Why didn't I listen to Bob Brinker? He called the bear market in 2000 - and is no Pollyanna today

bobbrinker.com ^ | june 29, 02 | churchillbuff

[steve50]

Where are you finding 5.1%. Last time I looked short term, 1-2 year, was going at 2-2.7%. I don't think long term was much over 3.4%. Guess I need a new Banker

[Dog Gone]

Realistically, I expect more Xeroxes and WorldComs. The excesses of the 1990s haven't worked their way through the entire market. There are bound to be more surprises, and some high fliers are going to get hit.

As a general rule, I guess I would be bearish for the next few months.

But, this actually looks like a really good time to start looking at individual stocks within sectors that have already been beaten to a bloody pulp. I think there is enormous opportunity there as some stocks have fallen to unimaginable levels.

The electricity producers have been creamed. Yet we're still going to need more power next year than this. That's one area to investigate.

Timber companies are another. A lot of supply is going up in smoke right now, and Canada can't dump timber in America anymore.

It may still be a bearish and unsettled market for some time, and I'm not sure I'd buy an index fund. But some individual stocks are going to show some spectacular returns, and if you buy them now, you could end up looking pretty smart.

[Grampa Dave]

First of all, we all learned that in a downward or Bear market the last thing place you want to be is an index fund.

Next, I agree with you that there is more coming re Rat Ceos and Rat Auditors and Disney like fiction re profits.

This I believe will be for the most part confined to the DIA and SPY stocks or the big guys.

I got into some good mid cap and small cap funds two years ago and have thinned the crop when they start to act wierd.

We are doing well with them, only OAKLX has been a downer. I saw this coming and reduced our positions in OAKLX this past Feb/Mar..

The good fund managers of the mid cap and small cap funds have good track records before the fall two years ago, and they for the most part have had a good return even YTD this year.

We are in our sixties and don't have a lot of recovery time. So we have a lot in the PIMCO Total Refund Bond fund, Vanguard Fed/Tres funds and a reasonable Fanny Mae fund.

I'm out of individual stocks. However, there is one semi local one that is really tempting. OS or Oregon Steel. They are about it re manufacturing steel pipelines in the US. They can be a wild ride. Not much profit for awhile. However, they just got a mega contract in your area.

If we get new gas and oil pipelines from Alaska, they will be it as the major US supplier. I may just buy it after it drops like it did recently and sell it after it makes 20% or so and wait for the next drop to buy again.

[disclaimer]

Everyone is over my head here, but would 50,000 in a CD at 5.10 for 5 years be stupid. Serious. Need to make a decision soon.

Make sure it's covered by FDIC. In the economic climate we're entering, we are going to see bank failures.

Interest rates may ramp up for a period of time so 5.1% may not be such a good deal at that point. Consider buying short-term federal bonds for some or all of your investment to ride out the financial storm.

[rohry]

Thanks for the informative post. The 90's in 10 concise paragraphs...

[painter]

This may sound dumb. But what are PE ratios?

[EVO X]

Where are you finding 5.1%. Last time I looked short term, 1-2 year, was going at 2-2.7%. I don't think long term was much over 3.4%. Guess I need a new Banker

My credit union is 5% for 5 years and federally insured.

[chnsmok]

Washington Trust. 4.91 + .20 bump for having an account.

[tom paine 2]

I'm a subscriber to his news letter and I checked my old letters. He was right on the money.

[steve50]

Where's it listed Dave? Ran a quick search and came up dry.

[RightWhale]

some high fliers are going to get hit.

Aren't many high flyers left. Seems like WorldCom, and Enron stocks were already very low when their box was nailed shut.

[Grampa Dave]

Where is what listed?

I mentioned stocks and funds in that reply.

Get back to me with the company, stocks that represent indexes or the funds, and I will try to direct you to the listing.

[steve50]

Sorry Dave. I was looking for that Oregon Steel you mentioned. Going to be a lot of pipeline building in the future, both home and abroad.

[Grampa Dave]

PE ratios are the Price of the stock versus its earning.

P/E this will give a ratio from 0 to smoke in the sky ratios that we had during the Clintoonian days of Drugged out Exuberance.

You need to buy the great book Stocks for Dummies (title may be a little different) to read about this key ratio.

Everyone has a different comfort factor. If it is in the 18+ ratio, I get a little nervous. Some of the vapor companies before the bust in 2000 had ratios from 200 to 400.

Oregon Steel, symbol OS, the company, I mentioned of some interest to me had a P/E ratio when the markets closed last Friday of P/E 42.90. That depending on your conservancy re this ratio is 3 to 4 times what I feel comfortable with. This means a lot of speculative money has driven the $ cost to buy the stock past what many of us feel is a legitimate/safe level. This explains why this stock can have incredible swings in a day, week, month or quarter.

Here is what the analysts at CNBC have to say about OS's high PE ratios:

Analyst alerts:

---

04/29/02 P/E to growth ratio suggests stock may be overvalued. Earnings Growth Rates | Price Ratios |

Financial alerts:

---

06/16/02 OS's P/E ratio well above industry average.


Hopefully that is some help to you re P/E ratios. I'm sure that some of the other investors will probably add or say that Grampa is basically correct or in right field here.

[Grampa Dave]

Go to this link. (link)

OS is a NYSE stock.

When you get to the CNBC site do a 1 year and then a 3 year chart to see the roller coastal activity.

A lot of us know that they will be the major big pipe provider. There may be too much money invested in OS for the profits that can be generated, and the actual pipes built.

Having said that. They actually make the pipe. The pipe is a product that is needed. Their local management and corporate management are well respected by the pipeline and construction industry. They just landed a huge $300 million contract to provide the pipe for a pipeline project in the coastal Texas area.

If Da$$hole becomes the minority rat after the Nov elections, and we are not in WWIII or IV. I will probably buy some just as a bet like in a horse race where you know the record of your horse and the jockey.

I hope this helps in your decision matrix.

[steve50]

Thank you Sir, with what CDs are paying a mans gotta try to find something

[Stand Watch Listen]

But still much better than, as we are now finding out, the

1990's decade of fraud and deceit

[Grampa Dave]

You might want to consider this company, CAA, on the Amex. (link)

With the exception of the last week in May the first 3 weeks in June, this company has a great track record for dividends and gain in stock value.

We own a similiar mutual fund, FBRSX. You might want to go to quicken.com and take a look at this fund and its record for this year and past years. It is typical of the really well managed mid and small cap funds that never have clowns on CNBC touting vapor ware. They just do our job for us in finding good stocks with good PE ratios.

Two other funds that provide a good income stream and reasonable stability when the Dow, QQQ, and Spy are crashing are the Pimco Total Return Bond Fund, PTTDX is one of the funds under Bill Gross, the expert in bonds. Vanguard has a stable fund, their short term Fed notes fund, VSGBX. It's NAV is really stable, and it kicks out dividends every month. Those dividends beat the CD's and money markets of today.

[painter]

Thanks!:)

[Stentor]

he issued his "sell" signal in late 1999

He made his out call in January 2000 sometime after the middle of the month. I remember because I could not move my money after the 15th and had to wait for the 15th of February. I was sold out of stock and into a teasury fund the last day of February 2000. He called a "sreaming" buy in the very beginning of 1999 that had gotten me into the S$P tracker. I owe the guy my backside.

He's good for the broad cyclical calls. His secular bear call should be worrying especially because Buffet and others agree with it to some extent. I don't subscribe to his newsletter so I haven't participated in the good or the bad of his shorter term calls.

His main reason for getting out was that: ( to paraphrase ) Greenspan is trying to kill this market.