Posted on: Sunday, October 21, 2001

Bargain hunters urged to be careful

USA Today

You've checked the math, and you've discovered that your 401(k) balances will be enough for three baked lima beans a night in retirement, provided you go easy on the gravy. And you're wondering: Could the stock market get any worse?

The honest answer, of course, is that no one knows. But in times of deep uncertainty, it's best to seek wise counsel. So we talked to three of the best investors in the mutual fund industry, all of whom have seen more bear markets than a buyer for the San Diego Zoo.

Let's start with Charles Albers, manager of Oppenheimer Main Street Growth and Income. Albers built a formidable record at the Guardian Park Avenue fund, driving it to a 5,964 percent gain from 1972 through 1998, vs. 2,644 percent for the Standard & Poor's 500-stock index with dividends reinvested. Oppenheimer Main Street Growth and Income has gained 8.3 percent since he started in April 1998, vs. 7.6 percent for the S&P 500.

Albers looks at dozens of indicators. Once or twice a decade, he says, the market gives opportunities that are hard to ignore — and this is one of them.

"The stock market was reasonably priced before the Sept. 11 attacks," Albers says. The market's dive afterward simply made stocks more attractive. Furthermore, the Federal Reserve is pumping money into the system and Congress is, too. That should boost stocks.

Last February, Albers thought small-company value stocks would beat the S&P 500. He was right: The S&P 500 is down 27.7 percent, vs. a 9.2 percent decline for small-cap value funds. Now he thinks the pendulum will tilt toward small-company growth stocks, thanks to all the fiscal and monetary stimulus.

Small-company growth stocks are risky and should be treated carefully. You're better off buying them through a small-company growth fund.

Ron Canakaris, who has been running Enterprise Growth 21 years, is more cautious. "I kind of grew up in a bear market," says Canakaris, who started out in the hideous 1973-74 bear market. Like Albers, Canakaris has beaten the S&P 500: Enterprise Growth has gained 1,833 percent since he took its helm in 1980, vs. 1,495 percent for the S&P 500.

Canakaris is sticking with big, high-quality companies such as insurer AIG and drug manufacturer Pfizer. He says many tech stocks will perform like energy stocks in the 1980s after the energy bubble burst — poorly.