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Saturday, Nov. 22, 2014

Brokers feel rebound is close

Tuesday, July 23, 2002

SIKESTON - With Friday's 390-point Dow Jones plunge - the worst close in nearly four years - followed by another tumble Monday, stock brokers are advising things should turn around in the market. When that will happen is yet to be seen.

"We've had a major correction in the NASDAQ, and we've had a major correction in the Dow," said Mike Bohannon of Raymond James Financial Services in Sikeston. "High volume, high volatility in the market sometimes indicates you're getting near a bottom. I'm not saying were at one, but there are indicators we're getting close."

Close enough that brokers advised hanging on to what you have.

"People need to know that this market is trying to make a bottom here, so anyone who is selling now is selling low," said Dean Wooden of Raymond James Financial Services in Sikeston. "I don't think anyone knows how low is low or how is high, but I know right now things are on sale. If Wal-Mart was having a sale of this magnitude, you couldn't get in the parking lot. It is the only market in the world where when it's cheap and on sale, no one wants to buy."

Looking from the dot-com boom to the present low, Wooden said the market has, in its typical fashion, "moved the pendulum from an overvaluation to an undervalution" of businesses.

But as "the little guys" in the market watch their 401k retirement plans dip in value to less than they put in, confidence to invest in the market is hard to come by.

"There's a lot of people that are concerned, hesitant to do anything at this time," said Bohannon. "It's a bear market. Local investors are no different than everyone else - everyone's being hurt by it."

"What we're feeling here is pretty much across the country right now," Wooden agreed.

Like everywhere else in the country, events from the Sept. 11 terrorist attacks to the Enron and WorldCom accounting scandals have combined to erode local investor confidence.

But investors are responding to "emotional factors and not economic ones," according to Wooden.

"The Federal Reserve Board just finished its most aggressive cycle in our history with no sign of an interest rate hike in the near future," said Wooden. "And tax cuts and refunds have helped the consumer keep spending which has helped fuel economic growth."

Wooden said his first advice for investors is: "Make sure you're diversified." Secondly, "understand your risk tolerance." While all investment does include risk, diversification can help minimize that risk.

And finally: "Try to buy quality," said Wooden. "Quality holds its value much better in a volatile market." When looking into companies to recommend to his clients, the key question, from retail or technology, remains, "Who's the best?"

"We're only interested in high-quality companies - we're not interested in junk," Wooden said.

The past is no guarantee of the future, but Bohannon remains confident that "if you're in it for the long term, things come back - they always do." Looking over the last 80 years, "the market outperforms all other investments," he added.

Recent accounting scandals have shaken investor confidence in the market, but they will bring in their wake changes in the market long overdue.

"In order to have a free market you have to have integrity in that market," said Bohannon. "Fraud can not be tolerated - it destroys the free market."

Wooden said he believes this is still the greatest country in the world to live in and that American businesses will remain a good investment in the long run. "We're going to be better for this, not worse for it," he said, predicting "better accounting, better managers, better board of directors and better companies."