NYSE---Deb (fast)
Outlook of 2004
Interview: Henssler Equity Funds---Parrish, Ted---Fund Manager
>> in case you weren’t keeping score today, the dow and s&p closed at 19-month highs. deb kostroun was at the closing bell for all the action during the day and here she is.
>> one of the things we saw, the market jumped at the open on the drop in jobless claims and didn’t look back, especially as we got more upbeat economic news and hitting the 19-month highs in the s&p and dow for the third day in a row. while the breadth of the rally also very good, we also saw a lot of the indexes that we typically track, all generally higher. you had technology higher, energy, retailers and financials. however, you did have a few stocks that actually were on the losing end, stocks like coca-cola, also colgate and some of the gold and silver stocks falling. that’s kind of what we saw in today’s session. coca-cola, they were lower on the change in management. colgate-palmolive hurt by weakness in its oral care division. and also we saw the gold and silver stocks dropping as gold prices slipping and it’s december, getting close to 2004 and ‘tis the season to make forecasts for the next year so how does dow 11,000 sound for next year? u.b.s. equity strategist gary gordon says that’s possible as he expects the dow to outperform the s&p 500 next year. he says a jump to 11,000 would be a gain of about 8% from where we are now and gordon says the dow has really more defensive names, meaning many of those industrial, energy and material stocks we’ve been talking about recently, such as caterpillar, united technologies and exxon-mobil and he expects the defensive stocks to outperform in 2004. so a lot of good prospects entering the new year.
>> deb kostroun, thank you, as always. stocks may have finished the day higher, but our next guest says the are about tapped out for the rest of the year. he manages the henssler equity fund, which itself is up 25% this year. pretty much in line with the s&p 500. ted parrish joins us from our bureau in atlanta to share his views on the market. as well as where we are heading in 2004. we’re talking about tapped out, tapped out, ted parrish, is that what we’re going to remember you for?
>> no, no, no. at the beginning of the year i said i thought the s&p would be up 15% to 18% and the market has done that. we firmly believe in my fund, the henssler equity fund, we believe that the stock prices move with earnings gains and we’ve had about, if everything holds true through the fourth quarter, about a 19% growth in s&p earnings and we think the stock market should reflect that. so we’re seeing estimates for next year and things are looking pretty good and we expect the market will probably be up double digits next year, 10% to 12%, as well.
>> investors by nature are greedy, always want more, right, never happy. are you looking for above consensus growth, for, say, the s&p 500, or below, or in line for 2004?
>> if you look back through history, the analysts usually undershoot estimates and companies usually undersmoo undershoot and it’s about 3.2% mark they undershoot by. this year’s been running over 5%. i think the s&p right now, the consensus is for 12.3% growth next year. maybe they’ll come in 14% to 15% but i think there’s a lot of leverage and a lot of companies will do well next year and we’ve seen g good reports so far and good outlooks going forward for next year in some industries i didn’t believe would hold tight so next year will be a good year, i think.
>> talk to me about why you think that a slow, sustainable rise in job creation is key? why slow and sustainable?
>> hey, i mean, there’s been a lot of shifts in the economy. i would dare say it’s structural changes and maybe that’s correct. you’re not going to see the job growth―we haven’t seen the type of job growth that bears have been expecting and those are the main catalysts they project as the reason the market will stall. but, hey, as companies are hessitant to hire and maybe now they’re seeing sales pick up and not getting earnings gains from just cost-cutting, they’ll probably go out and hire but they’re not going to come out and pound the table and overload.
>> so the initial jobless claims today, 353,000, better than expected. what was your take on that? were you surprised by that figure? or the streak of strength, or the decline that we’ve seen in the jobless number?
>> to tell you the truth, at the henssler equity fund, we didn’t pay attention to it. we’re long-term investors and week to week, we don’t pay attention to the jobless claims because it’s going to move all over the place. i like to see the unemployment rate go down and that’s something that we pay attention to but we’re long-term investors and we don’t look at the short-term noise, but long-term trends.
>> as long as your name isn’t in the jobless data, that’s what matters. quickly, ted, we have less than 30 seconds. why do you think this above-average price-to-earnings% -ratio is sustainable?
>> well, because, number one, inflation is at a 40-year low and interest rates at a 40-year low and higher earnings growth, low inflation and low interest rates can sustain a higher p.e. ratio.
>> well said and well timed. ted parrish, thank you, portfolio manager of the henssler equity fund. one of japan’s biggest banks may be ready to repay a big chunk of money it owes to the government. we’ll go live to tokyo to learn the story on mizuho financial.
