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Bargains tempt cautious investors
By HELEN HUNTLEY, Times Staff Writer
© St. Petersburg Times While the carnage in the stock market is discouraging most investors from even thinking about stocks, some optimists have begun cautiously putting money to work. "I see good values," said St. Petersburg money manager Timothy McIntosh at Strategic Investment Partners. "Even though I don't think we've hit bottom yet, I think we're in the bottoming process." History confirms the commonsense notion that the best time to buy stocks is when they're cheap because most investors don't want to own them. The problem, of course, is that cheap can get cheaper before it reverses direction. "There was some climactic selling Tuesday, with people wanting to get out at any price," said Art Huprich, technical analyst for Raymond James & Associates in St. Petersburg. "Some of the small- and mid-cap stocks which had been leading the market were getting sold with abandon. There were some initial signs of making a low." Wednesday the selling pressure subsided and stocks finished the day on an up note. After being down more than 100 points earlier in the day, the Dow Jones Industrial Average closed at 9,054.97, a gain of 47.22 points. Other market indicators also were up, with the strongest performance recorded by the Nasdaq Composite Index, which rose 22.35 points to close at 1,380.17. The gains aren't considered particularly significant, though, because trading volume was low ahead of the holiday weekend. Markets are closed today and will be open for a half-day on Friday (closing at 1 p.m.), when trading again is likely to be light. "When there are fewer people playing the game, you get more swings up and down," Huprich said. He said the real test of whether the market has stabilized will come over the next two weeks as investors get their quarterly mutual fund statements: "If they all of a sudden see it was a tough quarter, do they sell? And if they do, how does the market absorb that selling pressure?" While market bottoms are easily determined after the fact, many analysts say they will need to wait at least a few more weeks to make the call. "We've seen some signs that we need to see, but it's inconclusive," Huprich said. Clearwater market analyst William I. Ferree Jr. is more confident. He calls the current market "an historic buying opportunity for all sectors." "I think we're forming a longer-term bottom," said Ferree, who publishes Ferree Market Timer newsletter. "All that is needed for a trigger is an upstart to the new quarter, and momentum would then probably build to at least Labor Day." He says the party could start next week, assuming there are no terrorist attacks between now and then. Others are optimistic but considerably more subdued, noting the damage of the Enron and WorldCom debacles and the risk that there are more such corporate meltdowns yet to be revealed. "It's going to be a slow recovery because of lack of investor confidence in published financial reports," said Tampa money manager Finn Giles of Florida Investment Advisers. "I think the economy is going to turn, but I don't think we'll have investor participation." Giles said he has been slowly deploying clients' cash in the sectors he considers most promising: health care, financials and consumer staples. "Telecommunications and technology may still have some surprises," he said. St. Petersburg money manager McIntosh said he thinks investors should stick with stocks if they are in the market for the long term. "With 10-year Treasuries paying under 5 percent, stocks look the most attractive as an asset class for the next five years," he said. "But it's very hard to step up to the plate and buy when you see the selling going on." -- Helen Huntley can be reached at huntley@sptimes.com or (727) 893-8230.
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From the Times Business report
From the AP
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