Now’s the time to buy, big fund firm says

The price-to-sales ratio for the 30 companies that comprise the Dow is at its lowest point since 1996, making this a great time to get nto the market, said Neil Hennessy, CIO and portfolio manager for Hennessy Mutual Funds.
NOV 13, 2008
The price-to-sales ratio for the 30 companies that comprise the Dow Jones Industrial Average is at its lowest point since 1996, making this a great time to get into the market, said Neil Hennessy, chief investment officer and portfolio manager for Novato, Calif.-based Hennessy Mutual Funds Inc. The last time the current price-to-sales ratio was this low was Nov. 13, 1996. Following that low-water mark was a significant market upturn that lasted until Jan. 14, 2000. The Dow Jones Industrial Average returned 97.34% or 23.92% annually during that stretch, according to Mr. Hennessy, who spoke at a press briefing in New York yesterday. The Dow’s current price-to-sales ratio is 78 cents, which means investors can purchase a $1 share in a company for that price. That’s down from a five-year reading of $1.18 and a 10-year ratio of $1.31. The sales-to-price ratio of the Hennessy Focus 30 Fund, which is comprised of a diverse group of 30 stocks, is also down to the bargain level of 68 cents, compared with a five-year ratio of 89 cents, he said. The fund was up 10% heading into September, before the Wall Street meltdown, but is now down 29.41% year-to-date. Another reason to believe the market is in for a turnaround is an estimated $4 to $6 trillion that institutional and retail investors have at their disposal to spend in the market. "There is a lot of cash sitting on the sidelines," Mr. Hennessy said. Hennessy had $1.1 billion in mutual fund assets under management on June 30.

Latest News

Merrill lands four advisor teams as May recruiting data shows firm's two-way churn
Merrill lands four advisor teams as May recruiting data shows firm's two-way churn

Merrill's latest hires span Colorado to Louisiana, even as industry-wide recruiting data suggests the firm is losing almost as many advisors as it gains.

Fund manager sues Kandeo, alleges $100 million FinSocial loss
Fund manager sues Kandeo, alleges $100 million FinSocial loss

The $36 million buy allegedly hid inflated books and a $50 million diversion.

Advisor gets $200,000 from Ameriprise in 'emotional distress' lawsuit
Advisor gets $200,000 from Ameriprise in 'emotional distress' lawsuit

“An award citing emotional distress is very unusual,” an industry executive said.

Workplace financial education linked to stronger financial habits, but participation remains low
Workplace financial education linked to stronger financial habits, but participation remains low

New EBRI research found workers who participated in employer financial education reported higher confidence, literacy and financial satisfaction.

The rise of the super advisor: How AI is redefining competitive advantage in wealth management
The rise of the super advisor: How AI is redefining competitive advantage in wealth management

Beyond operational excellence, the winning advisors of the future are the ones who can reach across multiple disciplines without discarding specialist skills.

SPONSORED Direct indexing webinar targets tax-loss harvesting amid market swings

Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains

SPONSORED Who builds the income when the pension disappears?

Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income