(February 17) – “In the fourth quarter of 1999, it paid to stock up on stocks. But will a heavy helping of company shares reward investors the same way in a volatile new year? It’s a question Wall Street strategists will have to wrestle with, especially if the markets continue the vertiginous ups and downs seen so far this year — or if technology stocks, the bull market’s main driver, suffer a pullback. So far, even the pros don’t have a simple answer,” reports Terzah Ewing in The Wall Street Journal.
“Those strategists with the heaviest dollop of stocks fared best during the three months ended Dec. 31. Indeed, in The Wall Street Journal’s latest quarterly study of major brokerage firm asset-allocation advice, the biggest return — 15.5% — accrued to the hypothetical portfolio that threw caution to the wind and stashed all its money in stocks.
Among actual brokerage firm recommendations, the advice of one of Wall Street’s most tireless stock market bulls, Jeffrey Applegate of Lehman Brothers Holdings Inc.’s Lehman Brothers, took the crown in the fourth quarter with a return of 12.3%; he weighted his portfolio 80% in stocks.
“But that kind of performance came in a quarter that was in almost all respects perfect for those enamored of the stock market. The Dow Jones Industrial Average rose 11.2%, while the technology-juiced Nasdaq Composite index surged 48.2%.
“Since then, however, things have been less rosy for the stock market: the Dow average is down 8.1% so far this year and even the Nasdaq composite has risen just 8.8%. The Federal Reserve appears to have embarked on a path of raising interest rates to stave off inflation. And the course taken by all the market indexes looks like the proverbial roller coaster, with big up days followed closely by big down days.