Looking for a key to Wall Street’s secrets? Think baby boomers.
A trio of Fifth Third Bank executives predict that 1999’s successful stock market picks will be influenced by this now-aging generation, as well as developments in technology.
As the 35 to 65 age group grows, it will influence health care and financial industries, says John B. Schmitz, the bank’s director of portfolio management. He and colleagues James D. Berghausen, senior vice president and chief investment officer, and Roberta O. Tucker, director of fixed income strategy, outlined their 1999 investment forecasts earlier this year at a panel discussion in Columbus.
“Baby boomers continue to demonstrate that they fight the aging process,” says Berghausen in predicting that health care industries will burgeon.
In the financial realm, Tucker says, those baby boomers, who have of late been spending their money, will begin looking toward retirement.
“They’re thinking Social Security probably isn’t going to be there, so that is great for brokerage and investment stocks,” she says.
Technology also will be a safe stock bet, notes Schmitz, considering statistics that show half of all American households have PCs and the usage of the Internet is doubling every 90 days.
“In five years, usage of telephone lines will be taken up 90 percent by sending data,” Schmitz says. “So there are opportunities in technology and communications.”
One local company — Cardinal Health Inc. [NYSE: CAH, www.cardinal-health.com], which the panel noted for its “excellent management team” — was among the panel’s stock picks for 1999. The remaining list:
• Intel Corp.; NASDAQ: INTC; www.intel.com
• EMC Corp.; NYSE: EMC; www.emc.com
• Texas Instruments Inc.; NYSE: TXN; www.ti.com
• MCI WorldCom Inc.; NASDAQ: WCOM; www.mciworldcom.com
• Bristol-Myers Squibb Co.; NYSE: BMY; www.bms.com
• Marsh & McLennan Cos. Inc.; NYSE: MMC; www.marshmac.com
• The Bank of New York Co. Inc.; NYSE: BK; www.bankofny.com
• Tyco International Ltd.; NYSE: TYC; www.tycoint.com
• Service Corp. International; NYSE: SRV; www.sci-corp.com
• Comair Holdings Inc.; NASDAQ: COMR; www.comair.com
• Illinois Tool Works Inc.; NYSE: ITW; www.itwinc.com
So how have Fifth Third’s experts fared in past Wall Street gambles? Their 1998 list of 14 stocks returned 37 percent; Standard & Poor’s 500 returned 30 percent for the same time period, Berghausen says.
Keep in mind, he adds, a portfolio isn’t built on just a handful of stocks.
“The principle of diversification is the most important,” he says.
Joan Slattery Wall ([email protected]) is a reporter for SBN Columbus.