Newspaper article THE JOURNAL RECORD

Stock Investment Warnings: Is There an Echo in Here?

Newspaper article THE JOURNAL RECORD

Stock Investment Warnings: Is There an Echo in Here?

Article excerpt

NEW YORK -- In the midst of another bull-market summer on Wall Street, investors in stocks and stock mutual funds are hearing some all-too-familiar warnings.

It can't keep up at this pace. The easy money has been made. Wherever you put your money, guard against unrealistically high expectations.

Sensible, sober sentiments all. The trouble is, they are the same messages everybody heard last year and the year before that -- which the market, climbing to new high upon new high, keeps discrediting.

"The U.S. has never seen anything quite like the 1990-98 bull market," say analysts at Wright Investors' Service, a Bridgeport, Conn., money-management firm. "The Standard & Poor's 500 has tripled in price since its July 1990 peak, and the market's advance since 1994 has produced the best 3 1/2-year return in postwar history.

Today's economic fundamentals are good -- perhaps as good as they have been in 50 years, according to Alan Greenspan. But there is no denying the risks in stocks currently, in particular the earnings uncertainties coming out of Asia and the highest price-earnings multiples since the 1930s."

The dilemma that for years has faced investors with new money to put to work just won't go away: Buy stocks now, and you risk climbing aboard just as the bandwagon breaks down. Hold back, and you risk missing yet another leg of the bull market.

But analysts point out that there is a way out of this box. It requires simply abandoning all efforts to guess what the market is going to do next, and focusing instead on setting up and following a consistent, diversified investment strategy that recognizes both risk and potential reward.

Says Eric Kobren, a Wellesley Hills, Mass., investment adviser who specializes in mutual funds, "After 22 years in the investment business, I am still amazed at how much time individual investors spend on where the market is going, and how little time fund managers spend on this subject. …

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