You don’t have to be a prophet or an investment guru to understand the ups and downs of the stock market. All you have to remember is what your mother said in 1990, when the market fell 21 percent in 86 days.
Mamma said there’d be days like this. She didn’t cave in and cash out then. And despite the recent volatility, the Wall Street consensus is that neither should we.
But how do you deal with all the uncertainty when it comes to protecting the employees’ 401(k) or pension plan, or, for that matter, your own retirement funds?
We asked some of Northeast Ohio’s best-known investors-folks who do this sort of thing for a living. What follows are their thoughts and strategies. Now mind you, their ever-vigilant and overzealous compliance departments would emphasize that none of what follows is actual investment advice, and that nobody can accurately predict the future of financial markets.
Even our own lawyers are begging that we refrain from making any recommendations on what to do with your money. So be it.
But if you sit down with a professional investment adviser and a bottle of good scotch, you’ll hear what this breed really thinks of the compliance department.
Jim Oelschlager, CEO, Managing Member and Chief Investment Officer
Oak Associates Ltd., Akron
Who is he?
Founded Oak Associates Ltd. in 1985 and now manages $8.5 billion in assets, including $650 million in White Oak Growth and $34 million in Pin Oak Aggressive Stock funds.
Bull or bear?10:40 AM 12/2/98
Stampeding bull. Elements fueling his expectations include lower inflation and interest rates, restrained wages and continued downward pressure on commodity prices.
Where to set your sights
Money market for a return within six months or a year. Best bet: long-term commitment to the equity market; over time, it brings returns superior to most any asset class available.
How to sleep at night
Don’t overdiversify. Put a lot of money in a few good stocks and hold on to them. Don’t confuse motion with progress. Concentrate your portfolio and stay fully invested.
The place to be
Technology: Tech stocks will sustain the bull market, so put your money where your mouse is. Most superior technology is developed in America and gets converted globally. “What’s occurring with technology is the equivalent of the Industrial Revolution of the late 1800s.”
Financial services: Expects banks and insurance, in particular, to get a big boost in 1999, particularly if bank consolidations continue.
Pharmaceuticals: Like the technology play, most major pharmaceutical companies are in the U.S. Figure in the aging population factor: more boomers will take more pills. Other countries need drugs. Guess where they’ll get them?
Contenders
Technology: Cisco Systems, Tellabs and Applied Materials.
Financial services/consolidation: Citicorp, currently merging with Travelers Group, and NationsBank and BankAmerica, merging to form the truly coast-to-coast bank.
Pharmaceuticals: Merck, Pfizer and, to a lesser extent, Lilly.
Rising stars
Eyeball electronic commerce-business to business and consumer-retail. You’ll see the trend boom because it’s a great productivity enhancer.
Proceed with caution
Tangible-commodity producers such as oil companies and car makers face a bumpy road with global overcapacity an issue. As for the friendly skies: “I’ve never seen a group that has the ability to shoot themselves in the foot so consistently and regularly. One airline cuts fares by 50 percent, other airlines follow and nobody makes any money.” Fasten your seat belt. Better yet, bail out.
The last word
Avoid a lot of activity and refrain from trading often.
Randall Thornton, Vice President and Trust Officer
Trust Division, FirstMerit Bank N.A., Akron
Who is he?
Manages investments for myriad corporate and personal trust accounts. As trust investment committee chair, he spearheads implementation of investment policies and strategies.
Bull or bear?
Moderately bullish. Figures U.S. economy is still OK, and foreign economies will soon settle down. Foresees satisfactory corporate earnings and low interest rates.
Where to set your sights
Invest long term in quality combos of bonds and stocks. Focus on quality, large-cap companies. Stay with the asset allocation you built over time and shun quick changes during short-term actions.
How to sleep at night
Don’t even blink at short-term volatility. Recent hoo-ha won’t make a lasting dent on the market. Just sigh and be patient.
The place to be
Technology: A positive cycle; R&D investments today by tech companies feed corporate margins tomorrow.
Pharmaceuticals: Continuing investments in drug R&D will spawn a steady stream of earnings, and inhibit volatility in the stocks.
Financial services: Best bets here: insurance and banking. Regional banks are attractive, with limited exposure to foreign investments and hedge funds.
Contenders
Technology: Lucent Technologies, IBM, Microsoft, Cisco Systems and Medtronic Inc.
Pharmaceuticals: Pfizer, Lilly and Warner Lambert.
Financial services/consolidation: American Express, BankAmerica and American International Group.
Rising stars
Global telecommunications; market growth and digital development will foster expansion in this segment.
Proceed with caution
Commodity-driven companies-chemical, steel and paper industries-compete against worldwide capacity. If you’re considering emerging foreign markets, think again. It’s still too early.
The last word
Understand what your risk levels are.
Caveat: These opinions are those of the individuals surveyed for this article. Don’t rush out and make changes to your portfolio based on these picks. What looks good today isn’t necessarily the pick of the week tomorrow. Consult your investment adviser and tax specialist. And if you still lose a fortune, don’t blame us.