`Your Old Friend Lou' Evokes Tense Flashbacks

"Everything is funny as long as it is happening to somebody else." - Will Rogers

Got a letter the other day that was too good not to share.

In the lower left corner of the envelope, it stated, "Mr. Greg Heberlein only, please." Something of an indication of how special - and personal - the message inside was.

It began: "Dear Investor:

"You may find this a most unusual letter."

Hard not to be intrigued.

But before getting to the point - if we did that so soon, the column wouldn't even jump off the cover - another story is in order.

In early 1988, not long after the Crash of '87, market analyst Bob Prechter appeared on public television's "Wall Street Week." (Portions of this story have appeared before, but never as complete as this version.)

Prechter appeared in the belief he had notified his newsletter clients beforehand that stocks in mid-October 1987 verged on collapse.

But the show's host, Louis Rukeyser, thought differently. He strongly believed Prechter had misled his investors and devoted a major segment of that evening's telecast attempting to discredit him. Rukeyser redefined rudeness. Some who were on that program that night later speculated that the silver-haired punster needed to verbally attack a guest every year or so to continue to remain credible. That was pointed out in this very space.

Some months later, Rukeyser appeared in Seattle to help promote a local bank. After a news conference that attracted two reporters, your loyal scribe approached Rukeyser, curious about his motivation in bruising Prechter.

"You're the one!" he shouted, suddenly realizing yours truly had castigated him in print. Then he went off on a tangent that suggested he wasn't planning to respond to the question. End of interview.

About a year later (July 18, 1988, but who's counting), Channel 9, on which Rukeyser's show appears in Seattle, invited me and another journalist to appear on a panel to chat with the visiting Rukeyser. The moderator was advised that Rukeyser and yours truly weren't on the best of terms. He said that was OK.

"Television likes a little creative tension," the moderator said.

The day of the show arrived. All of us were on the set early, except for the honored guest, who did not take his place until about two minutes before taping was to begin.

Rukeyser took a seat, facing the moderator, with his old buddy journalist to his right. There was a pause. Then:

"YOU!" Rukeyser shouted, waving a finger in the general vicinity of your favorite business columnist. "I'm sick and tired of your snotty and erroneous comments. If you don't behave, I'll walk off this set."

It wasn't yours truly's behavior in question. But the moderator certainly got his creative tension. You could tell by how far his chin dropped. I haven't watched Rukeyser's show since.

Now back to the letter. It included the phrase "your old friend Lou" and, at the end:

"Warmest Regards,

"Louis Rukeyser"

In his personal four-page tome, my old friend Lou urged me to join his newsletter scheme. For a mere $49.50 a year, half the regular price, I'd get a monthly newsletter and lots of other goodies. The newsletter already has nearly a half-million subscribers - at $50 a head, that's about $25 million. Good to see Lou won't be on the dole anytime soon.

And I'm especially glad, in connection with our relationship, to see he has buried the hatchet. Hopefully, he'll understand why I still don't plan to watch his show.

Mutual-fund video

Another newsletter writer/investment manager has decided to branch out - to video.

Paul Merriman heads the successful Paul Merriman & Associates. A former stockbroker and corporate chief, Merriman launched his company to take advantage of the Individual Retirement Account boom in the early 1980s. At the time, Merriman agreed to take even small accounts and apply market-timing principles. He lets in newcomers at $1,000, even though his business is in the $150 million range.

Merriman, a Seattleite, now is distributing "How to Succeed at Mutual Fund Investing." The two-hour tape costs $24.95 through Merriman's company at 285-8877.

To prove his desire not to issue the tape strictly for profit, Merriman donated two copies to the Seattle Public Library.

The tape won't make you forget "The Lion King." As long as you are aware of Merriman's interest in market timing, - a bias he mentions several times - you may find some useful tips on the tape.

The tape is divided into five segments: 10 decisions to make to define your approach to the market, 10 questions to ask a mutual fund, myths and facts about market timing, your best retirement portfolio and how to select a financial adviser. Each segment runs about 20 to 25 minutes.

The first two segments may be worth the price of admission. The first segment yields the undeniable belief that stocks are the best investment. It also encourages individuals to strongly consider professional management. That's not a bad idea for most investors who don't have the time or expertise to fiddle with a portfolio.

The second segment, which doesn't push one fund over another, offers sound advice on things to look for in a fund, or a family of funds. The last segment on selecting an adviser provides similar how-to information, including the four keys to look for: honesty, integrity, competence and availability.

The segment on the best portfolio makes a big case for dividing investment money four ways: U.S. stocks, international stocks, U.S. bonds and international bonds. Each investor can judge whether that's appropriate.

The third segment deals with Merriman's specialty, market timing. Market timing is a controversial tool in which investors employ certain statistics, sometimes 200 or more, to forecast market direction. Many timers follow the trend, rather than predict it. Successful timers often argue their systems are designed to save money in bear markets, rather than multiply it during bull runs.

Merriman hedges by using four systems. If three say buy and one says sell, 75 percent of the money is in stock mutual funds. If another turns to sell, the funds are sold down to 50 percent.

In the video, Merriman is a little wooden at first, not as relaxed as public television's superb "The Wealthy Barber." But despite Merriman's tireless evangelizing for market timing, he just as tirelessly supports saving over spending. And once it is saved, it should be invested. You can't fault Merriman for preaching that.

Stocks and bonds

The Dow Jones industrial average of 30 blue-chip stocks dived 101.80 points last week to 3,831.75.

The Murphey Favre Northwest 50 of 50 stocks weighted by their regional economic impact fell 98.14 points to 2,453.07.

Bonds were restrained, awaiting Tuesday's meeting of the Federal Reserve Board's Federal Open Market Committee. That group could raise interest rates, but the betting is the Fed will wait at least until October, said Pamela Warren, Seattle-Northwest Securities vice president.

The 30-year bellwether bond finished at $966.25 per $1,000 of face value, off $2.50. That was priced to yield 7.79 percent, Warren said.

Municipal bonds, still absent significant supply, gave up as much $5 per $1,000, reported Judith Cochrane, Seafirst Bank municipal trader.

Wall Street Recap appears Sunday in the Business section of The Seattle Times.