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Abracadabra on Wall Street

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Here we go, a dazzling display of Wall Street wizardry. Or more to the point, an amazing run of super up-and-down market calls from an amateur magician who could probably give Merlin a run for his money.

That's what I've seen from 70-year-old San Francisco money manager Gary Wollin, who runs about $105 million of assets under the banner, Gary Wollin & Co., and performs in magic circles under the name, The Great Baldini.

When he's on stage or giving investment speeches, Wollin, bald, bearded and easily passable for Santa Claus, generally opens his bag of tricks by turning a regular dollar bill into a giant-sized dollar bill. And that's essentially his expectation for the stock market, as well, a considerably larger valuation for the Dow, which he sees climbing from its current 10,860, to about 12,000 by year end.

A relative unknown as money managers go, our magician has also displayed considerable razzle-dazzle in the marketplace in recent years with an awesome exhibition of uncanny market timing. That is, calling a series of significant up and down movements in equity prices.

Here's his documented record. In November 2007 with the Dow about 13,300, Wollin recommended that stocks be sold. It was wonderful market timing as the Dow subsequently crashed, plummeting to around 6,500 by March 18, 2009.

At that point, he reversed course and said it was time to buy stocks again. One again, it was wonderful timing as the Dow climbed to 10,400 by February 18, 2010. At 10,400, he turned cautious, saying it was time to take a snooze. Indeed, sleep proved to be the right prescription for investors as the Dow slid to 10,120 by July, 21.

Given his array of remarkable market calls, it's no wonder that The Great Baldini's forecasts have appeared a number of times in my writings.

No one, though, can be Superman all the time, and Wollin showed it in mid-July by reiterating his snooze strategy. That was a goof since the Dow subsequently rose 740 points or about 7%.

"I didn't lose any sleep over missing that move," says Wollin, "because I'm a long-term investor. The name of the game here is patience and no one is right 100% of the time."

As a money manager, Wollin, whose investment thrust centers on big name blue chips, is no slouch. Over the last 30 years, he tells me, he figures he''s outperformed the Dow by an average 2% a year. So far this year, he's up 5.1%, slightly above the Dow's rise of 4.1%.

Why so gung-ho on the market with all the worrisome economic concerns out there? Wollin points to the following:

  • The economy has stepped back from the edge of the cliff, is picking up steam and the National Bureau of Economic Research has declared the recession is over (which, by the way, a number of market pros strongly dispute).
  • It looks like the European debt crisis has passed and investors are recognizing it.
  • The Federal Reserve, fearful of killing the recovery, will continue to keep interest rates very low.
  • There is enormous liquidity on the sidelines, notably the trillions of dollars sitting in money-market funds, bond funds and CDs.
  • Vacation is over and the pros (mutual fund and hedge fund managers) have to start buying because anything they have in cash investments is earning practically zero percent.
  • John Q. Public is also saddled with puny yields, as seen by money-market returns of 0.45% for two-year Treasuries, 2.6% for 10-year Treasuries, 0.06% for money-market funds, as measured by the Fidelity Cash Reserves Fund, and around 1.22% for CDs.

Given, as well, a strengthening market, as seen in Friday's nearly 198-point rise in the Dow, reflecting a positive economic report. Wollin expects a decided pickup soon in trading volume, a lot more corporate stock buybacks and an increasing number of companies issuing debt to buy back stock.

In conjunction with this scenario, he expects more good economic news, namely top-line sales increases, higher earnings, little by little more job creations and a bottoming out of the housing market by the second quarter of 2011.

To Wollin, it all means the public should soon be returning to the stock market. "Greed should come back in fashion big time as fear and uncertainty begin to evaporate," he says.

His 10 favorite stocks, all of which he views as market outperformers over the next 12 months, are IBM, Procter & Gamble, Triple M, Johnson & Johnson, Chevron, AT&T, Bristol-Myers Squibb, Federal Express, UPS and CSX Corp.

One final question: How did Wollin come up with the name, The Great Baldini. "My girl friend and I had just finished making love," he explained. "I'm bald, she said the sex was great, and from now on I'm going to call you The Great Baldini. And that was it."

It's not every day I chat with a master in magic, market timing and love-making. This was one of those days.

What do you think? E-mail me at Dandordan@aol.com.