Imagine A Fellow Who Picks A Quarrel With St. Peter

There's a time for everyone If they only learn That the twisting kaleidoscope Moves us all in turn. - Tim Rice, lyricist "The Lion King" ----------------------------

Imagine some nut kicking Warren Buffett in the shin. Or tripping John Templeton. Or punching Peter Lynch.

Those three are icons of investing, all enormously successful. When they speak, it is as if we are Moses and they are God. No one dares to breathe lest the act of exhalation would obscure a single word.

They need only to think about writing books, and bookstore foundations are threatened by the stampede of potential buyers.

Television interview programs have them on their permanent call list.

So when such an icon is under siege, it is Wall Street Recap's profound duty to investigate. Not too long ago, this sentence engraved itself on our pupils:

"Peter Lynch is peddling poppycock."

Had the word "dope" been substituted for "poppycock," the impact would have been no greater.

Lynch, in the late 1970s, cobbled together Fidelity's Magellan Fund, a mutual fund that became the best performer of our time. After year after year of making his contemporaries look like they were investing in the dark, Lynch semi-retired as the king of portfolio managers and wrote two bestsellers.

He remains frequently sought for his investment views.

But not by Randy Roeing. Roeing is the fellow who, in high dudgeon, planted poppycock and Lynch in the same sentence. Roeing, 41, is hardly a financial lightweight.

With a master's degree in finance, and careers as a broker and commodities trader under his belt, Roeing, in 1988, joined the Dow Theory Forecasts newsletter operation in Hammond, Ind. He now is editor of one of Dow Theory's publications, The Low Priced Stock Survey.

In the May 16 issue, Roeing cautioned readers to be careful when listening to words even from an icon such as Lynch. He said Lynch was telling investors that because mutual-fund holders did a good job of holding their positions through tough times such as 1987, 1990 and the current market decline, they are battle-hardened veterans who will not bolt when the real collapse comes.

"It's shameful to the extent to which people rely on what they read," Roeing said by telephone the other day. "I've come to know personally people whose names I see quoted in the newspaper, but quite frankly I wouldn't let them manage my children's lunch money."

(He didn't mean this newspaper.)

"It just popped a cork on me when I saw Lynch's article talking about the intestinal fortitude of mutual-fund holders," Roeing said, "particularly to the risk that they might bring to the market in terms of bailing out at the first sign of turmoil."

First, Roeing said Lynch's examples are flawed. In 1987, the market broke so fast that by the time investors got their bearings, the market already was heading back up.

In 1990, Roeing said, larger, more popular issues either weren't hit at all, or hit so mildly that massive selling didn't make sense again.

In the current downturn, Roeing said, investors are growing accustomed to a common late bull market theme: stocks will always recover.

But aside from those points, Roeing said Lynch's whole premise is ludicrous. (His word.)

The masses - most particularly, mutual-fund holders - never sell at the top. They won't be gone until the bear market is two-thirds to three-quarters complete.

Roeing said he couldn't recall the precise numbers, but his approximations were interesting enough. One share of stock moving from zero to $100 will have an average of 25 to 30 holders. One share of stock moving from $100 to zero will have three or four.

"People trade out as it is going up, and as it goes down, they stay in," Roeing said.

The hang-on-at-the-top feeling is not new. In the six months after the crash of 1929, the Dow Jones industrial average rose 46 percent. An almost endless string of announcements from government and market officials in that period assured investors things would be better.

But from April 1930 to the bottom in July 1932, stocks plummeted 86 percent.

"The optimism in the 1930 rally really exceeded the optimism at the peak in 1929," Roeing said.

Having said all that, Roeing is reluctant to place himself on the throne of investment guruism. He will not say the market has peaked. But he also won't say it hasn't.

"I think there's sufficient cause to be quite careful," Roeing said. On the one hand, the decline since the Feb. 2 high may have alleviated some issues and made a run beyond 4,000 possible.

"But I don't think so," Roeing said. "The bulls haven't been forced to capitulate. It wouldn't surprise me at all if the February highs were the bull market high. The more I read and see, the more I tend to believe that."

Evidence that falling stocks in February didn't shake too many souls out was the stunning word from the Investment Company Institute. In March, stock funds attracted $29.4 billion and in April $22.7 billion. The April figure was 19 percent higher than in April last year.

"Not only are they not bailing out and being tested, they are so enamored of buy and hold they're willing to jump in," Roeing said. "Pretty extraordinary."

NOT ANOTHER FUND

With more than 4,000 mutual funds available, is there room for another? Among the latest is SteinRoe Young Investor Fund. It must invest at least 65 percent of its assets in companies affecting children and teenagers. Young or old may invest. Most of the educational material is written for teenagers.

The fund is a no-load, which means no commission.More information is available through 800-403-KIDS. These are the same folks who sponsored the highly successful Liberty Financial Young Investor Program.

Buying a new mutual fund late in a bull market is highly risky. At least this one has a decent purpose.

STOCKS AND BONDS

The Dow Jones industrial average of 30 blue-chip stocks rose 15.08 points to 3,772.22. The Murphey Favre Northwest 50, 50 stocks weighted by their regional economic impact, gained 15.63 points to 2,505.95.

The U.S. Treasury's bellwether 30-year bond added $13.75 per $1,000 of face value to close at $877.50. That was priced to yield 7.26 percent, said Pam Warren, Seattle-Northwest Securities vice president.

Foreign buyers, concerned about the mounting nuclear threat in North Korea, queued up to find shelter in the safety of Treasuries. Also, owners of declining European bonds switched into Treasuries, Warren said.

If bonds needed any other selling points, Warren said all of the week's economic numbers showed at worst an economy that was not overheating and at best a weaker-than-expected economy.

Municipal bonds gained about $5 per $1,000 of face value, reported Judith Cochrane, Seafirst Bank vice president and municipal trader. The economy and light supply fueled prices, she said.

The tendency is toward improved prices, Cochrane said, but the seasonal drop in new bonds could make it a struggle.

----------------- READERS PORTFOLIO ----------------- BOEING +11.6. CARVER - 2.1. FLOW INTERNATIONAL -24.0. IMMUNEX -15.4. MICROSOFT +31.2. NIKE +24.8. PLUM CREEK TIMBER + 3.3. QFC - 8.1. STARBUCKS +43.8. WASH. MUTUAL S.B. -11.9.

AVERAGE: +5.3% What $1,000 invested in those stocks would be today: $1,053.

---------------------- READERS' NON-PORTFOLIO ---------------------- ARROW TRANSPORTATION + 6.9. DATA I/O + 2.6. FRED MEYER + 2.1. ICOS -24.4. INTERLINQ -23.6. ITRON + 6.9. LOUISIANA-PACIFIC -14.2. PACCAR -10.3. SEQUENT COMPUTER - 4.9. WASH. WATER POWER -16.0.

AVERAGE: -7.5% What $1,000 invested in those stocks would be today: $925.