Monday, March 29, 1999

Dow 10,000:
Hawaii analysts
mixed on meaning

Dow bulls through 10,000

By Russ Lynch


Hawaii stock-watchers see the 10,000 mark in the Dow-Jones industrial averages as a positive indicator but they vary in their opinions of what it means.

Paul Loo, senior vice president and head of the Hawaii branch at Morgan Stanley Dean Witter, has been positive about the stock market for years and he still is. Loo doesn't agree with those who argue that the movement of the Dow involves only the "nifty fifty" elite stocks which must now fall and take the rest of the market with them.

He thinks the opposite will happen, that small-cap and mid-cap issues will catch up with the big boys and keep the market strong.

"The Asian crisis has hit its worst and is rebounding. Brazil is on the way back.

"Obviously Asia is going through turmoil. Obviously Russia is going through turmoil," he said earlier this month. "But I think the world is coming to a resolution of those matters," he said. Meanwhile, America's economy is booming.

"The world is learning that the best, clearest, most regulated, most honest financial markets of the world are right here in this country," Loo said.

Randy Havre of Honolulu Venture Capital, a longtime local analyst, said it's not the 10,000 mark itself that's important, it's the 800-plus points the Dow has climbed since the beginning of this year.

Unfortunately, Hawaii stocks haven't risen. "Local stocks really aren't doing anything," Havre said. "Look at Alexander & Baldwin Inc., for example. A&B's the bellwether of the Hawaii economy," Havre said, because its transportation business, Matson Navigation Co., brings in the majority of goods Hawaii uses and its real property operations reflect business activity.

"It was around $40 nine years ago," he said. Today, the stock was trading below $20.

Ted Jung, senior vice president in charge of the Smith Barney Inc. Honolulu office, does not subscribe to Loo's theory that the whole market will get stronger. He worries about value, noting that some of the biggest companies have seen their stock prices soar while their earnings haven't justified it.

Small companies haven't ridden up with them. "The small-caps still don't have any movement," Jung said today.

Although, the Dow is higher than ever, he said, historically there has always been a correction after the market hit such lofty levels.

Robert Osbun, branch manager at the Charles Schab office on Bishop Street, said excitement about the 10,000 mark has certainly brought people in to watch the ticker, but he cautions against paying too much attention to it.

"We really stress long-term investing goals here," Osbun said. "It's encouraging," that the Dow passed 10,000, he said when it first crossed the mark in intraday trading earlier this month. "It's what we want to see," he said, but he added the Dow only represents 30 companies.

"Truthfully, my clients don't pay that much attention to it. Most of them have long-term investments," Osbun said.

Financial adviser Bert Dohman, president of Dohman Capital Research and publisher of the Wellington Letter, advises caution. "Ten thousand is really a major, major level" and chances are the Dow will stay up there, he said. But"strategy is much better than a prediction," Dohman said.

Dohman also noted that such major landmarks in the Dow over the last few years haven't had any real impact on the overall market.

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