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Cutting Through the Bull

In their haste to highlight a bullish perspective, reporters missed the fine print on Tom Galvin of Credit Suisse First Boston.

SAN FRANCISCO -- Quick: Who's the most bullish strategist on Wall Street? If your answer was the perennially upbeat Tom Galvin of Credit Suisse First Boston, you wouldn't be alone. But you'd also be wrong.

Earlier this week, Galvin upped his recommended equity allocation to 95% from 90%, dropping cash to 5% from 10%. His seemingly unfettered optimism for stocks was highlighted by


and various wire service reports.

But in their zeal to create and sustain

bull market "heroes," the collective media (led by


Tom Costello) failed to read the fine print. The episode provides yet another example of why investors should take everything they see and hear with a healthy dash of skepticism.

The fact is, Galvin has two portfolios. Lost in the shuffle was the fact that the 95% allocation is for Galvin's "equity model portfolio," intended for professional money managers. Meanwhile, his "balanced" portfolio recommendation, probably better suited for individuals, stands at 70% stocks, 20% bonds and 10% cash.

A stock recommendation of 70% is relatively high, but trails those of forecasters such as Peter Canelo of Morgan Stanley Dean Witter and Jeffrey Applegate of Lehman Brothers, who each recommend 80% stocks.

Also omitted from coverage of Galvin's recommendations was the fact that his offering two types of portfolios is a new development.

At Donaldson Lufkin & Jenrette "my approach was toward institutional fund managers," Galvin said in an interview today, referring to his prior employer, which was acquired by CSFB last year. "Now it's different. I'm trying to come up with a measure that can facilitate the demands of two different audiences."

Clients at places like Fidelity Investments are focused almost exclusively on equities, and thus want guidance as to how aggressively postured (or not) they should be at a given time. But CSFB's private client service group focuses on high-net-worth individuals "who are not going to be that fully aggressive in equities and wanted a more balanced approach," Galvin said.

In an admittedly random sampling of Galvin's reports dating back to May 1999 (when he was still at DLJ), the first evidence of the strategist offering two types of portfolios didn't appear until July 2. The change was made without fanfare, just simply added into the tables in the "Market Statistics" page of his report.

The balanced portfolio was mentioned in the text of Monday's report, and then only because it was a "big picture" report, Galvin said.

The message of said report is that both institutional and individual clients should be more aggressive in stocks now "despite the fact the market goes no place fast," the strategist said. (Today, major averages overcame early weakness to close higher, with the


up 0.5%, the

TheStreet Recommends

S&P 500

higher by 1.1% and the

Nasdaq Composite

up 2%.)

That said, Galvin acknowledged that most individuals shouldn't have 95% of their assets in stocks. "That is my portfolio and relevant for people my age," he said. But everyone has different investment horizons, different needs, and different objectives. "I don't do this with my mother's portfolio."

If the past 18 months have taught investors anything, it's not to blindly follow anyone's recommendations. Still, the media's treatment of Galvin's recommendations could mislead some investors into being overly exposed to equities (even more so than most already are).

Had it been widely known that Galvin was targeting equity-only managers, the 90% stock weighting he adopted in April 2000 might have seemed less aggressive. More especially given his (then) year-end targets of 6000 for the Nasdaq and 1710 for the S&P 500. (Galvin's current year-end targets are 12,000 for the Dow, 1450 for the S&P and 2600 for the Comp.)

Furthermore, Galvin's "equity model portfolio" -- rather than the balanced one -- continues to be cited by financial news programs and wire houses such as





Dow Jones

, which publish regular updates on the recommendations of so-called major strategists.

This is highly unusual. It's also unfair to compare an all-equity portfolio to a balanced one, something most strategists are sensitive to. For example, Byron Wien, chief U.S. investment strategist at Morgan Stanley, has long made recommendations to managers who are limited to just stocks and cash. But it's Canelo's balanced portfolio that the firm submits to the surveys.

Galvin conceded it's probably fairest to compare his 70% stocks, 20% bonds and 10% cash mix to other strategists' recommendations. He admitted needing to "cultivate better

understanding as far as my discussions" of the two portfolios.

Galvin being a little more upfront about the distinctions would be a good start. The press being a little more judicious is another.