Forecaster says plunge wasn't all his doing Acampora made gloomy prediction late in Tuesday sell-off

August 06, 1998|By Bill Atkinson | Bill Atkinson,SUN STAFF

Shortly after 3 p.m. Tuesday, stock market pundit Ralph J. Acampora held court on CNBC, a business news network, and dropped a bomb.

Acampora, one of the most closely followed stock market prognosticators, suddenly reversed himself from stock market cheerleader to gloomy forecaster, saying blue-chip stocks could fall by as much as 20 percent this year.

His message was carried into brokerage houses, mutual fund operations and businesses across the country, and the market dived 160 points in the last half-hour of trading on a day when the Dow fall 299.43 points.

'Very convincing'

Some blame the last-minute drop on Acampora, the talkative Prudential Securities Inc. market strategist.

"He's a major hitter. He carries a lot of weight," said Morry Zolet, senior vice president of investments at Ferris, Baker Watts Inc. in Baltimore. "He definitely moves things around. The guy is very, very convincing. When he speaks, he's got you right in the palm of his hand."

Larry Wachtel, a market analyst at Prudential, said his colleague has the power to move markets because he has been right before.

"You've got to remember that [Wall Street] gravitates toward the people who have been right," Wachtel said. "He is a guru."

'Internal problems'

Acampora accepts some of the blame for Tuesday's slide.

"I'm sure I was part of the catalyst, but this market was already down 100 points when I made my opening comments" earlier in jTC the day, he told Bloomberg News. "There are internal problems with the market, and that is what we have to address."

It has taken Acampora about 30 years to reach guru status.

The Iona College graduate studied for the priesthood, but while recuperating from back surgery in 1965, he began reading Forbes, Fortune and Business Week. He read about corporations, executives and the stock market, and was smitten with the business world.

He joined a brokerage firm as a junior technical analyst in the late 1960s, jumped to Kidder Peabody & Co. as a technical analyst in the 1980s and joined Prudential in 1990.

There are a number of other Wall Street experts whom investors watch closely. Even more than Acampora, Abby Joseph Cohen, U.S. investment strategist at New York-based Goldman Sachs & Co., is respected for her accuracy.

Yesterday, she said investors had overreacted and that stocks are still cheap. She doesn't see the market plunging the way Acampora does. Rather, she said yesterday, she expects it to rise, with the Dow Jones industrial average reaching 9,300 by the end of the year.

Acampora has built a following because he has made a string of accurate calls.

Crazy prediction

In 1995, he predicted that the Dow would reach 7,000 by early 1998. People thought the prediction was crazy. As it turned out, Acampora was correct; it just happened before he thought it would. The Dow passed 7,000 on Feb. 13, 1997.

In January 1997, he said the Dow would hit 8,250 by the end of the year. Eight months later, on Aug. 6, the index rocketed to 8,259.

But Acampora recently hit a dry patch.

In June last year, he said stocks would reach 10,000 by this summer. But six months later he grew cautious and became less certain about his prediction.

'Flip-flops a lot'

In February, Acampora said the Dow would climb to 10,000 by the end of this year.

Now, he's calling for a bear market, and he gives the Dow a 50-50 chance of cracking 10,000 this year.

"He can change on the dime," Zolet said. "I wouldn't be surprised if he shortly turned around and became a bull again. He flip- flops a lot."

Pub Date: 8/06/98

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