Danielle Boone
Muriel (Mickie) Siebert, president of the discount stock brokerage Muriel Siebert & Co., has been a trailblazer ever since she hit Wall Street.
A Cleveland native, Siebert lied about her lack of a college diploma (she had studied accounting and finance at Western Reserve University in her hometown) to land a $65-a-week job in the equity research department of Wall Street’s Bache & Co. brokerage in 1954. She soon rose to analyst, winning respect for her insight into the airline and entertainment industries.
Harder than picking stocks was breaking into an all-male culture. Siebert persevered, however, and in 1967 became the first woman to own a seat on the New York Stock Exchange. She followed that first by becoming New York state’s first female banking superintendent. After a brief foray into politics--an unsuccessful bid for a U.S. Senate seat--she returned to Wall Street.
Siebert, 64, has strong ties to Los Angeles, where a project she began to help female business owners rebuild after the 1992 riots has blossomed into the Los Angeles Women’s Entrepreneurial Fund, which makes no-interest “micro loans”--some as small as a few hundred dollars--to female entrepreneurs. The money comes from a share of the earnings of Siebert’s securities underwriting business.
A self-described “bleeding-heart Republican,” Siebert devotes much of her time and energy outside the office to speeches and other activities promoting women in business and politics. She will appear at 1:30 p.m. Saturday in the California Ballroom at the Westin Bonaventure hotel in Los Angeles as a keynote speaker at the Los Angeles Times Investment Strategies Conference. The event is sold out.
Siebert spoke recently with a reporter in her Manhattan office, which she shares with Monster Girl, her well-coiffed long-haired Chihuahua.
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Question: As bad as it feels to be on the sidelines during a stock market boom, it can feel even worse to be in the market but underperforming. Do you see investors ditching their game plans to chase hot stocks or sectors?
Siebert: It’s a tough decision for investors, both professionals and individuals. It feels terrible when you know you’ve got a company whose earnings are increasing at the rate you thought they’d be increasing, but it’s not in the “hot” group. And that group has been limited. If you take the rise in the Nasdaq market, the bulk of it is confined to just a few stocks like Microsoft, Intel and Cisco Systems. And yet you could have companies that are increasing earnings nicely and haven’t moved the same way.
So I tell people, stick to your guns. You will make money eventually. There is really no substitute for picking a company you know that everybody says--your own research and other people’s--is going to increase its earnings and has a good outlook.
The quality of research that’s available to individuals today is wonderful. For $10 you can get almost everything on a company. You can get First Call, which is a great compilation of analysts’ earnings estimates. It was originally designed just for institutions, and they paydearly for it, but now I think an earnings estimate is about $1.50. You’re getting the numbers from an independent source, so you can make your own decision. I think it’s a bargain because if people are putting $50,000 in the stock, or $20,000, or $10,000, what’s a better deal than $10 for reports?
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Q: Smith Barney, Merrill Lynch and a number of other full-service, full-price firms say their long-run edge is the quality of their research, implying that cheap research is no bargain.
Siebert: If they have key analysts who make money for you, then the commission is small. But if you’re buying or selling stocks based on your own research, or your own feel, then their commission is very dear. Three cents a share is our minimum cost, so you’re in and out for 6 cents a share. A full-service broker can cost you 30, 40, 50 cents a share each way. Now, if that broker is giving you top-quality research, it’s worth it. We have a certain number of accounts using full-service brokers who’ll buy some from them and they’ll buy some from us.
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Q: You’ve mentioned First Call. You can go to the library and read Value Line and other specialized publications. You can read the Wall Street Journal or this newspaper. There’s a ton of financial material on the Internet. But at some point you hit information overload and you scream: Just give me some simple rules!
Siebert: Here’s a couple that depend on your feeling about risk. If you’re more conservative, pick a group that hasn’t moved but with stocks that you know aren’t going out of business--automobiles, for example. General Motors or Ford, Chrysler is loaded with cash. You could put two-thirds in stocks like that and one third into drug companies like Merck, Pfizer, Bristol Myers that have not gone crazy price-wise.
Do it that way, or pick a group that is so vibrant now it has lots of momentum. There’s interest in the technology stocks for obvious reasons. You see companies coming out with direct Internet access, using TVs instead of a computer. Somebody’s going to make a lot of money there.
But if you put your money in stocks that are just today’s game, you have to watch those. You can’t buy technology stocks and not watch them closely.
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Q: Any rules about when to get out of a stock--sell when it doubles, for instance?
Siebert: That’s when you spend your $10 or $15 on research. If you find the reasons you liked the stock are still there, you can be conservative and sell half, to get your cost out. Or if you expect a slow-up in earnings, sell more. Some stocks can’t afford even small earnings disappointments.
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Q: Is that short-term mentality the fault of mutual fund managers?
Siebert: The pressure on the money managers was started by corporations that wanted maximum return on their pension funds. Those [money managers] who didn’t perform well didn’t get the money. So the corporations brought it on themselves, and the fund managers just picked up on the trend.
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Q: Does an individual investor with a long-term horizon have to respond to every earnings disappointment?
Siebert: It depends what the reason for the problem is. If it’s because they had a delay and they’re going to ship a product in July instead of May, it could be a buying opportunity if you know the product’s good and the rest of the outlook is good. But generally speaking, with 70% or 80% of some stocks held by mutual funds, sometimes the individual does have to respond. You can be right, and the company makes more money than people thought, but still the stock doesn’t do anything because the market remembers that disappointment.
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Q: That’s dismaying. Please tell me that in most cases, if I’m right about earnings, I’ll be right about the stock?
Siebert: It’s hard to beat fundamentals if you have a long-term orientation. I’m talking about at least a year horizon--that’s the shortest time to see real progress.
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Q: Part of the reason mutual funds are popular might be that people are too busy to do their own research. How much time do you have to spend to be a good investor?
Siebert: What I’d call “maintenance” on an investment you already own might just mean reading the earnings reports three or four times a year, or looking more closely if something changes. But if you’ve bought a stock on a “story” or on its momentum, you need more discipline and you have to watch it very closely.
Generally, it takes a lot longer to find something good to buy than to just keep track of a current investment.
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Q: The flood of money going into mutual funds gets lots of attention, but do you still see a lot of stock pickers coming in?
Siebert: The customers we’ve had for a longer period of time are stock pickers. A lot of them buy and sit with quality, and they’ve done pretty well. They’re usually in some mutual funds too, in areas where they want a broader diversification. But if somebody wants to own Intel, they want to own Intel.
We find their children coming in and buying mutual funds, and I think that’s smart as a way of starting out. I would rather have them do that than to pick one stock that maybe gets hurt and they lose their taste for the market.
One thing I find that many investors don’t pay attention to is their mutual fund’s cost basis. If you have a fund full of rapid risers, you might have capital gains tax to pay. So you should ask for the cost basis on a fund’s portfolio. They print it twice a year. Who wants to pay $20 [a share] for a fund and find that there’s $3 or $4 dollars in profits that you’ve got to pay capital gains on? The fund may be worth only $18-something to you at that point.
But mutual funds are a good way to start out as an investor. We all know that Social Security will not be a retirement package for people in their 30s the way it once was. Some of these kids of 30 are seeing their parents retire, and it’s not the way their grandparents retired. Social Security won’t do it all, and a lot of corporations with their 401(k)s put the onus of a retirement fund on their employees, so it’s just common sense that people are going to have to do more for themselves.
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Q: What about the proposals to put Social Security funds in the stock market to make that money grow faster? Is that a solution?
Siebert: I don’t think the government should pick stocks, but I would have no qualms if a portion of the money went into a broad index, say the 1,000 or 2,000 largest companies. I don’t want the government holding proxies, though. I don’t want them controlling companies. I think it would be counterproductive. They could neutralize that by saying that if the outside shareholders voted 90% to 10% on a [proxy] question, then you could vote the government stock in that proportion.
