With Americans everywhere fearing a repeat of Sept. 11's terrorist violence, the crash Monday morning of an American Airlines Airbus jet had investors feeling jittery. Though authorities stressed Monday that they saw no immediate evidence of terrorism, security stocks rose sharply and airline issues plunged.
But Howard Ward, manager of Gabelli Growth and the subject of Monday's
10 Questions interview, urges you to stay calm and think about the bigger picture, which he says remains bullish in many regards. And stocks' recovery around midday Monday suggests that at least some people agree. Here's what Ward said in our follow-up interview this morning.
What does today's news do to your outlook?
It's an economic pothole. Assuming it discourages travel, you'll see some additional economic weakness. You get a loss of productivity as we are glued to the TV, trying to figure out what's going on.
My colleague Susan Byrne couldn't fly here, and nobody can get anywhere right now. There's a real impact on worker productivity. It adds to some of the deflation out there.
The main concern is about consumers' psychology. People might start postponing buying things, and companies could start postponing their spending. It's premature to suggest this happens, but the more events that happen on our soil, the higher the probability that this happens.
How will the crash play out in the market?
This is bad for airlines, lodging and luxury resort companies. Cruise lines suffer and credit card companies suffer because people aren't spending as much money. You'll get less ad spending, and New York will be hurt the most. People will delay trips to New York.
The groups holding up best were classic defensive areas like health care and drug stores. It's encouraging that the market didn't go down more than it did, especially after its gains over the past few weeks. I think with rates so low we could see more allocation by pension funds into stocks and that could be good. The market wants to go up.
and others are rallying. There's definitely some bargain hunting.
Of course, I say that as I watch this fire in Queens.
Even before Sept. 11, investors were putting more money in the bank than stock funds. Does this crash give that trend a boost?
This has the makings of a classic bull market rally. It's perfect that
ratings are suffering. It's great evidence that the retail investor is no longer in love with the stock market. It's great that people are becoming cautious. That's what happens in the early stages of a bull market. Meanwhile, from the stock market's Sept. 21 bottom, our fund is up 22%, so people should be looking for opportunities. I think they should dollar-cost average into the market because it's so volatile, but I think they should be investing.
I can't say enough about the tonic that is low interest rates. They're lower than they've been in something like 40 years. For this quarter we're up 13.5%, and the
is up 7.6%. Beneath all this turmoil, growth stocks are working again. I'm hoping this is a new trend after a hiatus of 20 months.
If you could say one thing to investors today, what would it be?
Ian McDonald writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. He invites you to send your feedback to
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