REBOUND ON WALL STREET : Advice : Look for Value, but the Fainthearted Beware
Some assessments of the stock market and investment advice from market professionals: David D. Alger, Senior vice president, Fred Alger & Co., Boston:
“The thing to do here is do nothing, except look for good values. There are some stocks that ran up before that now have come back down to places where they should be bought. Basically, that’s what (investors) should be doing, is concentrating on opportunities.”
John P. Graner, Los Angeles regional director, Prudential-Bache Securities:
“We don’t think this is a market to speculate in because it is volatile. We do think it’s a market to invest in. In terms of investing, we’re telling our people to follow the defensive issues--those with good earnings, those that are recession-proof.”
Jack Conlon, Executive vice president, Nikko Securities Co., New York:
“The nature of the reaction today (Monday) is one of bargain hunting on the part of professional traders. I suspect we’ll see the next several sessions with this kind of heightened volatility. So it won’t be a marketplace for the fainthearted for the next couple of weeks.”
Charles E. Johnson, Vice president of marketing, Franklin Resources, a San Mateo mutual fund manager:
“(Investors) should view their investments as longer-term investments. The market P/E (price-to-earnings ratio) looks very healthy--after the fall it was down to 11%, which is very cheap historically. Clearly it was just an aberration on Friday. I think that the market will recover most of the decline, just as it did two years ago. People learned a lesson from that one because we saw buying a lot sooner this time.”
Robert Kirby, Chairman, Capital Guardian Trust, Los Angeles:
“All the last couple of years have proved is that with the invention of the wonderful futures market in Chicago and programmed trading, we have simply created a ‘Star Wars’ stock market. All that means is you’ve achieved a new, heightened level of volatility that you either live with or get out. People keep trying to find a fundamental reason for all this, and there isn’t any. There are some professionals who have learned how to run the market in spurts to suit their purposes. . . . We’ve been thinking that the market was a touch overpriced, just because the stocks seemed to be anticipating some further decline in interest rates that hadn’t occurred yet.”
John R. Queen Jr., Vice president, Merrill Lynch, Pierce, Fenner & Smith, Los Angeles:
“We have been telling people to basically hang on if you’re a long-term investor. Now, that’s easier said than done, and emotions get in the way. We are seeing more public activity on the buy side today (Monday) than we saw after the ’87 crisis, which I take to be a good sign. By and large it was an orderly market today--there was a tremendous amount of upside volume, and that’s a good sign from a stabilization standpoint. For somebody who’s a speculator or a trader, this is a very treacherous market. It’s difficult to get timely (stock) quotes, it’s difficult to trade in the market when it’s making such wild gyrations. And if I were a speculator, I would tend to back away just a little bit and let the dust settle. But for the long-term investor, a lot of times these are where the opportunities are made, and it takes a certain amount of gumption to get in there and hang on. But usually that’s the right thing to do.”
Charles C. Mann, President, Professional Financial Advisors, a Mission Viejo financial planning firm:
“We’re not really getting too excited about what happened on Friday. . . . We’ve actually been selling out of the market since January of this year at various levels. We’re going into the cash position and then buying into the market over the next three years, our strategy being that we’re not exactly sure where the market will go in the short term but we know there will be some corrections. We feel by buying back into the market over the next three years, we’re due to hit some of the lows.”
