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June 30, 2003

Nasdaq on the Rebound

By Kathryn M. Welling

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Michael Belkin, the iconoclastic market strategist who publishes his eponymous Belkin Report for institutional investors from remote and blustery Bainbridge Island, Washington, doesn't really care much if he ruffles feathers. Or upsets comfortable, conventional thought patterns or portfolios. Mike Belkin sees this Fed-fueled rally driving Nasdaq up another 60 percent.

The whole point of his business is helping his clients get positioned right to take advantage of big market moves. Since December that's meant telling skeptical institutions to get ready to party. Mike elaborated on his change of heart for me recently.


You are one contrary cuss, Mike. Just when institutional investors were beginning to cotton onto the secular bear market story you've been spinning since 2000, or 1999, really, you call for a monster rally.

I guess that's my lot in life. I do seem to have high targets, in percentage terms, for this rally, higher than pretty much any I've seen out there. It's not because I've suddenly been transformed into a bubble person. It's just that I constantly analyze the situation and what I see now is the potential for a fairly significant market bounce.

"Fairly significant?" I'd say 60 percent more on the Nasdaq would qualify. You are out there on the analytical fringe again.

It is hard to imagine the Nasdaq, which is currently around 1500, going to 2400 any time soon.

Almost as hard as it is to imagine that at the peak of the mania it got up to more than twice that level.

But it's certainly within the realm of probability and possibility. Not this week or this month, but looking out toward the end of the year. Over the next maybe six to nine months, something like that.

Haven't you been listening to the Sage of Omaha? He has been preaching that single-digit stock price appreciation is the best any rational investor should expect.

Yes. I read that and laughed. I was with Salomon Brothers, remember, when [Warren] Buffet came in and sort of reorganized the place-not for the better.

As I recall, he was the white knight called into rescue Solly from the brink.

Yes. He did save the firm. We were able to roll over our commercial paper when he came in, which was an improvement. But that was still the effective death knell of Salomon Brothers. Not that it was Buffet's fault. It was the Treasury trading scandal that brought on the whole sorry chain of events.


But the upshot was that Salomon got acquired by Citigroup. Now the organization doesn't even exist anymore. They retired the Salomon Brothers name. Anyway, back in the late 1980s, it was an interesting place to work.

No kidding. You obviously refined some skills there that are serving you and your clients pretty well.