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What the experts think
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August 31, 1998: 12:54 p.m. ET
Strategist calls the market sell-off 'cyclical'; analyst blames hedge funds
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NEW YORK (CNNfn) - The U.S. stock market continued to plummet on Monday, as investors continued to worry over the financial and political troubles in Russia.
The Dow Jones industrial average dropped 144 points by mid-morning to erase the gains the market had made this year.
A panel of experts takes a look at what's behind the latest sell-off.
Robert Froehlich, chief market strategist at Scudder Kemper Investments, thinks financials are the way to go in this volatile market.
He says investment institutions will flourish with low interest rates, and names a few in particular that he thinks will prosper.
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Bill Meehan, senior market strategist at Cantor Fitzgerald, said the what's happening to U.S. stocks is just an "ordinary, garden-variety type of cyclical bear market."
Meehan also believes the U.S. market will come out of this global sell-off just fine, as long as the Fed keeps his eye on the ball.
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Anders Aslund, an analyst at the Carnegie Endowment for Peace, said Russia is in the midst of a "financial meltdown."
Calling Yeltsin "totally out of it," Aslund said the Russian leader could be out of office as soon as next week.
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James Hedges, president of LJH Investment Advisors, says the Russian economic crisis seems to be spreading to emerging markets.
He places the blame on hedge funds, which place big bets on the market with wealthy investors' money.
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Mark Minervini, chief investment strategist of Quantech Research Group, called the global sell-off "two-thirds done," but told investors to wait a while before jumping back into the market.
He also said that the economic crisis facing Russia and the emerging markets is good for the U.S., because it shows just how strong American markets are.
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Lawrence Goodman, an international economist at Santander Investment, says the interplay between the Russian economy and other economies in the world is "pure psychology."
But he said Russia's currency crisis is likely to spread to other emerging markets.
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William Hummer, market strategist for Wayne Hummer, called the current global situation the "worst world monetary crisis since World War II."
He says the market could drop another 5 to 10 percent, as deflationary pressures continue.
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David Beard, a Morgens Waterfall Vintiadis portfolio manager, said the sell-off may present some good buying opportunities.
He believes long-term investments are fairly safe right now.
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Robert Goodman, senior economic advisor at Putnam Investments, reminded investors to "keep their heads" through the sell-off, which he said was a natural phase of the market cycle.
He also said that the Russian attempt to create a democratic free market was "virtually impossible" and hence he was not surprised by the trouble there.
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In times past, market plunges like Thursday's were seen as buying opportunities. However, two leading Wall Street experts are cautioning investors to view the world differently this time.
Mark Holowesko, chief investment officer at Templeton Worldwide, and Robert Farrell, senior investment advisor at Merrill Lynch, said investors shouldn't expect the bull to return anytime soon.
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Doug Swanson, manager of the Pegasus Bond Fund for First Chicago NBD, says global economic worries are causing a bond market renaissance.
He cautioned investors to stay away from lower-quality securities of any sort.
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