailers and technology. Noting that forecasters predict 2.7 to 3.25% real GDP growth and under 2% inflation, as well as technology spending by corporations and individuals, strong housing and auto sectors and growth in the service industries, Kobrick said, "This is an extremely good environment for picking stocks."
The volatility of Internet stock trading is cause for caution, Kobrick said, "and we invest very carefully in this group." However, the long-term outlook in this sector is strong. "The Internet may be the next industrial revolution -- but if not, it is close. It will astound people with how it will affect our daily lives in the future. Like everything new -- yes, there were 950 automobile companies in the 1930s, and yes, the PC industry had over 900 companies -- there will be a shakeout. But the real winners will emerge. Internet commerce and cost-savings will be a boon to the American economy."
Internationally, economic crises abroad demand watchfulness, Kobrick said. "Brazil won't be an easy fix, but it should not have an overbearing effect on our enormous economic strength and resiliency. We believe the good news is that Asia is bottoming, and seems unlikely to slow our economy, or be a major factor. In both regions, we will check the pulse often."
Kobrick Funds, founded in 1997, is a no-load family of mutual funds focused on companies with a distinct and effective management style. Industry veteran Fred Kobrick and his team manage the Growth Fund, the Capital Fund and the Emerging Growth Fund. Kobrick Funds is headquartered in Boston. Its web site address is www.kcfund.com.
Please contact Kobrick Funds to obtain a prospectus, which details fees and expenses. Please read the prospectus carefully. Specific securities mentioned should not be construed as a recommendation to purchase. Distributor: Funds Distributor, Inc.
CONTACT: Warner Public Relations
Carin Warner, 978-526-1960 |
