BUSINESSWEEK ONLINE : SEPTEMBER 11, 2000 ISSUE
FINANCE Beach-Blanket Bullishness These are the dog days of summer. Manhattan has emptied out, and finding executives on Wall Street is like hailing a cab in a rainy rush hour: nearly impossible. What are Wall Streeters expecting the stock market to do? To find the answer, BUSINESS WEEK just followed the money--to the beach. There, along the pristine shores of East Hampton on Long Island, where suits, ties, and high heels are traded for bikinis and baseball caps, we found the usually hyperfinancial folks of Wall Street. Not surprisingly, under a cloudless blue sky, with 80-degree weather and the sound of cell phones muffled by the crash of surf, a relaxed optimism prevailed. No more interest-rate hikes was the prevailing beach opinion. And as for technology, some stocks would continue to sizzle, albeit on a case-by-case basis. Yes, the bulls were having their day at the beach. Relaxing in a lime-green bikini and matching hair ribbon, Pamela Gardner, president of New York's The Gardner Group, a recruiting firm that places technology experts in top Wall Street firms, says she expects the market ''to go crazy'' this fall. Her personal indicator: No sooner had she hit the beach than her phone started ringing madly. Her business, which depends directly on market prospects, had slowed to a crawl after stocks tanked in April. But suddenly, firms are scrambling for people who design sophisticated trading rooms. ''I've closed three deals since yesterday,'' she says. Just down the road, under a big blue umbrella at Georgica Beach, sat Edward L. Shugrue III, chief financial officer of Capital Trust, an investment management firm that specializes in high-yield debt. He said the market was currently doing just what he expected: not much of anything. But Shugrue says the market this fall would continue to differentiate between the haves and the have-nots--those companies that have earnings as opposed to those that don't. Technology companies will continue to recover their losses of last spring, but not across the board: ''It's not a rising tide anymore, with every boat going up,'' he says. Even with many Internet portal and content companies continuing to decline, Randy W. Slifka, a managing director at Perennial Capital Partners in New York, which invests in public and private equities, thinks the technology sector will continue to lead the market. Slifka, who pondered the market from his beach chair while smoking a cigar, sees the market rising only 5% to 8% during the second half of the year, compared with a fall of 1% in the first half. Abroad is where the action is, says Slifka. European risk arbitrage and emerging markets represent the best opportunity to make money. David Gruber, general partner at Market Neutral Fund--a fund that has equal long and short positions in stocks--says he expects a lot more volatility as people start to rethink their portfolios once the summer is over. The most bearish of the August beach bunch, Gruber thinks that the recent market rally has no conviction about it. ''But if I invested any money based on my own opinion about market direction, I'd be broke,'' Gruber says. Meanwhile, Steven Ludsin, a few feet away, was prepared for anything. Equipped with a Palm Pilot and cell phone, Ludsin, an investment adviser with his own firm, S.A. Ludsin & Co, often works from his beach outpost. This year, though, things have been quiet: ''There have been no Asian economic crises, no hedge funds unraveling. In fact, we've gotten apologies from John Meriwether [of Long-Term Capital Management] and George Soros.'' RECORD HIGHS? Ludsin expects the market to hold steady, with no interest rate hikes until after the election. ''Even with a shakeout of Internet stocks, I still think that part of the market will continue to outperform,'' he says. ''Nasdaq is a curious creature, and I think it will stay near record levels.'' Getting scoops on the beach, however, can be as tough as finding a message in a bottle. Ludsin says he recently saw Carl Icahn strolling by the sea. He congratulated Icahn, saying what a great job he did buying a piece of General Motors Corp. Icahn's response? ''He laughed and said 'thank you', and we chatted about it,'' says Ludsin. For many, a day at the beach is just another day on Wall Street. But the suntanning is much better. By Debra Sparks in East Hampton, N.Y. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS The Less-Loved Stocks Have Their Day Beach-Blanket Bullishness CHART: Out of the Doldrums? INTERACT E-Mail to Business Week Online

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