(FORTUNE Magazine) – She's not in the same league as Oprah or Kathie Lee, but to viewers who can't get enough stock market coverage, Elizabeth Mackay is a daytime TV phenom in her own right. A sturdy regular on CNBC's Market Wrap--and a frequent guest on CNN, PBS, and Fox business shows--the Bear Stearns chief investment strategist is one of the most polished examples of that quintessential late-'90s bull-market creature, the on-air market guru.

But the fact that she can squeeze complex investment themes into sound bites doesn't mean those themes should not be taken seriously. Early last year, for example, Mackay began plugging home health care, health-care information technology, and vaccines, three groups that each outpaced the market. She also correctly anticipated the strong performance of higher-yielding value stocks in 1997.

An 18-year Wall Street veteran, Mackay now hangs out in a small office overflowing with textbooks from her MBA days, magazines, newspapers, newsletters, and financial journals (and interestingly, not a single TV). Noticing that she has been growing less ebullient as the market has gotten more so, I invited myself over two days after the Dow broke 8400 to see what was on her mind.

Liz, the only thing rising faster than the Dow these days is your TV ratings. But I sense you're not exactly a raging bull.

I think stocks have a shot at another 5% to 8% gain over the near to immediate term, but they will give some of it back later in the year. I could see the Dow at 8200 to 8300.

How come?

A bunch of things, including Asia and the year-2000 problem, both of which are likely to have a negative impact on corporate earnings.

What's your take on Asia?

The Asian stock markets appear to be bottoming, and our market is saying, "Hey, that's great, Asia is over." I don't buy it. The Asian markets will bottom well before the Asian economies because that's the nature of stock markets, but the problems in Asia have yet to have a major impact on U.S. corporate profits. That's the other shoe in this crisis. When it drops, it could cause dislocations and volatility.

But any stock that has anything to do with DRAMs or construction abroad has already been clobbered. Are you saying the pain will spread to consumer brand names too?

If your currency has depreciated 70% and you're in a serious recession, you quickly discover that you can wash your hair with soap rather than shampoo and that there's an alternative to Coke. It's called water.

And the switch could hurt earnings?

Right. I worry about this because Asia is part of the long-term growth strategy for big-cap consumer multinationals like Coca-Cola and Kellogg, which thus far have been unscathed.

Tell me about the year-2000 problem.

The Y2K problem, as it's known, boils down to the fact that Jan. 1, 2000, may be seen as Jan. l, 1900, by computers that have been programmed to believe the first two digits of every year are 19. This sounds like something that should be simple to correct, and once you find the problems, it is.

However, it's extremely labor-intensive. You have to look through your data, line by line, to see what your particular problem is. Then you have to test your solution, which takes an enormous amount of time, and then you have to integrate what you've done with what your customers and suppliers have done to make sure you're all compliant and that no one is sending you data that will corrupt your system.

It's amazing how widespread the problem is. It affects everything. Elevators and oil rigs have date-embedded chips. Banks have them, and not just for deposits and withdrawals. They are in their vaults, their heating and cooling systems, their ATMs.

The thing is, the time, money, and resources that will be spent solving the Y2K problem are not going to produce any new products or market share gains. The productivity enhancements and returns on what will be huge investments will be zero, and I suspect this will have a big impact on earnings in the second half of the year.

If Y2K is such a big problem, why isn't everyone working night and day to solve it?

A lot of companies are. The regulators are on top of the banks, brokers, and other obvious transaction-oriented industries, and most will be compliant by year-end 1998. But a lot of others probably don't realize they're at risk. What I worry about is the kind of thing that happened to Union Pacific, Oxford Health, and Kaiser when technology problems wreaked total havoc on their businesses.

Every disaster has an investment angle. Who's going to benefit from Y2K?

Comdisco sells testing packages. A Bell Atlantic subsidiary markets Network 2000, which is designed to help companies identify date-change problems and work out Y2K solutions. You need a tremendous amount of storage to run parallel systems during the testing phase, so IBM, EMC, and Storage Technology are certain to be big beneficiaries of the Y2K problem. Ditto for plain-vanilla outsourcing and services companies like BISYS, DST, and EDS.

Do you have any favorites in that group?

There's IBM, which is probably the cheapest high-quality technology stock you can find. EDS is also an underappreciated opportunity, selling at less than 1 1/2 times sales. The company stumbled badly when it was spun off from General Motors--just the opposite of Lucent, which immediately produced upside surprises when it was spun out on its own. EDS is now being viewed as a solution to the Y2K problem. Rather than tackle it themselves, a lot of companies are thinking of outsourcing back-office functions and specifics like payroll to companies like EDS.

What other themes are you following?

I've been looking at companies with revenue growth of 10% a year--and they're rare. A lot of these stocks are in consumer services. On a rate-of-change basis, personal-consumption expenditures for services are the highest they've been in this expansion. People are paying more to do things than to buy things.

Instead of upgrading their washers and dryers, they're taking trips to Europe?

Exactly, and it's a trend that's likely to continue. In terms of demographics, it's the 45- to 54-year-old age group that spends the most on leisure and entertainment. Companies like Time Warner [the parent of FORTUNE's publisher], Disney, and Carnival have the added attraction of being largely domestic or not having much exposure to Asia. Because these companies deal in unique products or services, they also have the pricing flexibility needed to drive the top line. Carnival Cruise Lines, for example, is enjoying better fares this year than we thought it would.

Any wild cards you'd like to talk about?

How about Cracker Barrel Old Country Store, which operates sit-down restaurants with little gift shops primarily in the South? It may not sound exciting, but sales and earnings are growing at 18% a year. I'm also thinking about REITs, which have dividend support and tend to act like real estate, even though they often get lumped in with financials. We recently screened for small-cap companies where there was a high level of confidence for increased 1998 earnings, and American General Hospitality and Glenborough Realty Trust are two names that popped out. Now that Warren Buffett has moved into silver, it sort of suggests that an inflation hedge might be a good idea.