With Halloween just around the corner, face masks of ghosts, ghouls, goblins and Godzilla are already starting to rack up some brisk sales. Maybe you've already bought one of them. One fella, though, who won't be sporting any horror mask at his Halloween outing is veteran San Francisco money manager Gary Wollin. Based on his glowing market outlook, he figures he'll be appropriately attired as one of the seven dwarfs, Happy. Or, if he's wrong on the market, he says, he'll switch to Dopey.
When it comes to the market, though, Wollin, 69, a relative unknown among money managers, is anything but dopey. Over the past couple of years in his conversations with me, he has repeatedly demonstrated his prowess as a skilled market timer with an uncanny ability to catch up and down moves in stock prices.
For example, last March, with the Dow around 6,500, down more than 50% from its all-time high of 14,164 in October 2007, Wollin, a bear since November of 2007 (with the Dow at 13,371 at the time), suddenly switched gears and moved into the bullish camp. Wisely, he's steadfastly retained that stance ever since. In a chat last July, with the Dow at 9,069, he made another winning forecast, predicting the index would top 10,000 before year end. With the Dow now at about 9950, coupled with the market's recent vigor, some pros believe his five-digit forecast is pretty much in the bag.
So what's next?, I asked Wollin, whom I've quoted several times in my writings because he's been so right so often.
Lo and behold, our bull, who manages a little over $100 million of assets under the banner, Gary Wollin & Co., and is presently 95% invested, believes we could be on the verge of "a stock buying panic." That assumes the Dow tops the 10,000 mark and holds above that level. A buying panic or stampede, he believes, could kick off at any time, and would be reflected in a fast 1,000-point runup in the Dow, say over a 30-day period, which would push it to around 11,000 on accelerated trading volume. Accompanying such an advance, he says, would probably be some hefty triple-digit daily Dow gains on the order of 200 or 300 points.
Surprisingly, Wollin, who expects to witness his buying panic before year end, looks for it to be spearheaded by individuals, rather than institutions -- the very people, he notes, who have been running scared, who sold out of the market and have moved to the sidelines. The big stock market gains off the March lows and the improving economy have changed things a lot, he says.
"Just go into a barber shop and you'll see people are less scared than they were six to eight months ago, even those who worried that they had no money for retirement. Now they worry they'll miss the boat. Just watch; they'll come back into the market like crazy."
Real worry, he says, has a very short half-life on Wall Street of say three to six months. After every giant decline, there's an enormous rebound and the thing for investors to keep in mind, he observes, is that we're still in one.
With institutional cash reserves at their lowest level in many years, an obvious question is where will the money come from to trigger and sustain his buying panic. Wollin sees plenty of public liquidity available in the very places in which investors rushed to safety during the market's severe downturn. These include money-market funds (which have an estimated $3.4 trillion in assets), CDs, savings accounts, bonds and corporate bond funds and Treasury securities.
"The thing to keep in mind," says Wollin, is that "greed on Wall Street never goes out of style."
Wollin, incidentally, doesn't think his buying panic is sustainable. Rather, he sees it followed by a selloff and then, thanks largely to a peppier economy, he expects a return to a normal and rising market, with the Dow climbing to 12,000 before the end of 2010.
Wollin's fund, up 12.9% this year in the first nine months following a decline of 22.8% in 2008, focuses on big blue chips and household names. His top picks--each of which he pegs as a potential 14% gainer over the next 12 months--are Intel, Cisco Systems, IBM, Freeport- McMoRan Copper & Gold, Exxon Mobil and Microsoft. "I think they'll do 1.5 times better than the market with less risk and less volatility," he says. As a dividend play, he also favors AT&T, which sports a sizeable 6% yield.
One Los Angeles hedge fund manager, who views the market as substantially overvalued based on fundamentals and a number of obvious risks (such as the threat of inflation and rising interest rates) ridicules Wollin's forecast of a buying panic. "If he believes that," he says, "you know the guy also believes in the tooth fairy."
Write to Dan Dorfman at Dandordan@aol.com