"Market Monitor"-Derwood Chase, President, Chase Investment Counsel
Friday, May 22, 2009SUSIE GHARIB: Our "Market Monitor" guest tonight says that even though the stock market is rallying, it's still a bear market. He's Derwood Chase, president of Chase Investment Counsel. Nice to have you back, Derwood. How are you?
DERWOOD CHASE, PRESIDENT, CHASE INVESTMENT COUNSEL: Just fine, thank you.
GHARIB: So we can't shake off this bear market. Give us your analysis on why you think we're still in a bear market.
CHASE: The characteristics of the recovery just don't quite qualify, in our judgment. I think it's anticipating a faster turnaround than the economy and we haven't seen the exhaustion of selling that you normally see before a sustainable bull market.
GHARIB: And your advice to your clients in this kind of market is that they're better off putting their money in defensive stocks. Can you give us your analysis on that?
CHASE: Well, we're trying to stay in good-quality growth companies that have good defensive qualities and some are contra-cyclical. Of course we're assuming individual investors have substantial reserves to protect them in a high-risk market.
GHARIB: Let's go over some of the stocks that you recommended the last time you were on the program back in December, which was a very difficult time when the markets were pretty much on a downward spiral. Abbott Labs (ABT), Proctor & Gamble (PG) and Wal-Mart (WMT) were all down by 15 percent. Do you still own any of these stocks?
CHASE: We are fundamental and technically oriented, and the technicals broke down on all of those stocks so we did eliminate them. If you still held any of them, I think we'd feel comfortable continuing to hold Wal-Mart.
GHARIB: All right, all right. Let's move on and look at your new stock picks. At the top of your list TJ Maxx, ticker symbol TJX. What's the attraction there?
CHASE: In difficult times when consumers are really watching their budget, a discount retailer, usually 40 or 50 percent off on name brands, stands out. They're much more able to maintain their earnings and we think they'll have earnings up slightly this year and a little bit further next year. So it's a good compromise in the retail area.
GHARIB: You have a stock recommendation in the oil patch, Schlumberger, the oil driller, SLB on the big board. Tell us about that one.
CHASE: Well you know, 85 percent of the oil reserves worldwide are owned by various national companies, but Schlumberger is the outstanding oil service company. Everybody needs their services particularly on the very deep, horizontal, very complicated wells. Their services are more widely needed and they're gaining market share.
GHARIB: Now the stock got as high as $100, $105 about a year ago. Do you see it reaching up to those levels? Of course oil prices were higher back then, too.
CHASE: I think within a couple of years oil prices will be high, much higher again and they should recover, along with the oil prices.
GHARIB: All right. Newmont Mining, NEM trading at around $47 a share. What's your view on that stock?
CHASE: That's one of the bigger, more outstanding gold mining companies. And we like that as a contra-cyclical and as an inflation hedge.
GHARIB: All right. Do you have any disclosures to make? Do you own any of these stocks?
CHASE: I own all of them as one of the larger individual investors in Chase growth fund or directly.
GHARIB: We just have a little bit of time left. You can just share with us any other thoughts that you have on the market or any worries that you have?
CHASE: Well, technically, I think the market is very likely to test the March lows. Whether it does that in the next month or so or whether it does that a year from now remains to be seen. So we consider it a high- risk market.
GHARIB: All right, thank you so much for coming on the program. Hope you have a great weekend.
CHASE: Same to you.
GHARIB: Our "Market Monitor" tonight, Derwood Chase, president of Chase Investment Counsel.
