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Expert warns of 'floundering'
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October 27, 1997: 4:55 p.m. ET
Seth Glickenhaus optimistic on market but cautions against 'overdone' stocks
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NEW YORK (CNNfn) - Monday morning, in an attempt to gain some insight into where the stock market is headed, John Metaxas, CNNfn anchor, interviewed Seth Glickenhaus, chief investment officer of Glickenhaus & Co., for "In the Game." Here is a transcript of that interview.
JOHN METAXAS: What's going on in the market today? Is this just a knee-jerk reaction to Hong Kong or something more?
SETH GLICKENHAUS: No, I think it's somewhat more. You know, from 1982 to the present, we've gone from 1,000 to 8,000 plus and the largest move in a 16-year period that we've had. And I think we're about ready to consolidate this move. I think it'll take a number of years to consolidate it, and that we're going to flounder here for a long time to come.
METAXAS: OK. "Flounder." What does "flounder" mean? Where do you think the market will be five, ten years from now?
GLICKENHAUS: I think we're going to remain at the 8,000 level for at least five years and it'll vibrate between -- oh, 6,800 on the down side and possibly 8,300 on the up.
METAXAS: So, you think there could be some more selling in this round here?
GLICKENHAUS: In this particular round, I think it's been overdone in the short, short run. So, I think we're going to rally from this level -- in a matter of days -- but there isn't much upside potential here. You have to realize in 1966, the averages hit 1,000 for the first time. It took 16 years before they could break out. They had come up from 160. They had gone up sixfold. We have now gone up eightfold, and foreign competition and many other factors -- reduction of the deficit and other things, are going to keep us here for a long time, like stability. It's going to be a market where good money managers, who can pick the right stocks, are going to outshine the many mediocrities that have done so brilliantly of late.
METAXAS: That's your stock and trade. Tell us, in this kind of environment, is it safe to go into stocks, and what kind of stocks?
GLICKENHAUS: There are a few sectors that have been badly overdone. The technology sector, for example -- Intel (INTC), Texas Instruments (TXN).
METAXAS: You mean they're badly oversold.
GLICKENHAUS: Badly oversold. Micron Technology (MU), for example, has gone from 60 down to 28. This is an enormous decline in a short period. Its prospects are excellent. The semiconductors grow at an 8 to 18 percent per annum growth record, and the price is way down -- probably will stabilize and do better
METAXAS: So, selectively, you're going in and buying some stocks at these levels.
GLICKENHAUS: Yes. I think Chrysler (C) for example -- down 38 into the 35 level -- is a very cheap stock.
METAXAS: Of course, you've been owning Chrysler back to the days of the Iacocca recovery?
GLICKENHAUS: That's entirely right. It's raised its dividends seven times in four years. They will have brought back by the end of next year 27 percent of their stock. They're the lowest-cost producer. And it's an outstanding value.
METAXAS: You've told us the long term. Let's get -- let's squeeze in one and very short-term question -- with the Dow going below 7,600 today and now, sort of stabilizing at that level, how important is it to hold the 7,600 level?
GLICKENHAUS: It's extraordinarily important. We've come down to this level three times and bounced, and if we go through it this time, you could have a very substantial decline.
METAXAS: All right. Words of warning from Seth Glickenhaus of Glickenhaus & Co. Always a pleasure, Seth.
GLICKENHAUS: Thank you, John. I really enjoy talking to you.
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