The Nation's Pulse: Taking Stock
Ferguson, Tim W.
THE NATION'S PULSE by Tim W. Ferguson Taking Stock S ince the last recession, the stock market has increased more than fourfold. I have missed at least half of that rise. I am either an...
...P k n 25...
...Down 40...
...corporations...
...Lesco of Ohio...
...I got a trick...
...I 'm not alone and that is where nurture comes into it...
...Guess what...
...Iknow all of the Buts: high P/Es, bad breadth (too narrow a range of stocks advancing), a corporate earnings plateau, currency shocks abroad, inventory accumulation, overindebtedness, inflation, deflation, and on and on...
...48 June 1999 • The American Spectator I also think investment bankers and everyone caught up in their act make ridiculous amounts of money, so I've looked for companies that don't do a lot of pricey deals...
...ional...
...Celadon Group...
...So I've gotten next to nowhere...
...Down 40...
...Contradicting such advice, which is retailed primarily in newspapers and magazines, have been gums of television and the Internet...
...The second option allows me to blame others for my problem, and that is now the American way...
...Everyone loves a treat...
...At Forbes, I'm surrounded by people with an "Oh, yeah...
...There's a boom out there, so why am I not getting rich...
...Residential hotel chain for road warr rs...
...Heavily laden with cash and bonds, I have been ready for 50 of the last five "pullbacks...
...I have found many reasons in the r99o's to avoid winners and to invest in offbeat losers...
...Should have checked out...
...Templeton Dragon Fund...
...Down 70...
...golf courses...
...Institutions rule the roost today...
...Instead, I succumbed to the refrain in nearly every article on America's bull market—the one that begins "But...
...The enduring optimist of the airwaves is Louis Rukeyser, whose long-running "Wall Street Week" program on PBS invites steady investment in the market...
...James Cramer, a vocal proponent of the "wired" age, has had a field day along with the day traders...
...Fresh Choice...
...Big caps also are the favorites of institutions (mutual funds and pensions) with huge amounts to invest and therefore the need to put most of the money into "liquid" holdings, where they can get inand out without drastically affecting the price...
...In the meantime, friends and relatives who never even look at the Wall Street Journal have been loading up their Range Rovers...
...Makes bug shields and other accessories for trucks and sport-utility Lehi How could you lose in that market...
...With each tick upward of the multiple, a reliable crew of rationalists has weighed in with worry...
...Down 45% from a year ago...
...The Dow was at 3,300 then...
...Silicon Valley egomaniacs have been buying and ripping down perfectly good houses next door in order to build guest mansions...
...But since, being employed by a major business publication, I am forbidden to trade stocks actively, I console myself with the notion that short-term moves don't matter...
...Generally speaking, though—if you include the funny money of stock options—you've gotten what you paid for in this market...
...Was a real joker for a while...
...It is the big-cap stocks that have dominated, particularly in the recent run-up to Dow Jones ii,000...
...Warren Buffett, the ultimate value investor, has been loudly cautious, and several of Wall Street's old lions—the ones with the wisdom and perspective that come from having experienced a tough market—have advised lying low for at least the last few thousand Dow points...
...Eskimo Pie...
...D n 15...
...Sure...
...And liberal foundations have watched their endowments grow ever fatter...
...Cap stands for capitalization, or what the total shares TIM W. FERGUSON is an assistant managing editor at Forbes...
...Telefonica del Peru...
...Down 40...
...Some of them have counseled getting into cheap, smaller-cap stocks, becausethat's where the bull predictably turns next...
...What frightens him and others with a "value" orientation is the higher and higher price/earnings multiple of the market during its bull run...
...Chart House Quintessential California seafood chain bought by ace investor Sam Zell :ud back the order...
...That's a ludicrous approach in the public equities market, where you win when others bid up your stock...
...So the big guys can boost their profits while, down the food chain, margins shrink...
...outstanding of the company are worth...
...When this PIE ratio used to get higher than 16, it was a red flag that a "correction" would bring it back to earth...
...Sold at 90% loss...
...These days, it is around 34 for the big-cap shares...
...So, I will not retire off Dow u,000...
...As a cultural Calvinist, I prefer to put money in companies that are restrained in how they promote themselves, which is one reason I've avoided most aspects of the high technology industry, the most Hacked business I've ever seen...
...But at least I have this patriotic compensation: My paycheck savings rate is off the charts...
...TWF The American Spectator • June 1999 49...
...attitude about every hot stock...
...My excuses are based on both nature and nurture...
...Here's how I've prepared for the next bul I ,Iarket...
...Homestead Village...
...A Contrarian's Collection Mutual-fund icon Peter Lynch said you should buy stocks with a "good story," and b'esses you could see up close...
...But they don't rule me...
...Allan Sloane and Christopher Byron are also bad-news bears...
...High tech may be the great engine of the bull market, but those publicists haven't gotten my invested capital, no sirree...
...Lund Inter...
...All those new h ers apparently sit on crates...
...I'm in it for the long haul...
...Anyone for a military coup...
...For all those Internet stocks that have no profits at all, the P/E is infinite...
...A more serious explanation is that the big-caps seem to be enjoying the end of inflation: Pricing pressures work in their favor, allowing them to use their heft to take the last dime out of a smaller fry's hide...
...Salad-bar restaurai . No greening of America...
...Our editor ribs himself by recalling the cover story he wrote in 1992 likening the market to the Dutch tulip speculation in 1634...
...Barron's magazine and its marquee columnist Alan Abelson are the chief sourpusses...
...Again, how could you lose...
...Many have lost ground...
...This is important because the great majority of the listings in the papers are not those companies...
...I am either an inordinately dense business hack (good possibility) or I have been absorbing too much advice...
...nce supplier to proliferating U.S...
...Trucker with big piece of U.S.-Mexico tra Stopped at the border...
...The print sector derides Rukeyser as a shameless self-promoter, but if I had listened to him instead of just watching him these past several years, I could now afford to do something else on Friday nights...
...Down 5o...
...It has to be...
...Playing the China emerging-markets maven Mark Mobius...
...Finally, I don't like to see executives richly compensated and their headquarters lavishly appointed...
...And very persuasive ones: Abelson was the winner of last year's Gerald Loeb Lifetime Achievement Award...
...As I write, my losers have backed up a bit, but this is minor consolation...
...As a contrarian, I don't like to buy what everyone else is buying...
...Celebrity pundits Jim Rogers and Jim Grant always have witty and intelligent things to say that make you smile and frown at the same time — usually focused on the follies of governments or bankers...
...Daytime CNBC, watched wherever stocks are traded in America, is always rooting the market on to "positive territory...
...This is a version of the rich get richer story, so some would say it must go back to Reaganomics...
...Many of the top movers of the nineties are the deal-doers...
...First, a clarification: When people say "the stock market" these days, they mean the Dow Jones Industrials or other large U.S...
...If you read the business press you can't miss them...
...Others have urged putting money in hedges like energy stocks and even gold...
...I monitor my tepid portfolio...
...The Dow Jones index itself is all big-caps...
...Well, it is becoming a very long haul...
...Ladd Furniture...
...They are, rather, what are called "mid-cap" or, more likely, "small-cap"even "micro-cap"—firms...
...Down 30...
...The smaller the cap, the less likely the outfit is to have participated in the bull market...
Vol. 32 • June 1999 • No. 6
