Bob Brinker is not the only bull on Wall Street. Elaine Garzarelli, president of Garzarelli Capital and a market timer that correctly called the 1987 bear market that Bob Brinker missed, is Bullish.
Last night on the PBS show "Nightly Business Report" (NBR) Garzarelli said her indicators were at 80%. On her
April 2011 appearance on NBR when the indicators were at 76%, Garzarelli said the S&P500 could reach 1500. All four of her picks from her appearance last year were down.
Below are excerpts from her
Jan. 13, 2012 NBR appearance.
No doubt you`ve heard the phrase cautious optimism, probably for the past couple years. Forget about cautious optimism. Tonight`s Friday “Market Monitor” is a bull, plain and simple, an optimist. Elaine Garzarelli is president of Garzarelli Capital. She joins us this Friday from the NASDAQ. Elaine, nice to see you and happy New Year.
ELAINE GARZARELLI, PRESIDENT, GARZARELLI CAPITAL: Same to you.
HUDSON: You use a set of indicators to discern your market outlook. Why so optimistic?
GARZARELLI: Well, my indicators range from 0 to 100 percent. And currently they`re at 80 percent. They include fundamental indicators such as monetary indicators, economic cycle sentiment and valuation. And anything below 30 percent would suggest a major bear market; below 43 would be a 10 to 15 percent correction. So at 80 percent, that is very, very bullish.
HUDSON: You are looking at the fundamentals there. But what about the headline risk, especially all those concerns about Europe. You heard the reporting in the interview earlier in the program about governments getting their credit ratings cut overseas.
GARZARELLI: I think that is discounted. We have known about that since December. And you know, I think most of the countries should be double D anyway. So I don`t think that`s going to have much of an impact. I think the stock market today needed a little bit of a rest. It`s been rallying since October.
HUDSON: I am sure the European governments are glad you are not on the S&P credit committee. What about the sustainability of the U.S. economic environment? Last spring we saw some green shoots but they dissipated by the second and third quarter. Is this time lasting?
GARZARELLI: Well, we see real GDP growth this year of about 2 percent and about 2.5 percent next year. And the strongest sectors will be residential construction, equipment spending, technology, commuters, software and manufacturing structures.
HUDSON: With that, we`ll look at some new exchange-traded funds beginning with the Russell 2,000 exchange-traded fund, IWM. Why look at small caps in this environment?
GARZARELLI: Well, they don`t have much exposure to Europe which is a major reason. And also they were the worst performers last year, down close to 7 percent. And the areas that the Russell 2000 make up are mostly basic materials which I like, industrials and consumer durables.
HUDSON: You mentioned technology earlier as a place where there may be some economic growth. XLK is the technology fund here in the mid 20s. What do you anticipate this year in terms of a return?
GARZARELLI: Well, I think that the technology group could probably do twice as well as the S&P 500. And that XLK includes companies like Apple (NASDAQ:
AAPL), IBM (NYSE:
IBM), Microsoft (NASDAQ:
MSFT), Google (NASDAQ:
GOOG), Intel (NASDAQ:
INTC) and Cisco (NASDAQ:
CSCO).
HUDSON: All certainly household names. How about industrials? They have been kind of the market leaders and the laggards as of late. We`ve seen a nice rally off that October low.
GARZARELLI: Right. And they were a bad performer last year during the correction phase and there the stocks would be
GE, United Parcel (NYSE:UPS) , UTX, Cat, 3M (NYSE:MMM) and Deere (NYSE:DE).
HUDSON: You`re not afraid of international exposure there at all, are you?
GARZARELLI: No, not really because I think the group has corrected so much that it discounted a lot of that.
HUDSON: Finally here in fixed income, we talked about credit ratings but you are not afraid of bad credit ratings, junk, JNK the ETF that focuses on the high yield effort. Is this protected?
GARZARELLI: Yeah, high yield does well in an environment of 2 to 3 percent, real GDP growth which we foresee and I think the default rate will be low because we don`t see a recession for the next couple of years. And it`s yielding JNK about 7 percent now. Corrected quite a bit last year and that`s a very good yield.
HUDSON: Three times what the government bonds are yielding. Let`s take a look at your last picks back in April, you were last with us. You like the materials exchange-traded fund down 10 percent, financials down 16 percent. You also at that point liked energy down 13 percent and Advantaged fixed income closed end fund down 2 percent. Do you still like any of these?
GARZARELLI: I love them all. We had a signal last year of a 10 to 15 percent correction so hedged in May of last year. The groups have corrected quite a bit and they look absolutely fantastic now.
HUDSON: Elaine, do you and your investors have positions in all the funds mentioned tonight?
GARZARELLI: I do. And the sector analysis fund we own all of the things I mentioned.
HUDSON: She is a bull. No caution, just optimism. Our Friday “Market Monitor” guest, great to see you. It`s Elaine Garzarelli of Garzarelli Capital.
GARZARELLI: Thank you.
Below shows how the markets finished Friday:
| 31-Dec-11 | 01/13/12 | 14-Jan-12 | Results[up/(down)] |
| $470,378 | $488,546 | 3.9% | = Kirk's Explore (*) Stock Portfolio % YTD |
| 125.50 | $128.84 | 2.7% | = SPY % YTD |
| 1,257.60 | $1,289.09 | 2.50% | = S&P500 YTD |
| 55.83 | $58.18 | 4.2% | = QQQ % YTD |
| 12,217.56 | $12,422.06 | 1.7% | = DJIA % YTD |
| 121.85 | $124.16 | 1.9% | = DIA % YTD |
| 73.75 | $76.39 | 3.6% | = iShares Russell 2000 IWM % YTD |
| 64.30 | $66.15 | 2.9% | = VTI % YTD |
| 31.29 | $32.17 | 2.8% | = VTSMX % YTD |
| 114,755 | $116,520.00 | 1.5% | = BRKA % YTD |
Long Term Results that Speak for Themselves
Since 9/30/98 inception, "Kirk's Newsletter Explore Portfolio" is UP 390%
vs. the S&P500 UP only 51% vs. NASDAQ UP only 57% (All through 12/31/11)
(More Info, Testimonials & Portfolio Returns)
Latest 2012 Update: Up 7.2% YTD as of 1/20/12
*Kirk's Explore Stock Portfolio started with $100,000 on 9/30/98
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