Fairfield County Business Report; 539; Stock Market

And are people still investing in the stock market business leaders with any real knowledge with behavior and commentary from John with great authors of OF. I read an article the other week it was titled The Death of investor confidence and the gist of it was that since October of last year many investors who had at least may have thought about investing in stocks are going elsewhere. That's going to be our panel discussion today. The State of the stock market and its future will be getting to that in

a few moments. First though it is business news with Andrea ahas Andrew. Thanks Ron. A scheme to manipulate the price of Danbury based Union Carbide common stock is the latest development in the Wall Street insider trading scandal. This week U.S. attorney Rudolph Giuliani announced a 10 count indictment of G.F. corporation two subsidiaries and J.F. vice chairman James T Sherwin's. The charges include stock price manipulation securities fraud wire fraud and conspiracy. Assistant U.S. Attorney chip Lowenstein says Sherwin is charged with scheming to drive up the price of carbides stock to attract buyers and increase profits. JOHN Peter GLONASS of Greenwich faces 207 years in jail and nearly $8 million in fines. The 44 year old stock promoter was convicted this week for his part in the phony gas and oil tax shelter. Assistant U.S. attorney Vincent for setit says the jury found GLONASS guilty of 44 charges including racketeering bank fraud tax fraud securities fraud and bribery a co-defendant in the case.

Forty eight year old Anthony Mark Hayes of Southport was convicted of two counts of racketeering and three counts of bribing officials at People's National Bank of Rockland County. He says the two men are scheduled for sentencing September 20th. Stafford based singer company announced an agreement this week to sell its craftsman power tool division to Ryobi Ltd of Tokyo. The purchase price about three hundred forty five million dollars in cash. A spokesman for the company Thomas Elliott says a number of singer businesses will be sold in an effort to repay debts resulting from Paul BAZARGAN takeover of the company in March. Singer currently employs about 110 people at its headquarters in Stamford. That number is expected to drop as more of its businesses are sold. Good news from Fairfield based General Electric Company sixty seven thousand member International Union of electronic workers ratified a new three year contract this week. The agreement gives the Union an 11 and a half percent increase in wages bonuses and cost

of living adjustments. Sources say a second Union Aggi the United Electrical Workers are also expected to ratify their contract. GM employs about 5000 people in Connecticut. Less than five hundred belong to unions. And finally tonight a word about summer vacations everybody knows that people head to the beach not the cities. Well everybody's wrong. At least a new survey suggests that a nonprofit research firm called the U.S. travel data center found that 31 percent of travelers plan to take their summer vacations in the city. Only 26 percent will go to the beach. The survey also found that only four of ten vacationers will stay in hotels. The average traveler says a spokesman for the travel data center puts his family in the station wagon and goes to see the grandparents. A business news here again is wrong. All right Andy. Coming up on Thursday July 14th how to buy a business it's sponsored by the Small Business Development Center. It's going to be held over at 141 Linden

Avenue in Bridgeport starts pretty early 7:30 in the morning 5 7 6 4 2 4 6. For more information. Coming up on Thursday July 14th we are going to be hearing about a real estate license law and regulations update sponsored by the continuing education section over at the community college. This want to be in Stanford at the Howard Johnson's are from seven till ten at night. Call 8 5 3 2 0 4 0 extension 2 4 3 for more information. On Thursday July 21st. A week later it's going to be a pretty business workshop that's sponsored by The New York chapter of score which is the Service Corps of Retired Executives and also the Small Business Administration. Over at the Darien library and not to be going off 9:00 in the morning till 1:00 in the afternoon 8 4 7 7 3 4 8. And of course if you want to be on our business calendar make sure you send us all the information with plenty of time to the Fairfield County Business Report Connecticut public TV 250 Harbutt Dr Stamford Connecticut 0 6 9 0 4.

But I did a lot of barbecuing last weekend and there's a pretty good chance that I'll be doing more of it this week. Now that is welcome news to a number of people. Number one my butcher. Number two the people who make Portuguese rolls and also maybe the poultry people in the supermarket. And of course the company which makes the barbecue sauce Andrea has dishes up a saucy report for us. Sometimes. Finally here it's time to hit the beach. Fire up the barbecue if you like most barbecue lovers you're probably pretty particular about the types of meats you buy. But chances are when it comes to buying barbecue sauce you're not nearly as careful. Finding the perfect sauce isn't easy. Just take a trip to almost any local supermarket and you're likely to see about 50 different kinds. There's new sauce and old

sauce. There's sauce that's thick and rich and sweet and sour. Or maybe you prefer a sauce from Kansas City Texas or New Orleans. There are lots of barbecue sauce on the market. What makes ours different is that we're liquid sauce and a traditional pit barbecue sauce. And what that allows us to do is to soak in and permeate to the bone. So we're very different from any other sources out there. Thirty six year old Asheville McElveen. He's president and owner of Ashbolt incorporated of Norwalk Asheville says the original recipe for a South Carolina barbecue sauce was developed by his grandfather 75 years ago. He says he decided to turn the family recipe into a business. Just four years ago after getting fired from his job at a local limousine service we literally started in street fairs in Fairfield County and then on the street corners in New York City and now we are

around 25 states with this product. And then the two biggest supermarket chains in the country Kroger and safe. Now South Carolina barbecue sauce is more expensive than the other brands. About 50 cents to a dollar more expensive but Asheville says it's worth it. You're going to stand those six or seven dollars a pound for your sterling steak. We'll spend a few extra cents for your barbecue sauce. In Norwalk Andrea has a county business. All right and now from all reports it was a fun time had by all at the recent Connecticut minority purchasing Council awards dinner. Reporter Vivian I attended the dinner for us and tells us a number of business people turned out to applaud and swap stories. Thirteen years ago Rebecca Esther Mankowitz came to the United States from the Philippines Armed with very little business savvy. Today as president of her own computer supply company she lends credence to the principles behind the American work ethic. The Connecticut

minority purchasing Council recently recognized her achievements at their 12th Annual Awards Banquet. I mean we're just in council has made it easier in the sense because they have all these companies who are active and they're very very strong advocates in doing business with minority businesses. So at least I had some initial leads. The other minority suppliers of the year nominated by the corporate members for their outstanding service quality and competitive pricing included Aaron runners of Hartford and Tara Meadows incorporated in Manchester. Ronnie Payne vice president of corporate purchasing a Digital Equipment Corporation was keynote speaker. He challenged the private sector to make innovative investments in minority businesses establishing minority supplier mentorship program with senior managers in your company. Think of your company and its minority investment program as a green house to support the group of these entrepreneurs and do such things as establish minority business

consulting office within your company. Encourage minority entrepreneurs to get into market niches. Worry you. Hello. We all have critical needs but pain didn't lay all the weight on the corporations. His challenge stretch to the minority vendors is well you've got to set realistic goals and then deliberately go do what you say you'll do. I cannot stress this enough. Our reliable supplier supplier the customer will want to stick with the supplier who plays it straight. Coporation you know what I want to pack and wait. Is noted my reply is along with Textron Lycoming crowd the minority is a major jewel in the marketplace. There is no company our size or larger that can in fact be successful without that base of the suppliers that have the homes skills and the home talents that in fact you

deliver to the industry. So from that aspect I really do sincerely say thank you for being the suppliers that you are for our industry in Waterbury Vivian Eistein reporting for the Fairfield County Business Report. And now onto our program about the stock market. Before we get to our panelists let's take a quick background report from Steve where we talked with two market experts in the Stanford area. The result of October 87 of greater attention has been given to the advantage of diversification. Different portfolios made up of everything from real estate limited partnerships or real estate investments to equities and mutual funds and all different type of combinations. It's been one thing that a diversified portfolio in October only had a downturn of 7 to 10 percent in October versus people who are invested into equities or more growth oriented products. Last 30 to 50 percent in a crash in October.

We certainly are advising those people to have as most of our investors to have a certain portion close to 50 percent in fixed income bonds or certificates of deposit. And in the on the equity side or the stock side a lot of our emphasis is on safe investments such as utility stocks with yields anywhere from 5 to 8 or 9 percent. But my go follow with Stanford based investment society for savings believes that while you may be more conservative about how you invest you are always using your head. The biggest thing that I see people doing and what they're doing wrong is they're always trying to accomplish long term goals with short term needs. And so if they can get rid of that really think of what their terms are and what they're investing for and go out to accomplish those. The average person is always trying to look for rates to go up. Like with CDs I see a lot of people coming into society for CDs and they're always going three or six months thinking that rates are always going to go higher or they're better off if they're looking at buying CDs

by long term because in the average somebody's going to buy in two year CD somebody's going buying a six month CD needs for six months cycles of interest rates increasing one half of one percent. We've never really had that when the market crashed on October 19th. Dropped more than 500 points in a single day. And though it has rebounded over the last several months investors confidence hasn't fully been restored. Well I don't know exactly where the market itself is going. I wish I had a crystal ball but I think for the next two to five years people will be concerned and certainly remember October 19th and be emphasizing safety of principle. To reassure these investors a lot will depend on what happens to the markets as to how volatility is controlled in Greenwich. Stephen Moore for the Fairfield County Business Report. Thank you Steve. Now let's meet our two panelists and both of them have been with us before. Doug trainer

is senior vice president W H new balls and Sun incorporated in Stamford. And Phil Kasdan is a investment portfolio manager at Prudential. And it's good to see you guys again. Thanks for being with us. Doug we'll start with you. Is it so it ask whether or not people have the same confidence today as they did a year ago. Yeah. They they really don't. They're kind of sitting back. I think they're taking more of a wait and see attitude as far as the market the equity market is concerned. Certainly they need places to put their money to work and what they're looking at and doing is more short term fix think I'm instruments and an early through the first six months of this year they've been they've been going into some of the closed end mutual funds that have come to market and and some of the open ended funds as well.

So it sounds to me like you've got plenty of time on your hands at work. Things aren't all that slow but they're not what they were certainly a year ago. Now why why don't people have the confidence that they used to have in the market. I mean obviously there was a big crash last year but here it is a number of months later some people say the market seems to be pretty stable nowadays. Why don't they have that same confidence. Well I don't think you repair confidence in a financial sense over a very short period of time. I mean it's not a quick fix kind of situation. People were terrified by the market crash last year and rightly so. The financial institutions of course have not gone out of business and nothing dramatic has really happened as far as they are concerned. Business is just not as good as it was because the investing public has stepped back from the market.

So do you think it's going to rebound. Will it be able to come back in the near future the way it used to be. Well I think two things kind of jump out at you. First of all post October 19th the immediate consensus was that we were the entire economy was going to go into a state of recession. I think now as we sit here in July that it's become obvious that the market didn't throw the economy into a into a recessionary phase as a matter of fact. Now we're we're seeing the market testing for. In fact for inflation. The other thing the other mitigating circumstance frankly is that the mechanics of the market the the the program trading the the computer based trading has caused investors to take a long look to see whether or not the stock market is a place for them to put their money. In your opinion has enough been done to fix what caused a good deal of the problem last October specifically program trading.

In my opinion no. There's been a lot of rhetoric but really nothing. You know they've they've set some limits on the daily. Daily trading but whether or not in fact that's that's going to have any substantive effect. I'm not entirely convinced. OK what needs to be done to restore the confidence. Well I think frankly what you've got now is a big ocean of liquidity building up again which existed last year when we were here at this time. And as Doug has just alluded to the question of where are you going to put your money. Investments have been during this calendar year very short term very short term oriented I think. Now there seems to be some feeling in the investment community that the dollar is stabilized a number of factors are falling into line where there are some meaningful longer term investments investments not trading vehicles but investments that make some sense to take a look at today. Doug is one of the problems the fact that a presidential election is coming up in a few months and some people maybe holding off on investing in the market until they see who gets in a Republican or a

Democrat. I really don't think I care if those facts have anything to play in the market. They're being discounted or have been discounted the marketplace. Now the more influential forces are what is happening to the American dollar which right now is strengthening against Japanese yen. What the Japanese are going to do what the trade situation looks like factors other than the presidential election I think as far as our securities markets are concerned at this point it doesn't matter to the investor which party is in power. I heard a commentary the other day talking about how many Japanese businessmen are going. We thought that they were spending a lot of money in the past in the United States. But over the next year or two expect billions and billions to come in here and watch the markets go straight up because investor confidence will resume because of that.

Well if in fact the the dollar is strengthening against the yen which it has been and if that becomes a trend then they're going to take the American Dollars which they've acquired and bring them back into the United States by acquiring more assets here in the United States at a more rapid pace. So when you say you have an awful lot of money to use would you think this is a good time for people to invest to get it while the going is good. In other words a fairly low rate. Well I always think it's a good time for for investors to be in the securities market if they are selective in the securities that they acquire. And if those securities fit the needs of their financial goals and that's why we have jobs still and because we are there to help them meet those goals and without that they're really going in blind that it's a deadly and tough game to play. So when should people be putting their money in the market nowadays what companies would you say. Well the the smokestack very cyclical cyclical areas are perhaps now going to be the

leaders. We haven't seen that to be the case since the 1970 1975. I would say when those kinds of industries the aluminum steels etc. were the leaders in the market today with the dollar having fallen and now kind of leveling off those companies are now in a leverage position to really make some significant ground they have. They have come a long way. But I think there are still opportunities in those areas. It's interesting I was watching a TV show this morning where I forget the I'm sorry the name of the stock market expert eludes me at the moment but he said only a couple of chips and that's it. Would you agree with that. Well I'd only go blue chips but I would even even hold that down to a more selective area. Example again the aluminums steals the copper is that the heavy equipment companies look to be in a very favorable position now.

Doug what would you say where do you advise people to put their money nowadays. I like some of the financial institutions. I think they have been racked from last year. I think they're selling a good price earnings multiples. I think if the scenarios begin to fall in place that make the investors start to come back into the market or other international things occur that they're going to be good long term investments and they can be acquired relatively cheaply now. Another one is in the. Water companies or something like that for the utilities. Yeah. Within the. Well if you want to put it within the utility industry what a company is. Very interesting. OK. I asked him before what should be done to restore the confidence what would you say needs to be done. That's tough to say. I don't think that a tremendous

amount of legislation is required. I think the markets work. I think the fact that we have come out of that situation of last year relatively intact in all phases of the economy augurs well. But what we have. And if it really ain't broke don't fix it. Even with the program trading and so forth the system did work. It may have worked better under different contexts and maybe with some different touches and the mechanism being being improved but basically it works. I'd hate to see a lot of legislation enacted to try to correct things that don't exist. Now I know I'm guessing where the market is going to be in a few months as I guess whether or not Billy Martin will be back to manage the Yankees before the end of the year. But let's try it Phil. Is it going. I'm not going to make that guess. I'm going to I'm going to chicken out but I will say that there are segments that are that are going to

appreciate that significantly and I think the the earlier you get involved in those areas the better as far as picking a number. The Dow I am I'm going to I'm going to beg off the dog here. It's tough to do that because it seems no matter how you get it. Inevitably the next day you might have a different guess. Exactly. Exactly. Doug we're going to give you a shot at it now. Oh thanks a lot guys. I don't see the Dow being tremendously higher than it is right now. And they might be in the 22:23 hundred range but that's the general overall market picture I think there are a lot of opportunities in individual securities for very substantial gains right on the horizon enough for thousands or anything like that or 3000 in the near future. Nothing. Nothing is impossible. And you know how far out the rise in what you're like us to pick.

OK. Well we'll stay with the 23 24 100 thanks. My thanks again to Doug trainer and also to Phil Kass and now it's time to get some management tips here. Vera Hellyer from Vira Jay Hillward associates of Casca. Tonight Ron I'm going to focus on what is known as the pike syndrome Pike which is a relatively sizable fish was placed into a tank and allowed to swim around. He had nothing to worry about. Whenever he became hungry all he had to do was gobble down the smaller fish. Then all of the smaller fish in its tank were taken out and a large glass cylinder was placed in the tank. The smaller fish were then placed inside the cylinder no longer accessible to the pike. And the pike finally got hungry he just reached out to gobble one of the smaller fish only to find that when he did. He got his nose if that's what fish have. But this happened repeatedly until he just stopped going after the fish altogether. Finally the glass cylinder was removed and the smaller fish allowed to swim freely. The old pike became listless and finally died of hunger at a time when food was plentiful and well within its reach. You say he never made any more attempts to eat the smaller fish

because he thought that such action would result in having his nose but that might be a fish story. But it applies to people as well. Many of us assume that because certain conditions were in place at a given time resulting in negative experiences for us that those conditions will forever be in place. Therefore denying ourselves opportunities to grow. The moral of this story is constantly check out your data then make sure that it's current and that it's right for that particular person situation etc.. Don't assume that situation Number 2 is exactly like situation number one for the Fairfield County Business Report. I'm very Hellier. All right thank you very. And as you know some big to do in a Soviet Union the past few weeks the summit meeting the party congress and this week's commentary on the economy John Winthrop bright the head of the Bridgeport based right investor service takes a look at the Soviet Union under Mikhail Gorbachev. Good evening. And where do we go from here tonight. Well after months of observation Mr. Gorbachev introduction of a new deal for the

Russian people. Little doubt can now remain that it does indeed represent a truly revolutionary advance to a Russian society which will inevitably become aggressively more democratized less rigid and more compatible with western capitalism the socialist state is basically made up. It would be too much to like English much for example let's go to a constitutional convention focusing on a U.S. style Bill of Rights for the Russian people. Most astonishing is the fact that this may turn out to be a change of leadership which may indeed be tested in recognition of the evils of an existing society and they should of a peaceful path of recovery. That's Mr. Gorbachev courageous achievement presents a resounding challenge to the leadership in the western world a challenge which is particularly timely for the so-called Group of Seven leading nations

which should be treated to a spectacle of a summit. Would she be able to find anything sufficiently wrong with the status quo to require any really significant destructive remedial action. Shut off till next week. And that is going to do it for us until next week. I'm Ron Ropeik thank you so much for watching. Have a good night