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Back in December, Steve Leuthold was interviewed by Thom Hartle, editor of Stocks and Commodities. The following is reprinted from the March 1993 issue of the magazine. Some readers may be surprised to learn the origins of The Leuthold Group were "technical" not fundamental. Some may also be surprised that our "Group leader", an avid student of long term economic and market history, is also a short term trading speculator.
Note: Leuthold's picture is somewhat dated, taken back in the days before the beard turned gray. We believe the color change is the direct result of this commodity trading.
 

After ten weeks of borderline "Neutral” readings, our weight of the evidence Major Trend Index shifted back down into the "NEGATIVE" zone with the March 1 calculation. So what did the market do the next day? It scored a 45 point gain in the DJIA, with the other market averages up a little more than 1%. At this point, with the Index back in "Negative” territory, we will probably do more defensive selling if this new surge carries significantly higher.

This publication invests in the equity market on a sector basis, but many of the sectors employed are somewhat unorthodox. This approach has worked very well for us over the years. Our equity model has outperformed the S&P 500 over 70% of the time in the last 21 years. 1992, as a whole, was not a good year for our equity model, but it appears we are back in the groove. In the last four months, our equity portfolio is up 12%, compared to a 6% gain for the S&P 500. Year to date, our portfolio is up 4% compared to 2% for the S&P 500.

So far, 1993 has been difficult year for most aggressive growth managers, especially those tilted toward health care issues.

The table on the next page is a performance rundown for Leuthold equity market sectors (and other measures) ranked by February 1993 performance.

Polling The Pro's: We have no new results this issue because no polls were taken. Next issue, you will see what institutional types in Seattle, Portland, Denver and Los Angeles think about the stock market's prospects.

There were two mighty explosions in lower Manhattan in February. One was horrible and the other wonderful, at least for the banks and brokers who had loaded up on bonds and notes. However, from this publication's standpoint, both explosions were pretty much viewed as horrible. (See comments later in this section.)

When President Clinton presented his economic package of proposals I happened to be out of the country, under a palm tree, reading Jimmy Buffet's first novel "Where is Joe Merchant?"

Close only counts in horseshoes. Our weight of the evidence approach to evaluating the health of the U.S. stock market improved in January, but did not break out of its six week "Neutral" range

The S&P 500 closed out January 1993 with a slight 0.7% gain.

In early 1991, a continuing survey of client stock market attitudes was initiated (41 polls have been taken to date).

The parties are over, the cheering has stopped and the sax has been put back in the closet.

1993's bond market has started on a strong note, with gains of two points or more in long T-bonds.

Each January, clients call to inquire about last year's performance of the S&P 500 with each component stock given equal weight.

Each year, along about this time, this publication (with help from our readers) makes a series of "Fearless Forecasts".

In early 1991, a continuing survey of client stock market attitudes was initiated (39 polls have been taken to date).

Last issue, this publication presented a study of historical stock market volatility based on the annual swings in the S&P 500 and the DJIA (low close to high close).

It's a tradition. Each January we publish the gold book (Perception II) before this green book. So don't blame the post office.