"Street Critique"-Wall Street's Recent Rally Will Be A Short Ride
Wednesday, April 01, 2009PAUL KANGAS: Tonight's "Street Critique" guest says, this rally's been fun, but don't get complacent. He's Michael Farr, president of the money management firm Farr, Miller and Washington and author of "A Million Is Not Enough." Michael good to see you again. Welcome.
MICHAEL FARR, PRESIDENT, FARR, MILLER & WASHINGTON: Thank you, Paul. Nice to see you.
KANGAS: Early last month you said that we were overdue for a rally and the major averages are up about 14 percent since then, a great call, I compliment you. What's next?
FARR: Well, Paul, I'm happy about the call and that we're up 14 percent. I'm a little bit concerned. The market has been consolidating. I can't quite determine whether this particular rally has stalled or whether we're in a base-building mode. But as always I'm cautious.
KANGAS: So you think we could test the lows, recent lows again.
FARR: Well, I think ultimately we could test those lows. I don't think that's coming any time fast right now because there does seem to be some pretty good upward momentum. But I would still like to see some more follow-through to the up side.
KANGAS: What can we do to improve investor confidence?
FARR: You know, nothing improves investor confidence like making a little bit of money. So as we see these prices rise a little bit and you see your account portfolio values increase, it lets people know that there is still money to be made in the stock market. But I wouldn't sound the all clear quite yet.
KANGAS: OK. What are your thoughts on the GM and Chrysler bailouts? Are these two going to make it or are they going bankrupt?
FARR: I think that they should go bankrupt. I think actually they are bankrupt and they're getting enough government cash to keep them alive. I think they ought to go into bankruptcy and I think they ought to operate out of bankruptcy. The government in my opinion, is throwing good money after bad.
KANGAS: How about all those parts suppliers that are going to be hurt?
FARR: You know, a company can operate out of bankruptcy. We've seen airlines go into bankruptcy and come out. It's not that they're going to go out of business. It's not that everybody going to lose their job and those parts suppliers are going to continue to supply pretty much as many parts, I think, as they're supplying now.
KANGAS: In January, you gave us your 10 picks for the year 2009. Let's see how they've been doing. We see a lot of them with minus signs here. Stryker (SYK) particularly and Colgate-Palmolive (CL), the big ones on this board, any thoughts on these quickly?
FARR: I think that the Stryker news today was not as bad as expected. They have a putty, a glue, that didn't get FDA approval. Those numbers weren't in Stryker's numbers so it didn't disturb me much. I'm still holding on.
KANGAS: You're still with all of these? Let's have the second board of five. We see a couple of gainers. Cisco (CSCO) and Staples (SPLS). You're still with all of these? Is that true?
FARR: I am still with all of these and it's nice to see a couple of gainers. In this sort of a market, it's been a brutal market, so it made some money somewhere and the last name, Paul, JPMorgan (JPM) was my big dog last time I was here. It was down well past 20 percent. It's rallied back very nicely in the last 30 days. Volatility can sometimes be your friend.
KANGAS: You're doing a little bit better than the Standard & Poor's 500. I hope you can keep that up.
FARR: About 420 basis points better so far for the first quarter and we're crossing our fingers.
KANGAS: There you are. It's down 6 and the S&P down over 10. And you own all those stocks personally, do you?
FARR: I do. I own them all personally.
KANGAS: OK, thanks very much for being with us, Michael.
FARR: Thank you, Paul, for having me.
KANGAS: My guest, Michael Farr, of Farr Miller and Washington and author, "A Million Is Not Enough."
