"Market Monitor"-Richard Steinberg, president of Steinberg Global Asset Management
Friday, January 04, 2008SUSIE GHARIB: My "Market Monitor" guest tonight says 2008 is a time for quote guarded optimism. Joining us now, Richard Steinberg, president of Steinberg Global Asset Management. Hi, Rich and happy New Year.
RICHARD STEINBERG, STEINBERG GLOBAL ASSET MGMT: Happy New Year, Susie. Good to see you.
GHARIB: As you know, on Wall Street, they say the first week of how the market does of the year determines how the rest of the year does. The major averages were down between 4 and 6 percent in these last couple of days. So what does that mean for the rest of 2008? What's your outlook?
STEINBERG: I don't think that we can have that yet. I think what we've done is we've squeezed some of the risk takers out of the market. Analysts' estimates are a little bit too high. They need to come down. But now I think the market is already ahead of that. The big issue is the Fed has to get their act together. They need to be more responsive. They aren't. Even with $95 or $96 in S&P earnings at a 16 or 17 month, we could have 8 percent up side, but it's going to be rocky. It's going to be fits and starts to these market and investors are going to have to live with the volatility.
GHARIB: Let's talk about what investors can do. It's been a while since you've been on our program, September of 2006. At that time you had four recommendations for our viewers. All of them have done really well so congratulations on that. But let's review them quickly. StreetTRACKS Gold (GLD), that's the gold ETF, it's had a nice profit, up 48 percent. And eBay (EBAY) up 14 percent in that time period. So is this a time to buy more or sell these?
STEINBERG: We took some money off the table in gold, but our value manager still loves it. Commodities are going to be rocky, though, so you have to pick your points. Long-term (INAUDIBLE) gold still there, eBay great franchise. Whitman is doing a great job there and I think that that's still a great long-term buy and we own them both still.
GHARIB: Your other two recommendations, Ingersoll-Rand (IR) up 11 percent, International Asset Holding Corp. (IAAC), that commodity brokerage firm gaining 20 percent since September of 2006. Have you taken profits here or are you still, do you still like them?
STEINBERG: Ingersoll-Rand, we still continue to own. We hit a home run with International Assets. It was down the day that we were here. We sold some up in the $40s, bought it back and I think it's a long-term commodity play. They're the brokers for commodities, but it's not for the feint of heart.
GHARIB: OK. Let's look ahead to 2008. Top on your list of recommendations, Bucyrus International (BUCY) traded on the NASDAQ, why do you like it?
STEINBERG: The theme is coal. They make heavy equipment for the mining industry. They made a great purchase of a deep digger in Germany, DBT. The stock is really cheap, huge backlog, great long-term story for coal.
GHARIB: All right, Sterlite, (STL). What's the attraction here? This is an Indian mining company. Why do you like it?
STEINBERG: It's an ADR, huge mining company. Stock's really cheap. It's six times next year's earnings. Southeast Asia, China, coal is going to be a big story. Mining continues to be a big story. The stock is very, very cheap.
GHARIB: I was surprised to see your next recommendation, Western Union (WU). We don't hear too much about that company anymore. WU is the ticker symbol. Why are you recommending this one?
STEINBERG: It's unloved, unwanted. Everybody hates it. Huge cash flow story, even with single-digit revenue growth, they'll have double- digit gains. You have to just be patient. It's the U.S.-Mexican corridor which is still an important trade.
GHARIB: And finally, you like the ETF for preferred shares, this is the I shares of the S&P U.S. preferred stock index. The ticker symbol PFF on the American Stock Exchange. Tell us about this one.
STEINBERG: The 10-year notes at 3.8 roughly. This area has gotten crushed because of the credit crunch. There's a lot of banks and preferreds in this and there is a lot of tax loss selling at the end of the year. The stock has come down from $50 to $42. Investors can get paid to wait and have a diversified portfolio of preferreds.
GHARIB: Rich, do you own any of these stocks or any other disclosures you want to tell our viewers.
STEINBERG: We own all of them within the firm. I own none of them personally.
GHARIB: Real quickly, General Electric (GE), years past when I've talked to you, was one of your top holdings, still is. What's your view on General Electric.
STEINBERG: So goes the global economy, so goes GE. You and I, we're talking about Immelt recently. He's got a great handle on the business. They continue to invest in growth storage, especially overseas, but we're going to get some real interesting information from them in their next earnings because we'll see whether or not the global growth story, which we believe is still in place, is in place with GE and that's what we have to watch.
GHARIB: All right. Thank you so much, Rich, again happy New Year.
STEINBERG: Good to see you.
GHARIB: Thanks for coming on the program. My "Market Monitor" guest tonight, Richard Steinberg, president of Steinberg Global Asset Management.
