"Market Monitor"-Robert Stovall, Managing Director & Strategist at Wood Asset Management
Friday, February 27, 2009PAUL KANGAS: My guest "Market Monitor" this week is Robert Stovall, managing director and strategist at Wood Asset Management, based in Sarasota, Florida. Welcome back to NIGHTLY BUSINESS REPORT Bob. Good to see you.
ROBERT STOVALL, MANAGING DIR. & STRATEGIST, WOOD ASSET MANAGEMENT: Thanks for inviting me, Paul.
KANGAS: The recent carnage on Wall Street, do you believe that's an indication that investors really don't believe the Obama rescue plans are going to be effective?
STOVALL: I think believe is a wrong word. I don't think they understand at all. It's quite complicated, wide reaching and hard to get your arms around. So I don't think they disbelieve it. I just think they're confused.
KANGAS: You think all the infusion of funds into the various markets is going to cause an inflationary spiral?
STOVALL: Eventually it will, Paul, yes. We've downgraded the dollar in several different ways over these last few months. And yet the dollar is a strong currency, relative to many others. It's called a safe haven currency. But eventually, we'll have the inflationary impact of these new spending programs and the dollar will weaken, in my opinion.
KANGAS: Your career on Wall Street spans to 55 years. Is this the worst bear market you've seen?
STOVALL: My memory's pretty good, Paul. I can't remember anything like this. This has gone on for so long and it's been so extreme and I've seen days -- several days where you think gee this must be the end, like last October, last November. Here we are starting the month of March and I don't see the end yet.
KANGAS: When are you telling your clients to do in this environment?
STOVALL: We're telling them that they have to just hang tough, stay with it and if they go totally into cash, that they -- they may be left behind if there's an abrupt turnaround. And that's what they do.
KANGAS: All right. Now, you made four stock recommendations when you were with us late in September. Let's have a look and see how they-- they're all blue chips but it didn't make any difference. CSX (CSX) down 56 percent, Johnson & Johnson (JNJ) down 28 percent, the bluest of blue chips and they're still down. Do you still like them, these two?
STOVALL: Paul, I like those two, yes. I own them myself. Actually, I own every stock we're going to talk about today because they're in the Wood Asset portfolio.
KANGAS: OK. There were two others that you recommended back on the 26th of September, Pepsico down almost 33 percent and even Wal-Mart (WMT) down just about 19 percent. It's just unbelievable.
STOVALL: That's right. That's the high quality performers of these last six months for most of that time. I think -- I rarely say average down. I think that's a bad strategy most of the time. But in this case, all four of these are well-run companies in good sectors. I think you just have to stay with it or even buy more.
KANGAS: Patience is a virtue, apparently.
STOVALL: I think so.
KANGAS: OK. How about some new recommendations, despite your rather bearish attitude for the near term? Do you like stocks that you would buy at this level?
STOVALL: That's right. I like dividend-paying stocks Paul and these four, all of them are in plus territory for this new year which is only two months old.
KANGAS: Let's have a look at the first one.
STOVALL: OK. That's Consolidated Energy, Consol Energy, actually, CNX, the old (ph) consolidation coal. It's a strong company in the coal business gaining market sure.
KANGAS: All right. How about number two?
STOVALL: Number two, I like FPL Group, the old Florida Power and Light. It is a major power producer, big in nuclear. Also, they have meaningful positions in solar and wind.
KANGAS: OK. We have about 45 seconds left and number three choice?
STOVALL: Number three choice is McKesson Corp (MCK). That's a distributor of drug products and health care. They don't make the products as much as they market them. Also the last one is an Israeli-based generic drug maker Teva, T-e-v-a and that's the symbol.
KANGAS: And I believe that you have already informed us that you own all of these stocks correct?
STOVALL: That's correct, all of them, these four and the four I mentioned last fall.
KANGAS: We just have a few seconds left, any last-minute thoughts, Bob?
STOVALL: Yes, I think if you give up and capitulate and just put your money in a sack, you're making a mistake, Paul. I know it's painful while they're going down. Keep your money in the U.S. Treasury money funds. That's the safest place to keep them, if that's what you want to do and eventually the turn will come.
KANGAS: All right, very good, thanks for being with us again, Bob.
STOVALL: My pleasure.
KANGAS: My guest, Robert Stovall of Wood Asset Management.
