Which Way Is Up?

Our experts discuss strategies to thrive no matter what the market brings

Sometimes It Seems As If Good News For investors brings up more questions than answers. Midway through 1997, for example, with the market fresh from an unstoppable 20% tear in the first half of the year, there were riddles aplenty to figure out. On one side, pundits had warned even before January 1 that stocks were overvalued and that a correction–an overall drop in the level of the market–was long overdue. And true enough, the market slid almost 10% in February, rebounded shortly thereafter and proceeded on to a record 8,000 mark for the Dow industrial Average. Could so many great financial minds be so wrong? Not necessarily, many experts said, repeating the same gloomy forecast.

Much to our relief, no sooner had we begun to puzzle over what had happened, than it was time for the biannual BLACK ENTERPRISE Investment Roundtable, an opportunity to gather some of the best professionals around to ponder tough questions we all need answered to best structure our portfolios. On July 10, we brought together a noteworthy group at our Manhattan headquarters, There was Barbara Bowles, CEO and founder of the Kenwood Group Inc., a Chicago institutional investment firm managing $300 million in assets and running a mutual fund that specializes in mid- cap value stocks. Another value stock expert in attendance was Nathaniel Carter, president and chief investment officer of Lakefront Capital Investors, a Cleveland money management firm running $20 million in institutional assets and the newly minted Key Victory Lakefront Fund to boot.

We didn’t want to neglect growth stock managers, so we invited two. We had Dawna J. Edwards, director of equity investments and principal of Alpha Capital Management Inc., a 100% African American-owned money management firm headquartered in Detroit that manages $120 million in assets. Teaming with her was Robert Lamb, president and co-founder of Highland Investment Group, a Fairfield, Connecticut, firm that recently launched the Highland Growth mutual fund. Finally, to help with guidance on the fixed income and bond front, we added Frankie Hughes, founder and president of Hughes Capital Management, a Washington, D.C., firm with $225 million under management.

Our panel covered the gamut of investing: what had happened and was going to happen to the market; what are some of the best long-term investments to be found) and whether another drop in the stock market is in the offing. And to best help you comb through some of their invaluable advice, we’ve divided the proceeding up to address specific questions you, the investor, would most likely ask.
Is the market too high? Are stocks overvalued?

BE: At our roundtable six months ago, the consensus was that stocks were very expensive. Since then, the market has run up about 20%. What’s up?

BARBARA BOWLES: The market is selectively overvalued. Large-cap, bluechip companies have made the most gains so far with the top 50 companies up 40% year to date, while the rest of the market is up only three to 10 percentage points. If there’s value to be found, it’s in smaller

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