Wow! This market is a steamroller. It's not as if this historic Bull move needed further validation, but for Treasury Secretary Rubin to resign, and to have the Dow Industrials down only 25 points is truly amazing. All this with an 11,000 Dow that could use a correction in its move to higher ground. If that isn't enough, The S&P 500 is up 8, the Nasdaq is up 39, the Russell 2000 is up 2, the American is up 9, and the Dow Transportation index is up 12! And finally, to add insult to injury, the 30 year Treasury Bond was up 2/32, dropping the yield to 5.83%. Yes Brother Rubin, this congregation is going to miss you a whole lot, and don't let the screen door slap you on the rear, on the way out.

The market is giving us a message. For me, this is a message that I've received many times over the years, for good and bad. When a market disregards big-time bad news as it did today, this Bull is a lot younger than we may have thought. Similarly, those of you with a grey hair or two may recall that in Bear markets, good news means nothing. When the news is bad, the market goes down, and when the news is good, the market goes down.

Today was nothing but raw market power. The money is pouring in, as legions of new investors are pumping more and more into stocks. They are fearless, as they have never seen stocks fall for a prolonged period. Every setback we have had in the last 6,000 Dow points or so, has proved to be a buying opportunity. When you buck this tide, you get swept under. Look at that "elf" on Wall Street Week. She has been wearing a dunce cap for years now, with only occasional relief. I marvel at her unrepentant bearishness, and even more - how she has manages to keep her job. Even the mighty Mr. Greenspan, a quick learner if there ever was one, never uttered anything about exuberance again. That one time was enough for him, about 5,000 points ago. Sure, he has indirectly slammed the Internets, but they're a special beast, and in my judgement deserve all the slamming they can get.

So what do we do? We stay invested. We don't chase momentum stocks, and we avoid high P.E. stocks. We buy stocks with good fundamentals that have had a setback in recent weeks, or have been long slumbering, but whose price and volume action indicate an awakening. Sometimes you have to wait for a pullback, so you wait. Paying top dollar even for good stocks never appealed to me; buying at a good price is the first half of a profitable transaction. Of the stocks that I follow (of course), I am waiting for a pullback in Citigroup, Chase Manhattan, and USX Marathon; and a further pullback in Pepsi and Pfizer.

The stocks that can be bought right now, are my favorites, the Biotechs/Genomics. In general, I love Pharmaceuticals because our aging population will consume more and more drugs, and that's in good times or bad. They have come under a cloud recently, as investors worry both about the very high P.E.'s with which I heartily agree, and the government's interest in curtailing drug costs if Medicare is to pay for them. The latter I don't worry about too much, because Congress understands the need for big profits to go along with the very high cost of bringing drugs to market.

Back to the Biotechs/Genomics. Everyone has waited so long for these stocks to come into their own - and I don't mean the Amgen's etc., of which there are less than ten. I mean the secondary and tertiary issues that have been generally ignored by this greatest of all Bull markets. Sometimes investors seem mindless in evaluating stocks. They will pay $25 for a stock that has a great idea, but still hasn't gone into human clinical trials, meaning they are many years from MAYBE having a marketable product. And then they will only pay $10 for a stock that has a product and marketing has begun. Two in this latter category are Ligand Pharmaceuticals (LGND) and Isis Pharmaceuticals (ISIP), both of which I own. We'll try to give you details on them next time.

In the meantime, know that today saw some significant moves in Biotechs/Genomics, with Human Genome Sciences (HGSI) going up 2 3/4 to 42 and Igen International (IGEN) going up 4 7/16 to 31. "There's gold in them thar hills", but you have to know where to look. And of course, a little luck never hurts. Stay tuned.

The Market Pro - May 12, 1999