Many analysts believe the public's recent enthusiasm for stocks is worrisome. But according to Laszlo Birinyi of Birinyi Associates in Greenwich, Conn., the public rarely buys at the top. "In the last eight bull markets it's done so only twice. And in three of those markets the public was a net seller throughout the entire bull run. In the great bull market of 1982-87, mutual fund sales peaked in April 1986, after which the market still rose 49 percent."
- Berger 100 Fund has compiled one of the most enviable records in the growth-fund field (up 26.9 percent on average over the past five years) by concentrating on quality mid-sized companies with high, sustainable growth rates. It tries to temper its risk by buying such stocks before they've been discovered or when they're experiencing temporary downturns. Recent favorites: Oxford Health, CUC International, Solectron, IDB Communications, Intelligent Electronics, Oracle Systems.- Over 300 thrift institutions have been taken over by commercial banks in each of the past two years. Salomon Brothers Asset Management sees this trend continuing. "Thrift shares typically trade for 50 percent to 60 percent of book value. And their takeover prices are typically 150 percent to 200 percent of book value. Five thrift stocks which appear attractive in their own right, and which could benefit from this consolidation trend in the future, are: Bayview Capital, NS Bancorp, Rochester Community Savings, SF Fed, Standard Federal."
- Junior Growth Stocks newsletter (P.O. Box 15381, Chevy Chase, Md. 20825) recently went looking for small stocks "flying below the radar of institutional investors." It found 10 that, despite the hard economic times of recent years, have been posting annual sales and earnings gains over 20 percent. Their average institutional ownership is just 22 percent and their average P/E ratio just 15-to-1: AgServices of America, American List, Autoinfo, Brandon Systems, Hako Minuteman, Outlook Graphics, ReLife, R&B Inc, Summit Care, Tanknology Environmental.
- GNMA funds, which invest in government-backed mortgage securities, aren't hurt as much by rising interest rates as most bond funds. In fact, says Marty Schafer of Investa Capital Management in Des Moines, "the best scenario for mortgage investors is when rates stay flat or move up slowly and slightly." Another plus for GNMA funds: higher rates mean fewer mortgage refinancings.
- Four factors point to higher platinum prices, according to John Brimelow of BV Capital Markets in New York City: a rebound in the Japanese economy (Japan consumes more than half of the world's platinum), low inventories among auto companies (for use in making catalytic converters), lower Russian exports and the rising popularity of platinum bullion coins.
- How dependable are the earnings estimates of Wall Street stock analysts? Not very, says David Dreman of Dreman Value Management. "I recently conducted a study of 67,375 quarterly estimates from 1973 to 1990 with Professor Michael Berry of James Madison University. The results were devastating: 57 percent of the estimates were more than 10 percent too high or too low, a much larger variation than is generally considered necessary to trigger an earnings surprise. Investing on the basis of such estimates is betting against the odds."