The Hindu Business Line : Investment Nuggets

The Wall Street has few women who have enjoyed the reputation and sheer clout that Elaine Garzarelli has over the years. She gained fame while an analyst at Shearson by predicting “The Black Monday” in 1987 that saw when the Dow Jones Industrial Average (DJIA) lose 23 per cent on October 19.

Garzarelli is known for using a combination of economic indicators such as earnings, industrial production, interest rates and cash-flow levels to predict the direction of the market.

Famous for her contrarian views, here are some investment thoughts from her.

“I’d be a buyer here. It’s a good time to add to stock portfolios. No need to run and hide— we’re simply going through a 4 to 7 per cent correction in an ongoing bull market that should soon run its course" 212; on the recent US stock market meltdown.

“Well, I would stick with cyclical industries because I really do believe that the economy has bottomed and we’re in a recovery, even though there’s statistics like consumer confidence today, that was knocked down a little bit.”

“Buy stocks in the right sectors. Ninety percent of stocks in an industry will move if the industry’s growth prospects are better than the economy as a whole. Restaurants, building supplies, financial institutions, and semicondu ctors are sectors I believe will outperform the broad market during rallies.”

“The more interest rates come down, the more bullish I become.”

“Good moves are anticipatory. That’s why when things look great you sell; when things look horrible you buy.”

“I’ve always said that the stock market is very, very unsafe, unless you work very, very hard to take the risk out.”

“That’s why the stock market can be the fastest way to lose money this side of Las Vegas. I know dozens of private investors who have lost thousands upon thousands of dollars by trusting ill-conceived advice about ‘sure th ings’ in a so-called bull market.”

“Investors should pay attention to leading indicators more than the Dow. It’s the difference between focussing on the road or the rear view mirror. The most important statistics to me are compensation, productivity, and unit lab our costs, published quarterly by the Bureau of Labour Statistics,” — Garzarelli on the importance of fundamentals.

“A volatile market — if your view of the economy is good and you have cash — is a buying opportunity.”

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