A Rally Deferred: William Young of Buford, Dickson, Harper & Sparrow Inc. Needs More Time for His Momentum Strategy
McKinney, Jeffrey, Black Enterprise
Unfortunately, the war in Iraq, an anemic economy, and slow consumer spending due to higher unemployment all conspired to dampen the success of William Young's "momentum" investing strategy. The president of Buford, Dickson, Harper & Sparrow was optimistic that his approach could overcome the dismal returns of 2002. While there were positive signs, the recovery didn't come quickly enough.
Young's list of five stocks showed a loss of 6.24% in the 52-week span from June 3, 2002 to June 2, 2003. By comparison, the S&P 500 fell 7.08% and the Dow tumbled 8.36%. Young contends, "The portfolio provided a stellar return when compared to other stocks in the S&P 500." However, his firm decided to sell one of his holdings and maintains a "hold" on the four others.
Young was disappointed with the performance of Kraft (NYSE: KFT). The stock dropped nearly 21.54%, from $41.42 to $32.50, which he attributed to the consumer food giant's inability to develop new products in a bearish market. Young's firm sold Kraft in late May, then bought Best Buy (NYSE: BBY), the specialty electronics retailer because, "We see that as a growth stock, especially if the economy gets better and people have more discretionary income."
A second disappoint was Apple Computer (Nasdaq: AAPL), which dropped 23.83%, going from $22.91 to $17.45. Although Apple was hurt by the soft economy as fewer consumers bought personal computers, Young believes its launch of iTunes, which allows consumers to download songs off the Internet for . …