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Holland: market on target
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March 12, 1999: 7:48 a.m. ET
Strategist says stocks not overvalued, but predicts more will invest at 10,000
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NEW YORK (CNNfn) - Although many investors may be looking to cash out as the Dow Jones industrial average gets closer to the 10,000 mark, others will see it as an opportunity to jump in, says one top stock strategist.
Michael Holland, chairman of Holland & Co., told CNNfn's "Business Day" the psychological significance of Dow 10,000 could have a big impact on investors.
"Each 1,000 point market becomes less important because the percentages get smaller and smaller, so they have become truly irrelevant in some measure," Holland said. "But (10,000) is extremely important because a lot of people who have had a little bit of shaken confidence over the last several years (are probably going to) come in here."
Holland does not believe the market is currently overvalued, but predicts it could become so if many investors jump in at the 10,000 mark.
Dow 10,000 "would be one of the things that would cause it to become overvalued. People saying '10,000 -- I wasn't there I should buy something.'"
A wide range of investors could jump into the fray, according to Holland, including large global pension funds, major mutual funds or even "the widow who has no stocks and was wondering if she should buy some."
The strategist recommended new investors stick to a diet of diversity.
"Should they only own U.S. Internet stocks? Probably not. That would be crazy. On the other hand, a broadly diversified list that they bought, and if the market went down, they had some more cash reserves to buy some more," Holland said. "These are old clichés, but they work."
Holland credits advances in technology for the bull market of recent years.
"The economy has been so much better here than so many people expected, so much more profitable, so much more long-lived, in large part because of the productivity that has come about because of great technology changes," he said.
"Neither the bull market, nor even the economy, will move forward as I expect each of them will without technology leading the way," he added.
Holland also said persistent corporate restructuring has helped companies improve their stock value.
"Managements in the U.S. have led the way and now we see are starting to see it around the world, BP et al are starting to show that they understand the importance of getting leaner and stronger and better," Holland said. "And we continue to have greater and greater productivity." 
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