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Wall Street Week is going to our panelists are blank yellow. Robert you run and order Randall. Tonight's special guest is Bernard Weinberg. Good evening I'm Louis through geyser. This is Wall Street Week. Welcome back. The more senior among you will surely remember the news casts of Gabriel Heater and used to begin with that cheery phrase. There's good news tonight. It was a catchy line and people seem to enjoy hearing it. So I thought for a while of appropriating it for this program. Then unfortunately I happen to take a look at the actual new is I have to report. And what the stock market like this when even Mr. heater might have been hard put to find an ever sunny description that would not have aroused his audience to either acute knowledge or a messy physical violence. I did think briefly of updating his famous phrase but the only thing I could come up with that had a consistent ring of truth was tonight. But somehow that didn't seem to have the

same classy ring to it and I concluded that by the third or fourth week of hearing it you might understandably decide that you had troubles enough of your own. So let's just leave it at this. There sure is news tonight folks no doubt about that. And if you should happen by chance to be a closet masochist you're really going to love it. It's weeks like this when in fact because many a small investor to wonder whether there really is any reasonable chance for him to make money in Wall Street and in your hour of darkness we dutifully bring you a ray of sunshine a golden ray we hope for us all. My guest tonight is not a big shot in the government or on Wall Street. Not a market analyst who specializes in some particular group of stocks not a mutual fund mogul who dump stocks by the bushel basket. Not even one of the market celebrated Mavericks and critics though all those groups have been well represented on Wall Street Week in the past and hopefully will be again. Tonight we have something different. A self-described ordinary investor one of the vast

horde of so-called little men to whom this program on like Gulliver's Travels is most sincerely dedicated. Bernard Feinberg started very small indeed and successfully built up a portfolio in six figures. He's convinced the other Lilliputians can do as well as he did. And tonight he's going to tell us why. But first let's see how the Davids in the Goliath's alike made out this past week on Wall Street. And as the Dow Jones Industrial Average indicates the only decent slingshots were plainly in the hands of the bear it's those traders who want stock prices to go down except for a weak bounce on Tuesday the market plunged all week with the Dow index of 30 blue chip stocks losing nearly 26 points to nine hundred twenty seven point ninety eight. The decline which was climax by an 11 point drop on Friday came on consistently low volume Monday's 12 and a half million shares was the slowest day since mid-April. Which means for those who like to find silver linings in these things that the brokers are losing money too.

They had lots of company. The New York Stock Exchange index of all common stocks listed there dropped a point in the third to fifty seven point four three. The American exchange index gave up Point 1 4 to twenty three point five three and the over-the-counter composite declined 1.7 on to one hundred point 1 0. You may perhaps be wondering about what our little technical elves have come up with this week. Well these little list men of all reports steadfastly that while their sentiment figures have slipped a bit they still show a clear by No. 6 indicators up 3 neutral and only 1 down. Now duty compels me to report that this is the fourth straight week in which our technicians have been sending out a buy signal. Period The began with the Dow average more than 35 points higher than it is tonight. Well if you were the one who compiled this index would you be getting just a trifle nervous. Luckily we have with us tonight the fellow who does compile it. Our elf in charge of new rock

will now explain to us precisely why you would have been smart to be of buy there right through the current decline. Lou about six weeks ago our biased signal was given be when the Dow was down at the nine twenty level we had a one week aberration in the index caused by one of our indicators. What's an aberration of the US. Well it has the word baronets and maybe that tells us of aberration. But in any case one of our indicators which was a very very positive indicator turned negative temporarily because of heavy block volume in one's particular stock. But it has been saying we're in the area now where buyers should be considering buying the bulk of the stocks just as it started to give sell signals in the latter made in latter part of the center about four to six weeks prior to the peak of the market for the bulk of the stocks. Now I want to make sure that I understand clearly precisely what this means. Could those buy signals continue when the market went down say to 800. Yes it's possible if you have sufficient bearish psychology to cause the indicators to hit extremes I should explain though that the criteria for the indexes are set historically as to the

extremes that we see and conceivably this may be a period similar to April of 970 two to three weeks prior to a cataclysmic collapse of the averages. And this is possible now because we're just starting to see the high quality the core growth stocks start to succumb to the market and as we know these are heavily weighted in the averages as we've had a two tier market on the upside. In other words since April of 1972 when the averages have consistently gone up in the bulk of the stocks have been declining it is conceivable now the bulk of the stocks may have seen their worst and that the averages may go down because the core growth stocks could be hit in the final wave on the downside. Well is it fair to say that what you're index is telling us is that sentiment is so negative that who's reached the point that it usually portends a slight upturn. That's correct. And you hope that that is right again. Yes we do crowd around you. You would follow other forms of tradition I suspect. Do you believe that this kind of technical interpretation is helpful or not. Yes do is matter of fact in times of extreme market action way up or way down I

think technical indexes are helpful I just don't think there are in between. But but I'm going to come back to the fundamentals because again whether this market's going to go up next week or down next week is not important. What is important is our stocks under priced overpriced are fairly valued and I would say they're somewhere between under priced and fairly valued at the moment and I think a 5 signal comes not from the statistics but from the fundamentals in the earnings of corporations albeit the psychology is terrible. The national news is very depressing. People don't have much confidence. That's the reason the market's down. Well the negative things seems to be fears that inflation is going to be out of hand and that we may have a recession next year whatever aims are telling us now. Do you share that fear. Sure I share that fear but. First of all don't think inflation has gotten And secondly I don't think we're going to have a recession. I'm more worried and I

think the market's more worried about power or perhaps a lack of power that our federal government will have for many months to come because of the Watergate news and this is very depressing to people. Well Frank Cappiello let's pursue that with if we can. The stock market really have to be affected in the long run by Watergate. It could be over the next couple of years if all of the energies of the administration. Are spent in these investigations or warding off investigations depending on your point of view. And if he loses the confidence of Congress and the confidence of a large part of the electorate a loss of confidence could freeze the administration from moving forward. And I think what you had this week was a can be summed up in one. Look two words really Watergate and oil Bob comments on the core growth stocks but outside of these when Kodak the real stocks in the Dow that were blasted this week were basically oil stocks I think. And this of course had a definable reason and that is the oil

producing a consortium of Libya Middle Eastern Arab states are doing some tough negotiating. This creates fear of an oil and energy shortage and a possibility of higher prices which would fuel inflation. Here again the critical area again is approaching the nine's one area if it bounces off this one we've got a quadruple bottom I don't know what that means Bob a lot of you. WALLACE Well in any event gentlemen we'll be back. To find out next week who is right and who is wrong. It's time now to move from the big marketplace to the individual kitchens and answer some of the questions about personal investing in that we've received from our viewers. Bob Narok of Las Vegas Nevada is interested in what some people might regard as a venture as risky as any in Las Vegas. Short sales that is borrowing and selling less than a hundred shares of a stock in the hope that the shares can later be replaced at lower prices. Short sales usually cannot occur if the last previous transaction showed a decline in the stock price. Mr. Levin just says he's heard this

is not true with a lot short sales and he wonders whether you've heard right. Unfortunately Lou it's incorrect like short sales must be made on an uptick or the sale has to be at a price higher than the previous sale or the previous sales reported such as a sale that was up and then the sale that is flat and this is the stock sold it for two times ago then sells sells at five you can sell it short. That's correct it sells it for than it five and five again you can sell it. That's correct as long as it doesn't get out right. That's just as true for odd lots as the bigger amount right isn't much. All right I'm sorry about that Mr. Lovejoy maybe you can find another kind of gamble in Las Vegas will do better. To Randal Edward your line of Brecksville Ohio writes as follows The following three terms appear frequently in various financial and business articles in connection with the stock market in general or specific issues. One return on stockholders equity to cash flow through the market breadth. Will you please have one of your sages he writes define each term in simple language that the less sophisticated investor can

comprehend and give the significance of each. Unquote. I'll say it how about it. All right stick with me if I forget all three points back at you. All right the return on stockholders equity. All right. All return on stockholders equity is a term that really means that the earnings of a company in relation to the net worth of the company. That's it OK. And the second one I want to talk to you being brief was the second cash flow cash flow cash flow means many different things normally in security analysis it is related to the cash flow meaning the cash receipts and cash disbursements and the net cash flow of a corporation. But cash flow can mean cash coming into or out of a portfolio too. But usually it's a good thing to have high. Yes. One always likes cash. OK. And finally market breadth market breadth really means the the

breadth of a stock in the market or the breadth of the marketplace itself. The heavy buy or heavy sale and the relationship of little to a security or group of securities I think that was splendid. Thank you. Now from saint to parsley Rosemary in time Frank Capra Hello Debbie spear of Jacksonville Florida I would like to have your current view of the prospects for real estate investment for us both in continuing to pay dividends as high as the current ones and as long and short term investments for appreciation. OK there are basically income stocks and should be considered as such. And they pay a fine nice high yield but to some extent you are taking risks. There are really two basic types of REIT. Those that invest in construction mortgages or short term loans. Those that invest in long term loans. There is another variety that invests in land but these especially companies. Basically what he should look for if he's looking in

REIT is good management sources of low cost capital and basically the ability to originate mortgages to do a lot of these because you turn a lot of these mortgages around this being the case. Interest rates are interesting and are not important. As long as the cost of money and that rate at which they lend the money out remains constant the margin. So it doesn't the worry about low interest rates. If they maintain the same margin. But in this case there are a lot of possible dangers. So I would advise him to invest in the top white ones those operated by major banks or major insurance companies. And they're basically for income rather than for appreciation. Yes they are who get some appreciation on it over a period of time but they're really income vehicles and they do have some dangers. OK. Now if your investments are lacking in appreciation for you or vice versa if you have any other questions about the world of stocks and bonds just send your queries along to is it Wall Street Week

Owings Mills Maryland 2 1 1 1 7. That's Wall Street Week. Owings Mills Maryland 2 1 1 1 7. Now before we meet tonight's special guest let's take a quick look at some figures that however belatedly are beginning to make some Wall Street firms worry more about attracting and holding the individual investor. The post-war era has seen a dramatic growth in the number of Americans who hold stocks an ever expanding contingent of little men and women that reach thirty two and a half million at the start of 1972. Then something happened. The troublesome 1972 market scared away 800000 of those investors the first net decline in the two decades that records have been kept. Thus reducing the estimated shareholder total in 1973 to thirty one point seven million. That's still a remarkably formidable constituency but the small decline was enough to alert intelligent Wall Streeters to the danger that a new trend might be developing a trend in which greater numbers of disillusioned individual investors might

leave rather than enter the market. Many suggestions have been aired in these pink precincts for ways in which the little man might be lured back. But there is general agreement I suppose that one of the most effective means would be to give them a market in which was a little easier to make money. My guest tonight is a man who says it's all in having the right techniques. So let's go over now and meet tonight's special guest Bernard Feinberg. That will Mr. Feinberg. Hello Bernie. I love my city. Almost 20 years ago Bernard Feinberg successful career as a life insurance agent was interrupted by a heart attack. Then only 37. Mr. Feinberg found it difficult to adjust to his increased amount of leisure time. He decided to transfer the hours spent in this job to the confines of a brokerage house a place where some other men develop their heart conditions. After countless hours of watching the ticker tape he began to invest in companies which he felt stood a chance of high returns over the long

haul. Apparently he discovered how to fund them. He says he has no interest in capitalizing financially as an investment advisor. But like any good former patient you like to talk about his operations. Bernie just how good has your record been in the stock market. Well in the past 20 years my average growth rate compound in tenuously has been 30 percent per year. Do you think that's a 20 consecutive years. Do you think that 30 percent is a reasonable target for most reasonable I think is phenomenal. You should know. Well the average return the long haul as opposed to 9 percent. Right well over three times that's right. So it's possible you do know something. You wrote me a letter in which you said I want to quote this I can briefly state that I have adopted the philosophy of Santana when he said that somewhere down through the ages quiet country gentleman have kept their sanity and have known how to resist the exaggerations of the clergy with pragmatic skepticism

unquote. Now I'm not entirely sure what that means but why is the stock market because I thought I quoted and I know several times I elevate the tone of the I guess almost complete in the gate in this is that Jones gross national product which I referred to was gross national problems which I think be more appropriate. And I just use what I think is little faith in four sense in making my selections with my wife's assistance. Well I want if you could be a little more specific because we may have some people without your sensory What are some of the rules you followed. Roles number one the most important one is you don't buy a stock. The first thing you must do. You must look into an industry. This is extremely important. And then you move from there. And secondly get a stock in the industry that's had at least 40 to 50 million dollars in sales meaning they have got to gotten over the hump they've gotten all the bugs out of

their system and then lay it on the line. It's sort of like when you get married you put stock in the girl you love. And you say you're going to go down the line with her but she doesn't necessarily have high sales mean. That she doesn't have high sales. My wife is that exact. SALES Well that's what they want to ask you about you said you take tips no one but your wife. My wife has given me some phenomenal gifts as an example. I get annual statements and I'd like Schering-Plough For example when I look at the annual statement I say to surely look very naively sort of a fairly look. Is a company that has stock in. Tell me what you think of their products. She goes down the list. She said I use them all and besides they're expensive. Which is indicative to me. High profit margin. You said that you only wanted consumable products. But he knows that going to be soon and consumed as quickly as possible.

This would eliminate all those refrigerators because in other words an automobile our family got the money to buy and no one will replace this thing. My favorite industry and I think it's the only true growth industry is that the drug industry. And that's where I have gravitated because I originally worked at Merck and Company many years ago. And I saw the research was out of the way. And it's expensive. How much money can be made in this I kid my wife. We have run out of room in our medicine cabinet. The pills now are in the kitchen and I think they'll be flowing in a loft family room in about another week or so. You have said the most important quality is patients is that what you would recommend in a market at this point. Yes it's basic. Yes how you doing this year. Excellent.

Could you tell us some of the stocks are doing well this year. Yes I think in a very strong position a South African gold mining stocks. OK you're in good company tonight because our three panelists are all fellows who assure us that they're pretty successful investors to buy the right to see what's on their mind. Bernie is there anything else that you would be buying now other than the South African gold mining. Yes this is not for a faint heart. This is a situation I'm involved in I don't have what you would call it being inside information it's better than it's inside information. The company in Palo Alto California did they get a breakthrough on what they're working on the stock will be explosive. The name of the company is Alza collaboration. Yes you better spell that because last time was mention on the show. Yes and I mean and I want to repeat that that comes with no guarantee format and no guarantee of course. Yes I accept your statement that you've made 30 percent per year

compound for the last 20 years but my very quick mathematics tells me that that you have made a thousand times your money and whatever you started with you now have a thousand times so if you started with a thousand dollars 20 years ago you now have a million dollars and if you started and I don't have a million dollars did you start with more than a thousand dollars I think is a very personal question. Well then I don't think you made 30 percent per year on your money and I think that's an overstatement. And I think I have the facts assessing to substantiate it. Let me ask you a burning about one of the stocks I think was in the New York Times article the Western right doesn't go off the western violate some of your rules for example what consumables does go off unless I get in the Gulf and Western because I originally owned Paramount Pictures which was acquired by Gulf and Western. I sold it out at a damn good profit about three months ago.

Well could you tell us what what stocks you played the most on in this period of you know 20 years stocks stocks. Merck Pfizer Schering-Plough want to labor right Renny What have been your biggest mistakes in the stock market. I've never taken a loss in the stock market in 20 years. I've never taken a lot of time I don't have a lot but I own if you're holding on Penn Central I at some paper. But but that's a loss you're worth less if you're not made to last until you sell it. Oh well now I can buy a stock here and let it go to zero and not seven Iowa guys to really give me a rough time like Lou says you would. OK I can't be perfect. What do you what do you think could be done to bring more small investors into the stock market I think the possibility of bringing a small investor back into the market is practically hopeless. But why why why do they have lost sick confidence in their leaders their political leaders. They have lost their confidence in Wall Street. But why

can't a small investor do what you've done. I mean given given some hard work some diligence and of course a charming wife such as you have but why why can a small investor at least do half of your record or a quarter of it. He didn't have the time and I had. He didn't have something I possess you possess it. You three gentlemen assessing your various feels judgement. Now this would take a book to describe what is good judgment. Other words I don't think it requires a reading Standard and Poors I don't think it requires any of these things literally. I think it requires us plain old fashioned good sense which is the way the market was 20 odd years ago when I got involved in it. In other words we even has stock analysts in those days we didn't have time to search the earnings ratios etc etc..

You bought a company for a good meals and you hoped that you would prosper list then you can buy work for a good deal 20 years ago. Never no way. One of the one of the rules which you have said you use which you haven't talked about tonight and I'd like to hear you on is you say you're very interested in management and that you in fact call on Chief executives from time have no reluctance to do so any time you have trouble as a small stock Oh no problem whatsoever. You talk to presidents of the great companies money it is a think of I mean I wanted to make with a man's the more congenial to the warmer they are I call him I tell him I'm not an irate stockholder I'm a very satisfied one. And I go through them no problem. You've talked about time how much time do you think it's necessary to spend it takes a lot of time. How do you spend a typical day. Most of my day is spent on my investments. Would you advise the average American then not to go into the stock market. At this particular time I would advise the average man if he has four $5000 something in that area and keep it in the bank.

Is that because your judgment about the market or your judgment about the average American. No. I see a very dismal If you are the market for the next two or three years but you're remaining pretty heavily invested in your keeping your pension for you must be home I had a really good for a stock. Lost the will set again that I put so you don't have a loss on it and we should not be misleading about please don't hold me to walk into a few million people here that I understand that but I have one loss over a 20 year period. But you said you never had a loss. Well I don't I haven't taken it yet but I'll tell you one thing we came down on a Metroliner today and this is where I learn. I spoke to think there will have to be fast. All right. I don't know I think it's my maybe to find something to feel right now. Well if you don't have to be perfect to be a good investor right and say that to me and I do have to step to them side that time is up. I want to thank our guest Bernard Feinberg and our panelists for joining us tonight. And I hope you'll be with us again next week when my guest will be Ross Perot the dynamic young industrialist who after

campaigning for our prisoners of war for four years has now begun an equally vigorous campaign on behalf of the small investor. He has some ideas I think you want to hear incidentally because of the Senate hearings on Watergate. Some stations that normally carry Wall Street Week on Friday nights will be put in as on later in the weekend until those hearings end. Please check your local listings because we want to have you with us. Meanwhile this has been Wall Street Week. I'm with you. If you would like to obtain a written transcript of tonight's program send $1 to roll Street Week Owings Mills Maryland 2 1 1 1 7. That's $1 to Wall Street Week Owings Mills Maryland 2 1 1 1 7. Please allow four to six weeks for delivery.

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