In the midst of the September Wall Street doldrums many brokers are complaining about, I asked Bob Costos, top local Merrill Lynch producer, to share his sales techniques.
He responded, "People are more interested in security than in making money -- they make money in their businesses and professions -- so I give them security. I practice asset allocation; I'm not just interested in stocks. Most of my peoples' accounts are in cash, income securities and growth stocks. I have no special allegiance to stocks.
"It's a joint exercise between my clients and me. At times there are stock values out there, and when stocks are low we raise stock portions. When stocks are too high, we lower them. My people hardly suffered in the 1987 market crash; we had lots of cash. I'm not a trader or speculator; my clients and I work on an 18-month time horizon. I keep it simple: growth stocks and high quality bonds with call protection -- that's most important -- and I don't deal in bond funds."
LOCAL LINE: Alex. Brown will send a favorable report on Dynasty Classics ("designs and produces lighting products for Christmas items")....Legg Mason cut its Black & Decker earnings estimate to $1.05 from $1.20 a share. Legg's September Investment Letter recommends Federal Express, General Motors, Philip Morris, etc....Forbes, Sept. 17, features Daniel Long's Greenspring Fund ("funds like this shine when the market falls apart")....Security Analysts host Genuine Parts executives, Stouffer Hotel, noon.
HOPEFULLY HELPFUL: (1) If you want information about your bank and/or savings and loan, contact Veribanc, Wakefield, Mass. It offers an instant over-the-phone analysis of any financial institution for $10 and $3 for each additional bank or thrift. Phone 1-800-442-2657.
(2) "Scaling stock purchases into long-term positions at current levels, with further purchases on additional weakness, is an NTC appropriate strategy. This is 'dollar cost averaging,' where you invest a set amount on a fixed schedule, sticking to pre-set intervals." (Dick Davis Digest, Sept. 3)
TRUE CONFESSIONS: I inadvertently failed to redeem a $10,000 eight percent tax-free bond on its March 1, 1990 due date and thereby lost $400 interest. I print this embarrassing episode because my uncle, Nelson Gutman, a successful businessman, once told me, "You learn from other peoples' mistakes." Keep a calendar tickler file of bond maturity dates or leave bonds with a bank or broker.
WALL STREET WATCH: "Stocks have much farther to drop; the slide has barely begun. It's not so much the Persian Gulf crisis, but the deficit, bank problems and credit squeeze. Up to now Japan bailed us out; now they're in financial trouble." (James Grant, top portfolio performer on "Wall Street Week with Louis Rukeyser")..."This is a blue-chip buying opportunity for 3-5 years." (Carter Randall)...."We're in a recession and bear market, maybe a drop to DJ 2,200-2,300; the average investor should be careful." (Michael Holland, $3 billion Salomon Bros. portfolio manager.)....Stocks now recommended by eight newsletters followed by Hulbert Financial Digest are Merck, Boeing, Placer Dome.
SEPTEMBER SONGS: A waitress told me a top local nutritionist gobbles down cholesterol-laden meals several days a week at a Pikesville pizza joint..."Wall Street Week " tomorrow night spotlights "The Milwaukee View" with panelists Frank Cappiello, Louis Holland and Harvey Eisen..."I know money's important, but it ain't all it's cracked up to be." (Larry King on WBAL Radio)...Unhappy reminder: Your third quarter federal and Maryland income taxes must be postmarked by midnight Monday, Sept. 17...At Memorial Stadium, why can't the tarpaulin be put on and taken off the field mechanically?..."If you buy something with a credit card because it's on sale, you may actually pay more in interest than you saved on the purchase." (Westinghouse Federal Credit Union Manager Jerry Dooley)..."If you use your car for business, a portion of the insurance premium that you pay is tax-deductible." (Tax Hotline)