Bullish Merrill Lynch, No. 1 stockbroker, loses its big bear

Clough advised clients to put 60% of portfolio in cash or bonds

Wall Street

August 28, 1999|By BLOOMBERG NEWS

NEW YORK -- One of the bigger bears on Wall Street, Merrill Lynch & Co. chief investment strategist Charles Clough, will leave the largest U.S. brokerage firm at the end of the year, the company said yesterday.

Clough, 57, will step down after 12 years at the brokerage to pursue other interests, said a Merrill spokeswoman. While the New York firm declined to comment, his latter years may have been less than harmonious.

"His overall bearishness has certainly soured people in Merrill who would have favored a more bullish outlook," said Marshall B. Front, a money manager for Chicago's Front, Barnett Associates LLC.

Clough recently recommended that clients put 40 percent of their money in stocks, 55 percent in bonds and 5 percent in cash.

By contrast, Abby Joseph Cohen, the investment strategist at Goldman Sachs Group Inc., recently recommended that customers have 70 percent of their money in stocks.

"On the retail side they did have a problem where they have to move product and it was hard for them [to do that] with his bearish calls," said Front.

And Clough's record is mixed. He predicted at the end of 1998 that major stock indexes would be flat this year amid flat profits. But earnings and stocks have been buoyant with the Dow Jones industrial average returning 22 percent and the Nasdaq composite index 26 percent.

A year earlier he also said the bull market in U.S. stocks may end, a forecast that was not borne out given the Standard & Poor's 500 index's 27 percent return in 1998.

He also recommended U.S. Treasury bonds -- a better prediction. The 30-year U.S bond returned 18 percent in 1998.

Last month Clough said he expects the S&P 500 to trade "sideways." The benchmark for U.S. large companies has gained 10.8 percent this year and the Nasdaq composite index has soared 26.5 percent.

"He has some tremendous strengths which have been helpful to us and others," said Front. "He made some very good calls in the mid to late '90s on financial stocks and he did well calling the cyclical stock turn [earlier this year]."

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