Hugh Johnson

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On any given day, Hugh Johnson's upstate New York office is deluged with calls from financial reporters seeking explanations on what's happening in the financial markets. And that's on days when he isn't in New York City being interviewed on





The chief investing officer at

First Albany Corp.

, the brokerage house, gets the attention because of what fans call his rare ability to simplify complex concepts without parroting sell-side hype or spewing analyst doublespeak.

"He takes a long-term view and disregards much of the noise that passes for news," says Mark Haines, host of


morning "Squawk Box" program that Johnson frequently guest hosts. "I much prefer talking to someone who thinks and is wrong than someone who is right only because the consensus he/she follows happens to be right."

His unassuming personality doesn't hurt his popularity either. "I'm always surprised that many people in my industry don't exercise common courtesy" and return reporter phone calls, says Johnson, 56.

It's a quality that comes across on television. "I think viewers like him because he comes across as a 'friend in the business' rather than an Olympian dispensing wisdom to the mortals," adds Haines, who notes that


receives plenty of Johnson fan mail.

While Johnson may excel at explaining trends or interpreting events in the financial markets, he's unflinchingly candid about his limitations and admits that he's not prescient. "It's an extremely humbling business" for those who attempt to predict the future, says Johnson.

In fact, Johnson thinks that it's the height of arrogance for people like market strategist Elaine Garzarelli to try to call market tops and bottoms. "There is nothing worse than being stubborn to think you're right and the market is wrong," he added.

As if to dramatize his point about following trends, Johnson in all seriousness says that he's been bullish since the market started going up. "I'm a follower," he says, "not a forecaster."

Yet even as a follower he's cautious. Lately, he's been telling audiences that he expects the market to continue its upward ascent in 1997, while at the same time warning about the negative impact of declining corporate profits.

This careful tone is similar to what he told

The Wall Street Journal

in November 1995: "Eventually investors will throw caution to the wind, and that would be a bad sign for the market. I can't predict when that will happen, but there's a good chance of it in 1996."

Still, despite the ambiguous forecasts, over the past two years, the $253 million portfolio he co-manages has topped the

S&P 500

-- albeit by only the slimmest of margins. The fund, 82% institutional, returned 26.6% on an annualized basis from September 1994 to September 1996, as compared with a 24.8% return for the S&P 500.

Johnson says that he uses a five-step analysis with "definitive rules

that add value at every stage" in order to gauge the economy and make investing decisions:

determining where in the business cycle the economy stands

following Federal Reserve policy

watching liquidity conditions of the money supply

studying specific economic data like corporate profits and bond yields

looking at the technicals for trends that might have been missed in the first four steps.

After graduating from

Dartmouth College

and serving in the military, Johnson started out his career as a stockbroker. Uninspired by

Columbia Business School

, he dropped out to study philosophy, which he credits with developing his "analytical rigor." Circumstances, however, brought him back to the financial world before he could write his dissertation.

In his 30-plus years of investing, Johnson calls his decision to sell


in the early 1990s his dumbest and his decision to buy it back shortly thereafter his shrewdest.

The lesson he learned: "The best thing to do is to buy good companies and the worst thing is to sell them."

By Avi Stieglitz