He Grins at Bears and Takes Bull by the Horns

Don’t panic because some economist says we’re headed for another recession--we aren’t.

And if the stock market continues to pull back, you’d be crazy not to jump right into those stocks you loved not too long ago--when they were 10% to 30% higher.

That unabashed bullishness comes from Charles Albers, the 50-year-old manager of the Guardian Park Avenue stock mutual fund in New York. A veteran on Wall Street with pretty darn good credentials, Albers says rising worries about another severe economic slump are way off the mark.

“The alarm is overdone. The bottom line is that the recovery will take hold progressively over the next 12 months,” Albers says.

“These economists, they’re paid to be controversial, highly articulate and persuasive,” he says. But in dissecting every government statistic on the economy, he says, they’re driving everyone crazy because one number points to recovery while another points to continued weakness.

What people are forgetting is that economic statistics always give mixed signals at the start of a recovery, Albers says. They’re also forgetting that, once the Federal Reserve begins to lower interest rates in a recession, it takes a while for the economy to respond to that stimulus--but it will.

He chuckles at the idea that a federal income tax cut for the middle class is what’s needed to guarantee new economic growth. That proposal is now heating up in Washington, but, Albers says, “by the time they (Congress) vote it and get it paid out, it’ll be too late--the economy will already be recovering.”

Albers’ Guardian Park Avenue Fund is fully invested--stocks make up virtually all of the $270 million in assets. Unlike other fund managers who have been keeping 10% or more of their portfolios in short-term “cash” investments as a cushion, Albers has been able to find lots of stocks worth owning--even though the conventional wisdom is that many issues are too high-priced.

If his strategy sounds dangerous, Albers’ record shows it pays off very well:

* In the nine months ended Sept. 30, the Guardian Park Avenue fund was up 28%, well above the 24.7% return of the average growth stock mutual fund, according to fund-tracker Lipper Analytical Services.

* Over the past 10 years, the fund has risen 431%, versus a 308% rise for the average growth stock fund.

Albers’ stock-picking strategy is to go after companies that represent good value (i.e., they generally have low stock prices relative to earnings per share) and that boast rising earnings. Of course, those two qualities often are mutually exclusive. Albers finds that while value often is apparent, many investors have a harder time identifying or believing in a long-term earnings trend.

Indeed, many of the companies whose stocks have been trounced lately are still showing good earnings growth--it’s just that Wall Street is so panicked about the idea of another recession, the stocks are being dumped willy-nilly.

Albers’ biggest bets today are in three stock sectors: computers, defense and financial services.

He owns such personal computer companies as AST Research ($22 Friday), Dell Computer ($27.25) and Apple Computer ($51.25), in part because he sees an exciting export market for the companies in the 1990s.

His defense and aerospace stocks include Boeing ($48.625), Raytheon ($76.875), Martin Marietta ($50.75) and Southland-based software firm Logicon ($36.875).

“It’s absolutely true that we’re going to see a reduction in defense spending over time,” Albers says. But a lot of the cuts will be in manpower rather than in programs, he says. More important, “Many of these companies have very good (non-defense) commercial businesses. And the stocks are colossally cheap.”

In financial services, he owns such names as Federal National Mortgage ($59.75) and California auto insurance firm Mercury General ($27.50), plus a host of medium-size banks and S&Ls.; His financial stocks, he says, “all have earnings momentum, they’re cheap, and they’re all sound companies.”

How does he decide when to sell? When earnings growth, instead of accelerating, begins to decelerate. That’s why, for more than a year, he has been negative on food companies and other big consumer stocks that were tremendous gainers in the 1980s. Albers sees consumer companies’ earnings growing much more slowly over the next few years, and he believes that investors will gradually abandon those stocks because of that slowdown.

His fund had owned food and tobacco giant Philip Morris ($70) for many years, but has now sold most of it, Albers says. “It served us well,” he says, but he believes that the company’s days of enthralling earnings growth are over.

Is he upset that some of his favorite stocks, such as AST Research and Martin Marietta, have slid sharply from their 1991 highs as nervous investors have bailed out? No way, Albers says. “When other people get emotional, that just creates opportunity for people like me,” he says.

“I’ve been here more than 20 years. My long-term record is good. I don’t feel the pressure to have short-term results--I don’t have to prove anything quarter to quarter. I can think about long-term investing, and I think that gives me a competitive edge.”

The Guardian Park Avenue fund has a minimum investment of $1,000 and charges a 4.5% sales fee. Investors who want more information can call (800)-221-3253.

Later Trades Begin--Slowly: The Pacific Stock Exchange’s newly extended afternoon trading session didn’t get off to a rousing start last week, but like anything new it’ll probably take a while to get investors attuned to the idea.

The exchange extended its trading day 20 minutes starting last Thursday, from 1:30 p.m. to 1:50 p.m. (Pacific time). That means the PSE now trades for 50 minutes longer than the New York Stock Exchange, which closes at 1 p.m. our time.

The NYSE offers after-hours trading, but only at the 1 p.m. closing prices. The PSE is trying to attract more West Coast traders by offering live bid and asked activity for 50 extra minutes--in other words, a real buyers’ and sellers’ market where prices can change by the moment.

But it will take healthy investor participation to make a real market for the full 50 minutes. Last Thursday, the PSE said it traded 6.9 million shares for the day. A total of 316,800 of those shares traded in the 1 p.m. to 1:50 p.m. time frame, but only about 21,000 shares changed hands in the new extended trading period of 1:30 to 1:50, the PSE said.

A spokesman categorized that as “an OK start” for the extra 20 minutes. Friday results for the extended period weren’t available, the spokesman said.

The PSE has trading floors in Los Angeles and in San Francisco; most of the stock trading is done in Los Angeles.

Buy? Sell? Hold? Try These Rules

It’s terrifying when the stock market doesn’t do what you thought it would in the short term--especially if you’re an investor who hates surprises. To make the game a little less terrifying, market analyst Jeff Weiss at Lehman Bros. in New York suggests some common-sense rules for buying or selling, in good markets or bad. His tips were related by a rival--Eric Miller, strategist at Donaldson, Lufkin & Jenrette Securities--who thought enough of them to include them in a recent report on “contrary” market opinions.

* Capital preservation should come before capital appreciation. Before you buy any investment, think about how much of your money you could lose in the worst-case scenario-- then make your purchase decision accordingly.

* Rather than strive for a “hot” investment record, it’s usually better just to stay “eternally warm.”

* “Average up” when you decide to buy an investment--that is, buy over time, not all at once. “Buying a full position right away is like marrying on the first date.”

* What goes up always comes down--not vice versa.

* A stock is never too high to be bought, nor too low to be sold.

* Sell when a stock is 55% or more above its 30-week moving average price, and sell aggressively when the stock is 75% above that average.