Smart Market Moves

You don't need to gamble in today's market. Our panel of experts give you the best bets for 1999.

Oh, what a ride. Over the past six months, we have witnessed the market’s breathtaking lows and mind-boggling highs. Through individual accounts and 401(k) retirement plans, herds of investors have bought stocks in an environment where earnings-poor Net companies have market caps that rival blue chips; where the crises in the Pacific Rim and Latin America have zapped earnings of so-called defensive stocks; and the consolidation of concerns in major industries, including pharmaceuticals and banking, have created mega-institutions.

What’s truly amazing is that despite the ups and downs of this rollercoaster, many actually came out ahead-some by just parking their money in an index fund tied to the S&P 500. And others realized even more dazzling returns by purchasing such high-flying tech stocks as Microsoft and America Online.

As we look at the next nine months, the name of the game, however, is not just investing in the market but being selective. So say members of our investment roundtable. They maintain that it will be more crucial than ever to stick with quality as well as seek out growth opportunities at reasonable prices. Our mavens advocated these strategies-and more-when they convened January 20-the same day Federal Reserve Chairman Alan Greenspan testified before the House Ways and Means Committee regarding his concerns of an overheated market. The panel provided their comprehensive outlook on stocks and bonds and how investors, like you, can best profit in the coming year.

Our experts included Lou Holland, portfolio manager of the Lou Holland Growth Fund (up 35.75% in 1998) and managing partner and chief investment officer for Holland Capital Management; Deborah J. Frazier, vice president and senior financial consultant at Merrill Lynch, who specializes in providing financial planning and investment advice to professionals and small- and mid-size companies; Steven Singleton, senior vice president and director of research of Robert Van Securities, who uses a computerized program, Electronic Review of Investments, or Elroi, to handle fundamental, technical and quantitative analysis on securities; and C. Kim Goodwin, senior vice president and lead portfolio manager of the $7.5 billion American Century Growth Fund (up 36.8% in 1998), a leading proponent of growth investing.

The following is a summary of the highlights of the gathering, including guidance from our experts to help you devise a sound investment strategy for 1999. The panel topics ranged from the world economy to the best sector plays. Also, the panelists supplied us with their stock and
bond picks.

BE: Fed Chairman Greenspan once again voiced concern about the overvalued stock market. How do you expect the market to perform over the next 12 months?

LOU HOLLAND: I think that his concern with the power of this great bull market can be best described by the top 50 largest market cap companies, in all of the various indices, because they clearly dominate the performance. The performance of the Nasdaq index from its October low is staggering, up a whopping 65%. In terms of performance attribution, the top 10 stocks in the Nasdaq for the year ended December, were up 62%

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