Top investment letters see further stock-market gains

Andrew LecKey

August 27, 1993|By Andrew LecKey | Andrew LecKey,Tribune Media Services

Despite record stock market highs, a sluggish economic recovery and worrisome decisions emanating from Washington, the nation's top-performing investment letters are still confident that you'll get along swimmingly in stocks.

Of course, the strength of reliable advisers is an ability to pick individual equities likely to do well no matter what the circumstances around them may be. This is, after all, a stock-picker's market.

"My thinking is that the stock market is going to edge sideways for a long time, while company earnings rise and improve overall stock valuations," said George Putnam, editor of The Turnaround Letter, whose model portfolio as tracked by the Hulbert Financial Digest is up 54.7 percent over the past 12 months. "An individual who is a long-term investor should still get in the market even at these high levels, because equities over the long haul will outperform everything else."

Turnaround situations in which companies are troubled or out of favor have fueled Putnam's success.

His current recommendations include Lomas Financial, which emerged from bankruptcy and is now emphasizing mortgage servicing; Hartmarx Corp., a well-known apparel manufacturer that is narrowing its losses and will probably be making money by year-end; and A.T. Cross, a high-quality writing instrument company that has been hurt by worldwide recession.

"Given the low inflationary environment and modest economic growth, there's still room for higher stock prices," said Gordon Anderson, editor of the Individual Investor Special Situations Report, up 53.7 percent. "While there's always the possibility of a market correction, people are more aware of volatility, and a correction wouldn't have the impact that it did in 1987."

"I expect a 4 percent pullback in the stock market by October, but not much more than that, and I see the Dow Jones industrial average at 3700 by year-end," predicted Jim Collins, editor of OTC Insight, up 50.4 percent. "The over-the-counter market may be fairly priced, but it's not overvalued, and there is definitely greater potential."

Using extensive quantitative screening procedures on Nasdaq issues, Collins discovered investment hits like Cisco Systems, a maker of "routers" that communicate information between different computer networks. It is still recommended. Another favorite is Advanta Corp., which uses direct mail to issue no-fee gold credit cards.

So pick the stock in 1993, and don't try to figure out the market.

"Four of the five top-performing investment letters over the past 12 months don't do any market timing at all (the exception being The Princeton Portfolios), but are strictly stock-pickers," observed Mark Hulbert, editor of the Alexandria, Va.-based Hulbert Financial Digest, which tracks investment letter performance.

Top-performing investment letters over the last 12 months, based on a $10,000 model portfolio tracked by Hulbert, were:

* The Turnaround Letter, 225 Friend St., Suite 801, Boston, Mass. 02114; $195 annually for 12 issues; up 54.7 percent.

* Individual Investor Special Situations Report, 38 E. 29th St., 4th Floor, New York, N.Y. 10016; $195 annually for 12 issues; up 53.7 percent.

* OTC Insight, P.O. Box 127, Moraga, Calif. 94556; $295 annually for 12 issues; up 50.4 percent.

* The Princeton Portfolios, 301 N. Harrison, Suite 229, Princeton, N.J. 08540; $225 annually for a weekly computerized newsletter that can only be accessed by modem; up 41.9 percent.

* Emerging & Special Situations, 25 Broadway, New York, N.Y. 10004; $228.50 annually for 12 issues; up 38.6 percent.

* The Dines Letter, P.O. Box 22, Belvedere, Calif. 94920; $195 annually for 24 issues; up 32.9 percent.

* New Issues, 3471 N. Federal Highway, Fort Lauderdale, Fla. 33306; $95 annually for 12 issues; up 31.1 percent.

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