A Foreign View Of Investing, From An American In Tokyo

"Men live better on a little."

- Claudian

Imagine a world in which IBM and General Motors, instead of being dominant factors in their industries, were broken into pieces and playing much smaller, supportive roles.

As injured as those companies are, it is hard to believe they would be reduced to their components and taking a back seat to anyone.

Yet, a Seattle woman sees exactly that happening. She sees an industrial transformation the likes of which we've never seen before, a transformation that makes the smaller company filling a niche superlative to the giant corporation meeting so many needs.

In her world, for example, a fashion retailer such as Nordstrom would play a much bigger role than a JC Penney with so many departments.

At the start of a year, you like to look ahead. This year, we found someone willing to look way ahead. It may take a decade or more for this to play out, but Krista Wergeland is convinced the time has come for major change.

Perhaps what gives her remarks clout is the richness of her background. Wergeland, 30, was one of the first American women selected for a career in the Japanese securities industry. And that was when she was only 24.

To this day she remains with Nikko Securities in Tokyo. She has held a variety of roles for Nikko - the company re-evaluates and often reassigns many in the work force each six months. Among her assignments was a recently completed 3 1/2 years in London, doing both sales and trading.

Wergeland grew up in Seattle's Ballard neighborhood, graduating from Ballard High. She started with majors in Christian education and psychology at Seattle Pacific University. Because her family had housed visitors from Japan, and because she had briefly visited Japan, she caught the bug.

She wound up transferring to International Christian University in Tokyo. She learned the language as she went, majoring in communications.

"University was very, very tough," Wergeland said.

But when it came time for business people to assay the university talent, Wergeland was offered a lifetime position with Nikko. Wergeland never had to study finance.

"I didn't even care about the salary, silly me," she said.

Early on, she would sell Japanese stocks to foreign companies doing business in Japan. Many of the customers were brokerages. In London - a plum assignment - she sold stocks to European institutions.

Wergeland learned enough about stocks so that when she returned to Tokyo, she was able to provide her sales force with interesting new market plays.

"A lot of people over there love running in and out of a stock," Wergeland said on a Seattle visit the other day. "They churn stocks like crazy, not just the brokers but the clients."

That's part of the reason, she says, why the U.S. over-the-counter market is so turbulent.

"Our firm is just running all over the NASDAQ," she said.

Finding the new hot company is big in Tokyo. Wergeland said a stock such as Starbucks would be perfect, but it gets dinged because it sports a price-to-earnings ratio in triple digits.

Starbucks also helps herald a trend. Rather than go to a restaurant for a cup of coffee, the person of the '90s will go to a coffee-only stand - another niche market.

"The heyday of the '80s is gone," Wergeland said. "We're not going to see people just consuming, consuming."

They will be more selective. More resources will be employed to tackle environmental issues and nations with less.

Companies that have prospered but haven't changed will head into decline. That doesn't mean the stock market will go straight down.

"I see extreme rotation," Wergeland said, with companies filling the smaller niches moving to the front of the pack.

Those aren't the official views of Nikko Securities, just one vacationer among 10,000 employees. But even as the views of one, they provide a lot to chew on. Not exactly the conventional Wall Street forecast.

But Krista Wergeland has hardly lived the conventional Wall Street life. Maybe some Seattle financial concern will snatch her from Nikko, and we'll have an even easier path to such diverse thoughts.

The Dow Jones industrial average of 30 blue-chip stocks fell 25.13 points to 3,301.11.

The Murphey Favre Northwest 50, 50 stocks weighted by their regional economic impact, rose 48.84 points to 2,377.99

The U.S. Treasury's 30-year bellwether bond finished the week and 1992 at $1,027.50 per $1,000 of face value. That was priced to yield 7.40 percent, said Bob McCorkle, Seattle Northwest Securities vice president. As has been the case throughout the year, there was more movement in the shorter-term securities.

With many municipal bonds being refunded in early January, a question becomes how much of that cash will go into Treasuries. At the same time, bond players are eager to see how the new president's policies will impact bonds.

The municipal-bond market is especially eager to see how the massive refunding goes. About $11 billion in old bonds will be called back in by issuing agencies, said Lynda Chaffeur, Seafirst Bank assistant vice president. With tax rates expected to rise, most expect a lot of that to go back into tax-exempts, fueling a rally.

On portfolios: Here are percentage gains since the start of the year for two sets of stocks:

Readers' Portfolio (10 NW stocks preferred by readers) - Data I/O -9.5 percent, Boeing -16.0, Costco -34.1, Immunex -13.5, McCaw Cellular +12.6, Microsoft +15.1, Nike +15.1, Nordstrom +7.6, QFC +14.0, Washington Federal S&L +1.9. Average: -0.7 percent. What $1,000 invested in those stocks would be today: $993.

Readers' Non-Portfolio (10 NW stocks picked randomly, excluding the readers' top 10) - Pioneer Savings Bank +12.7 percent, Lattice Semiconductor +132.6, Nendels -20.0, Penwest -12.4, Bioject -26.3, Interpoint +28.8, Westmark International (Adv. Tech. Labs, SpaceLabs) -11.8, ProCyte -14.4, Willamette Industries +38.7, AirSensors +62.5. Average: +19.0 percent. What $1,000 invested in those stocks would be today: $1,190.

Wall Street Recap appears Sundays in the Business section.