two things that I’m watching. I think the partial privatization of Social Security funds via some sort of a public entity approach is something that, once you let it out of the box, you can’t put it back in. And until much more study and thought has gone into it, I don’t think the general population is ready just yet to make that change.
The tax cut is an issue. This nation is already in an “I spend everything I get” mode. So, if you give them more, they will spend it. And if Greenspan is hysterical about that, you’re just going [to make him more so].
CARTER: I think a seminal event between September 1 and the election will be third-quarter earnings and the anticipation of that, and I think that will be critical in determining what the market does up to the election. I think after the election, if George Bush is elected, I think you’ll see the market soar. If Al Gore is elected, who knows? I’m not really sure. But with respect to the political environment, I think that it’s clear that George Bush is going to cut taxes if he becomes president, and I think that will be good for the stock market. But if he does it, not in terms of a general relief, what I think he’ll do, ultimately, is move more toward lowering capital gains taxes and estate taxes because what that will do is allow people who are averse to selling positions to be more active, to sell positions, to redeploy capital. Those dollars will be taken out and reinvested and so forth. If we’re talking about a general tax cut, you know, lowering the rate, the income tax rate, then I think that could be problematic. So I think it depends on how he proceeds as to how the market reacts to that.
B.E.: What do you view as the dominant sectors over the next year?
COLEMAN: Generally, a stock gets in my portfolio because I find it specifically interesting, and then I look around for other companies in the industry to see if the rest of the industry is participating. I prefer companies that are growing so rapidly that everybody around them wins because they’re in the right place at the right time.
Photonics is that area right now. That’s the hottest area in the economy, quite frankly. It’s the optical backbone that’s building up these data networks. It’s Corning; it’s Nortel Networks (NYSE: NT). Those are the real companies in the industry. You have some other players like JDS Uniphase (Nasdaq: JDSU) that would have earnings if they didn’t have so many acquisitions and so much goodwill.
I like the CRM (customer relationship management software) space, and that began with me looking at Siebel Systems (Nasdaq: SEBL), which I have been following for years, and I got tired of watching it double, so I bought it. And it kept on doubling and tripling. I have about 7-to-1 in that stock. So, those are