Back to the Bulls' Story

With the Mach 5 that is the Nasdaq Composite racing back into the victory lap of record territory today, I figured it was time to catch up with the steadfast bulls.

During the past few years, few on Wall Street have been as steadfast or as bullish as Joe Battipaglia, chairman of investment policy at Gruntal, who remains so inclined.

The strategist is still 100% invested in equities, with a 40% exposure to technology and telecom, 20% in financials, and the rest spread among pharmaceuticals and various sectors.

Rather than expressing concern about the market's narrow focus -- so evident of late, and again today -- Battipaglia said it is a sign of an "efficient" market.

"The market is skewing toward earnings growth rates. That's where we are in the cycle," he said. "The distinguishing point is deliverable top- and bottom-line earnings results. That's what the market will pay for."

Of course in many cases, the market is also paying for the promise of future earnings down the road (at some point). But let's leave that discussion for another time. There's also the question investors from Richard Dreyfuss to Dreyfus funds seem to be asking these days: Whose earning(s) is it, anyway?

The glaring difference between the haves and the have-nots (those stocks with and without momentum, that is) was made strikingly clear in the reactions to two very strong earnings reports from two very different companies.

Network Solutions (NSOL Quote) leapt 14.5% Thursday after posting fourth-quarter profit of 25 cents a share, two cents better than expectations and up 142% from year-ago results.

Clearly, an impressive quarter for the domain-name registrar, at least on first glance. Forget for a moment that the stock trades with a price-to-earnings ratio of 259 times the $1.13 per share its expected to earn in 2000. Or that it's already run from the mid-80s in October to 256 before today's ascent. Let's take Battipaglia's word at face value and say today's rise was completely justified because the market is willing to pay for earnings.

So then, how does one explain Nucor (NUE Quote), which fell 4.6% Thursday -- continuing a recent downturn only briefly interrupted Wednesday -- despite posting earnings yesterday that (again, at first glance) were arguably as impressive as Network Solutions'?

Sure, Nucor's fourth-quarter net of $1.12 was "only" 59% above its year-ago results, but the steel maker blew away the consensus estimate of 88 cents. Also, company officials waxed effusive about the outlook for 2000.

Meanwhile, Nucor trades at a P/E of 11.3 times the $4.01 it is expected to earn this year, but it seems the investing public would rather pay for companies with higher P/Es because that's where the "action" is. With the Nasdaq 100 up 70% since the Oct. 15 market lows, it's hard to blame them and easy to see why the "old-timers" are balding for reasons other than genetics.

I asked Battipaglia about the market's reaction -- or lack thereof -- to Nucor's seemingly robust results, although not specifically in comparison to Network Solutions. His reply basically amounted to a sense that investors are looking for "sequential growth" and that companies like Nucor earnings are growing "at a much slower pace" than companies such as Network Solutions.

The market watcher also observed that many commodity-based companies are enjoying relatively easy comparisons to last year, when world economies were still feeling some aftershocks from the financial crises of 1998.

Certainly, there's some truth to that. And I know the Internet is revolutionizing everything. But the market is acting as if it's obviating the need for cars, buildings, airplanes, ships and anything else that's made of steel.

Whether or not that also includes Superman is unclear at this time. Regardless, the trend does not seem to have generated consternation for the strategist affectionately known as "Batman."