"Market Monitor" - Douglas Jimerson, president of National Investment Advisors
Friday, November 04, 2005PAUL KANGAS: My guest market monitor this week is Douglas Jimerson, president of National Investment Advisors. And Doug, welcome back to NIGHTLY BUSINESS REPORT.
DOUGLAS JIMERSON, PRESIDENT, NATIONAL INVESTMENT ADVISORS: Thank you, Paul, great to be back.
KANGAS: For some time now you have been very cautious about owning stocks saying that they have been showing characteristics of a classic bear market. Have you changed your opinion or have you become even more bearish?
JIMERSON: I haven`t changed my opinion. I am still of the same opinion.
KANGAS: Still bearish. But why?
JIMERSON: This market is trendless. Its been flat for, gee, how long, we cant even remember.
KANGAS: That`s not good for the bears or the bulls.
JIMERSON: No, its not. But the -- the real concern I have is interest rates. Because we continue to have a ratcheting higher of the short-term rates and the long-term rates are going up. The Treasury bonds and notes are now below their long-term moving averages.
KANGAS: So that is your main concern is higher interest rates. How much higher do you think they can go?
JIMERSON: You know, I don`t have that crystal ball. But it does seem that the Fed is intent on making certain that they flush out any hint of inflation in spite of possible deflationary hints from overseas and in spite of, you know, what we are seeing in the economy employment reports don`t seem too bullish.
KANGAS: So you believe in the old axiom don`t fight the Fed when they are boosting.
JIMERSON: Absolutely.
KANGAS: OK. Now one group that you have been bullish on and very correctly so has been in the oil sector. But you did recommend taking some profits there on your last visit with us in early May of this year. What is your stance on the oils now?
JIMERSON: Well, by and large were flat the oils. You know, as you look at ExxonMobil which I have been talking about for years, this is basically unchanged, but it`s had a wild ride since last May. And so I really think that that long-term bull phase for the oil stocks is passed.
KANGAS: OK. Now on that last visit in May, you said that the NASDAQ market was due for a fall and you even recommended purchasing a bearish mutual fund. Lets see how its done since May. I think it was the 5th of May you were with us.
JIMERSON: Right.
KANGAS: There we see it, down 9.3 percent. Now you did have a profit briefly in it when the market went down. But now its moving against you. Are you still with it?
JIMERSON: Absolutely. I was calling that a long-term investment. And the NASDAQ is down for the year still. That fund is up for the year still. I think that we are going to see a more important or more significant leg down in the market in the next month or so.
KANGAS: And it will be lead by the NASDAQ market?
JIMERSON: I think so. Although, an important element of this is going to be a correction in the oil stocks which corrected during the summer and I expect --
KANGAS: They corrected today pretty well also.
JIMERSON: I believe its the beginning of a next leg down in the oil stocks.
KANGAS: So no year-end rally for the oils, in other words.
JIMERSON: No. And I think that they there are better opportunities overseas. I`m suggesting that --
KANGAS: You have some new recommendations on the buy side.
JIMERSON: Yes. I think its good to look at markets that are in a very different phase from ours. The bubble burst here in 2000. The bubble in Japan burst in 1990. And their recovery has been under way for a long time. And their interest rates are very low, practically nil.
KANGAS: Can we get specific as to recommendations?
JIMERSON: A couple of very nice opportunities with no-load funds would be the Rydex Japan fund.
KANGAS: It has had quite a rise.
JIMERSON: It`s begun a very nice advance.
KANGAS: So you think that this chart just is typical of the beginning of a trend.
JIMERSON: Oh, I think so. Now obviously its going to correct if our market corrects. But I think this is a long-term opportunity.
KANGAS: Do you have another choice in that area?
JIMERSON: And Fidelity Japan fund also, another no-load fund. So its diversified within the Japanese market which is very much out of phase with the American markets.
KANGAS: OK, so you are going overseas, do you own any of these two securities personally?
JIMERSON: At this point, no.
KANGAS: But you believe in them.
JIMERSON: Absolutely.
KANGAS: And they`ve got further to go on the upside.
JIMERSON: Yes, I believe so.
KANGAS: We have about half a minute left, Doug. Any last minute thoughts for our viewers?
JIMERSON: Well, I think that the viewers need to look at the long-term moving averages of the markets. And we have had a Dow that`s flat. It keeps testing its long-term moving average. Its down two and a half percent for the year. This is not a time to be aggressive with stocks.
KANGAS: All right, Doug. I want to thank you very much for your input. As always interesting.
JIMERSON: Thank you, Paul.
KANGAS: My guest Doug Jimerson of National Investment Advisors.
