"Street Critique"-Michael Farr of Farr, Miller and Washington
Wednesday, March 04, 2009PAUL KANGAS: Tonight's "Street Critique" guest says there's a worthwhile rally on the horizon, but it won't necessarily signal a bottom. He's Michael Farr, president of the money management firm Farr, Miller and Washington and author of "A Million Is Not Enough." And Michael good to see you again. Welcome.
MICHAEL FARR, PRESIDENT, FARR, MILLER & WASHINGTON: Thank you, Paul. Nice to be here.
KANGAS: With the overwhelming market pessimism extent right now, do you think that this is part and parcel of finding a bottom to this market?
FARR: It feels that way, Paul. The Dow Jones Industrial Average is trading 32-33 percent below its 200-day moving average. Historically, that's very low and it's significant. We've been trading down now consistently. We saw a good bounce today. I'm hoping that that will follow through and lead into something of a rally here. We're overdue for one.
KANGAS: But how long a rally?
FARR: Good question. In 2002-2003, we saw three separate bottoms: July 22; we saw another in October and finally in March, we found a final bottom. And that October low was lower than the other two brackets. So this one right now is lower than the November low. Perhaps we will rally from here and lead to another low in June and maybe we'll start to see things build, but for right now, I'd like to see us come out of this.
KANGAS: What do you think the chances are for the stimulus recovery plan to work and be successful?
FARR: Paul, I would like to know what it is. They're so short on details. I keep hearing from the government with great enthusiasm. We plan to have a plan and that's not good enough for Wall Street. Wall Street hates to be surprised and we want details. We need a foundation and the government is not offering us one.
KANGAS: In January you gave our viewers 10 stock picks for 2009. Let's see how they've been doing since the first of the year, Stryker (SYK), CVS Caremark (CVS), Colgate (CL), Microsoft (MSFT) and Johnson & Johnson (JNJ), all great blue chip names, every one of them down. You're still with them?
FARR: Every one of them down. I'm still with every one of those. Of those five, CVS did the best.
KANGAS: That's right. Let's have the other five, Cisco (CSCO), Medtronics (MDT), Staples (SPLS), Danaher (DNR) and the bad one was JPMorgan Chase (JPM). And then let's top it off by how all of your 10 picks compared with the Standard & Poor's 500 year to date. You have done a lot better than the S&P 500 which is down just over 21 percent. You're off less than 16. That's not bad.
FARR: It's not bad but it's hard to say that you're not bad. I mean that list is 540 basis points ahead of the S&P 500, but if you've invested in it, you're still down 15 percent. It's not great comfort. And of course on that list of financial that's gotten hardest hit, we're hanging with all of those stocks still (INAUDIBLE) portfolios.
KANGAS: You own all of them.
FARR: I do. I'm with them there with my own money.
KANGAS: OK. Fair enough. Let's hope they have a better few months ahead and if that rally comes along like you're talking, I'm sure they will.
FARR: Let's hope they don't get worse, Paul.
KANGAS: That's for sure. All right, I appreciate very much your coming with us again, Mike.
FARR: It's my pleasure, Paul. It's an honor to be here.
KANGAS: My guest, Michael Farr of Farr Miller and Washington, author of "A Million Is Not Enough."
