Roller-Coaster Ride.

OUR PANEL OF EXPERTS REVIEW TODAY'S VOLATILE MARKET. STRAP YOURSELF IN AND GET PREPARED FOR A BUMPY TRIP.

UP, DOWN, ALL AROUND. JUST LIKE A ROLLER COASTER. This is a fitting way to describe the stock market over the past six months. There have been heart-pounding dips and confidence-building peaks. But oftentimes, the market has been as loopy as the latest attraction at Six Flags.

Yes, investors have been taken for quite a ride: Feelings of uncontrollable exuberance have been followed by nagging uncertainty as they have tried to figure out what sectors are in or out of favor, and where to put their money in this market. It's not an easy proposition. To put things in perspective, the Dow Jones industrial average crossed the 11000 threshold in August for the first time since April on the strength of tobacco, banking, and cyclicals. The tech-driven Nasdaq, however, has been short-circuited by profit-taking and negative earnings surprises.

To help explain the ride--and help you ride it out--we assembled our roundtable of market mavens for their semiannual meeting. This time, we mixed up our panel with a growth-stock money manager, a value-oriented portfolio manager, a telecom and utilities expert, and a manager who uses what he calls a "focused equity" approach to gain the best returns. The members of our roundtable were Stephen Humphrey, portfolio manager of the $100 million Lord Abbett Large Cap Growth Fund (year-to-date performance for the nine-month-old fund: 3%), which invests in "dominant companies" with a market capitalization of $8 billion or more and double-digit earnings; Nathaniel Cartel president and chief investment officer of Lakefront Capital Investors, which manages $48 million in institutional assets, and portfolio manager of the $3 million Victory Lakefront fund (year-to-date performance: -1.09%; 1999 performance: 13.9%), which focuses on large-cap value equities; Doris Kelley-Watkins, senior vice president and portfolio manager of the $447 million Evergreen Utility Fund (year-to-date performance: 8%; 1999 performance: 33.7%), which invests in a broad spectrum of utilities, including telecommunications and power firms; and Stephen M. Coleman of Daedalus Capital (year-to-date performance: 18%; 1999 performance: 124%), who runs a $240 million multicap portfolio that limits its holdings to no fewer than 10 and no more 25 stocks.

The following are excerpts from that meeting:

BLACK ENTERPRISE: Give us your outlook on the market in the coming months.

DORIS KELLEY-WATKINS: Well, it is not uncommon that people still consider utilities a defensive instrument and, for the most part, we are. But the utility sector is changing. The [Fed] has raised rates thus far this year by about 100 basis points. Normally, that would have meant bad news for utility companies, who are very interested to pay income and so forth. But, in fact, we have been performing quite well this year, and this is because the market is performing worse. We are a sector that thrives when there is uncertainty in the general market. My management approach seeks to certainly take advantage of market fears when defensive instruments do well. But we believe that the group also provides some wonderful fundamental choices that have been able to turn in handsome returns for investors. And so we've got both of those worlds, both defensive interest and downright excellent return interest, for our group.

B.E.: Mr. Carter, what will be the performance of value stocks over the next few months?

NATHANIEL CARTER: There's definitely a role for utilities and the traditional value names within our portfolio, although we try not to limit ourselves to what people would call traditional value sectors, such as capital goods and energies, utilities, and consumer cyclicals. We believe the value is where you find it, and you can't really classify it by sectors. If you find an opportunity, tech stocks, for example, trading at a discount to [their] peer group, then that certainly would qualify, as well.

I believe there's a secular shift going on in the way we value markets and stocks. We've had, what, six interest rate increases, and the cyclicals have done well. Every time [Federal Reserve Board Chairman Alan] Greenspan raises rates, the cyclicals get a bounce, rather than what it used to be where they would get hammered. And that's largely a function of the fact that when you look at growth stocks that, conversely, were always deemed to be not very sensitive to the economy, when you see interest rates going up, now they get it, which didn't used to be the case.

Having said that, we look at a broad range of companies. Utilities are certainly a part of that. But, at the same time, we own IBM (NYSE: IBM) and Intel (Nasdaq: INTC), two companies that are trading only at slight premiums to the market, that are obviously well-defined, well-established tech names, but we think there's significant upside from here.

B.E.: Mr. Humphrey, what will be your approach to the market going forward?

STEPHEN HUMPHREY: Because the Fed has made a decision to slow down the growth of the economy, I think that most stocks will tend to react. The Fed has had a history of overshootting, and instead of creating a soft landing, which is the exception, not the rule, they tend to have a heavy foot or heavy hand. In this particular cycle, we think that the Fed is likely to hold [on rates]. The big key that I tend to watch in terms of trying to make a determination of how much tech to hold [is] productivity. And what's been behind that has been the strong investment in technology. And if you look at the capital stock for technology, like computers, it's growing [at a rate] greater than 40% and hasn't slowed yet.

If you still have strong productivity, it means that the growth potential is still there. It also means inflation is kept in check, higher corporate earnings, and likely a higher stock market. Now last year, corporate earning went up about 17%. We [see earnings for] this year somewhere on the order of 16%.

B.E.: Mr. Coleman, you take a "focused equity" approach in terms of your portfolio. How do you go about sizing up the market and structuring your portfolio in reaction to current economic trends?

STEPHEN M. COLEMAN: We don't react. We're sort of in front of what we think the future is going to be. We're sort of making bets about what the world will look like and waiting for [it] to come to us so that we can get what we consider to be good stocks at fair prices. And so we tend to be waiting, wondering when [it's] going to find us.

[Using] the focused equity approach, we basically take very large exposures and a very few names. Currently, we have $240 million in assets, and those assets are in 12 names. So I don't really care what the Fed does. I genuinely do not care. The market, as we define it, is the population of stocks that we own. There are 12 companies in the whole world, as far as I'm concerned.

B.E.: Well, you're in the minority in terms of not caring about the Fed's action.

COLEMAN: I do not care. In fact, the Fed is taking aim at what it considers excesses in the market. But in order to crush the few tech stocks that are doing very well, it will have to kill the Old Economy.

B.E.: Is the Fed killing the Old Economy?

CARTER: I really don't think so. I think, as was indicated earlier, they're concerned about the wealth effect, and I think the rise in interest rates is geared specifically toward reining in the market because the fear is that if the consumer is bolstered by these gains in the market, he'll continue to spend, and that will be detrimental from an inflation standpoint. So I think they're wholly concerned about inflation, but I think they're being overly cautious. And as far as the Old Economy is concerned and killing it, I really don't think so. In order for the New Economy to thrive, the Old Economy has to be purchasers of that technology.

Jack Welch [the CEO of General Electric] once said that he wanted to thank all of those entrepreneurs who developed all of these [Internet products and services] because, ultimately, it's going to be to the benefit of the Wal-Marts and the GEs. As we've seen, there's been a huge correction within the Internet. I think the Old Economy is going to benefit because ifs going to become more efficient as a result of those technologies. There's a symbiotic relationship there. And given the fact that rising rates tend not to seem to hurt these cyclical companies, both from a market standpoint and from an earnings standpoint, it's going to be harder and harder to categorize companies in terms of Old Economy and New Economy.

HUMPHREY: To some extent, I agree with Nate. To some extent, of course, I don't. The way we structure our fund, we have 40% in what we call the traditional company that reinvents themselves, like General Electric (NYSE: GE) and Coming (NYSE: GLW). We have 50% in what I call a dominant company of today, which basically didn't exist 35 years ago, [like] Intel and Microsoft (Nasdaq: MSFT), And we have 10% in companies that didn't exist five years ago. Those that don't have earnings, we say have to have a minimum of 20% in revenue growth.

B.E.: Do you look at any other factors?

HUMPHREY: One of the things that I look at is demographics of the baby boomers and the way [that the consumer has worked his or her] way through the economy. When you hit 20, you go to work; 23 to 24, you get married; at 26, you have your first child and are renting; 32, [you] buy the starter house; by 40, [you've] basically moved up to a larger house; and the late 40s is about when that spending pattern falls off. And if you look at the numbers, then that means I'm expecting this expansion to continue through 2008.

If you go back 100 years ago, when we went through a similar type period with the autos and phones, you probably had 50 automobile companies and they couldn't all survive. Essentially, you're going to get a shakeout, but some will be the dominant companies of tomorrow. So, many of these dotcoms with smart managements that are nimble, fast, and have gotten there first, like eBay (Nasdaq: EBAY), Yahoo (Nasdaq: YHOO), or Exodus Communications (Nasdaq: EXDS), [are going to be] tough to beat out.

B.E.: What impact do you think the presidential election will have on the market, if any, Mr. Coleman?

CARTER: He doesn't care.

COLEMAN: Actually, I do care about the president. The president is a whole other matter [than the Fed] because he sets the tone in a fundamental way for how we will be governed and what the rules of the game are going to be. And so that office is humongous in the stock market. If George Bush wins, it will be a very different world and a better world, I would add, then if Al Gore wins.

HUMPHREY: I don't necessarily see that as so.

COLEMAN: Well, let's start with healthcare, because that is a very significant area. The approach that is taken by a George Bush will be materially different from the approach taken by an Al Gore, and I think that the approach taken by George Bush will be friendlier to those who are in the business of providing healthcare. I think that the healthcare stocks will prosper mightily if George Bush wins.

HUMPHREY: In terms of healthcare and stuff, I'm not sure. But I'm not sure that George Bush winning would be better than Al Gore. And the reason I say that is [because] I'm concerned about a major tax cut. I think it's stimulative. And with the Fed sitting there saying we don't want to see much in the way of inflation, I get concerned that that might be one of the ways that we blow this cycle. I would not like to see this economy stimulated any more than we're currently looking at it. I like the idea of the "Goldilocks" economy.

KELLEY-WATKINS: There are two things that I'm watching. I think the partial privatization of Social Security funds via some sort of a public entity approach is something that, once you let it out of the box, you can't put it back in. And until much more study and thought has gone into it, I don't think the general population is ready just yet to make that change.

The tax cut is an issue. This nation is already in an "I spend everything I get" mode. So, if you give them more, they will spend it. And if Greenspan is hysterical about that, you're just going [to make him more so].

CARTER: I think a seminal event between September 1 and the election will be third-quarter earnings and the anticipation of that, and I think that will be critical in determining what the market does up to the election. I think after the election, if George Bush is elected, I think you'll see the market soar. If Al Gore is elected, who knows? I'm not really sure. But with respect to the political environment, I think that it's clear that George Bush is going to cut taxes if he becomes president, and I think that will be good for the stock market. But if he does it, not in terms of a general relief, what I think he'll do, ultimately, is move more toward lowering capital gains taxes and estate taxes because what that will do is allow people who are averse to selling positions to be more active, to sell positions, to redeploy capital. Those dollars will be taken out and reinvested and so forth. If we're talking about a general tax cut, you know, lowering the rate, the income tax rate, then I think that could be problematic. So I think it depends on how he proceeds as to how the market reacts to that.

B.E.: What do you view as the dominant sectors over the next year?

COLEMAN: Generally, a stock gets in my portfolio because I find it specifically interesting, and then I look around for other companies in the industry to see if the rest of the industry is participating. I prefer companies that are growing so rapidly that everybody around them wins because they're in the right place at the right time.

Photonics is that area right now. That's the hottest area in the economy, quite frankly. It's the optical backbone that's building up these data networks. It's Corning; it's Nortel Networks (NYSE: NT). Those are the real companies in the industry. You have some other players like JDS Uniphase (Nasdaq:JDSU) that would have earnings if they didn't have so many acquisitions and so much goodwill.

I like the CRM (customer relationship management software) space, and that began with me looking at Siebel Systems (Nasdaq: SEBL), which I have been following for years, and I got tired of watching it double, so I bought it. And it kept on doubling and tripling. I have about 7-to-1 in that stock. So, those are two examples where I think the growth is, in both cases, 100% compounded.

KELLEY WATKINS: You cannot just give the impression to investors, especially novice ones, that this is a fail-safe. Stocks like that will correct severely.

COLEMAN: Well, you've used the word fail-safe, and I think it's the first time it's been used at this table. Stock prices are made by earnings growth and public expectations, and that's how I invest.

HUMPHREY: Well, Stephen sort of hit what I call a good point with the CRM space, the Oracles. Basically, technology, especially semiconductors, is a space that we're playing fairly well. We're probably market-weighted in microprocessors or PCs, but we're over-weighted in the infrastructure, [what I] call the networking space.

The other thing I factor in is the demographics. So, therefore, I also look at other areas. I'm looking at the Wal-Marts of the world and the Home Depots. In the interest-rate sensitive area, I might look at an AIG or an American Express. Again, it's the usual suspects, but those are the kinds of companies I buy and I do it because I think it's a safety factor in the size of these companies. They tend to be the ones who set the rules.

B.E.: Ms. Kelley-Watkins, I know you focus on utilities. Any other sectors that you like?

KELLEY-WATKINS: Even within utilities, I'm participating in this huge data, digital packet moving around in wireless [communications]. Wireless has really taken a central spot in my fund because of not only the voice growth, which is substantial in itself. Everyone knows that the penetration in this country is much lower than it is in the other developed nations in the world, and that the expectation for penetration of voice wireless is huge. So, talking about a long-term growth story, I see it definitely in wireless, so I'm participating in as many ways as I can. I'm even there in the infrastructure for wireless. Tower companies are the visible piece of the invisible network that is wireless.

CARTER: Well, I think one way to hedge against a lot of the risk that's implied with photonics, tech, and growth is to be invested in a diversified fashion, even though it makes sense, given your age, if you're middle-aged, to be more heavily weighted into tech. But I think there are some good opportunities. When tech is not doing quite so well, we see now that your portfolio can be propped up a little bit by some value names. And, as a result of that, we're fairly heavily weighted in the capital goods sector. We own Caterpillar (NYSE: CAT), Deere (NYSE: DE) and Cummins Engine Co. (NYSE: CUM). These are three companies, for example, that have had a lot of difficulty with labor over the last several decades. These are companies that are generally tied to the cyclical economy, and so we believe that they're going through a sea change. They're going to become more and more predictable in terms of their earnings.

On the retail side, we think there are some great opportunities. Kmart (NYSE: KM) is a stock that's trading at seven bucks now. Five or six years ago, the stock was close to $50 and it's been a tough road down. But they've made some changes in terms of focusing on a better merchandising mix, fixing up their stores, [and] they've got a new CEO. We think there's virtually no downside of the stock at that level.

We like some of the utilities, the Texas utilities and the Duke energies, the big names that are consolidating the industry. We own PepsiCo (NYSE: PEP), and PepsiCo has had a good run of late. Once they sold off or spun off Tricon (NYSE: YUM), that got them to focus more on the soda side of the business domestically, which has not been as strong as their international operations; and also the Frito-Lay aspect of their business is clearly huge.

There's going to come a time when only tech is going to be in growth because traditional consumer staple food names, the McDonalds and the Cokes, and pharmaceutical stocks are gradually migrating over into the value realm. They're trading at discounts to the market.

B.E.: What advice would you give to retail investors in terms of how to approach today's market?

HUMPHREY: I tend to think if you're going to get into the market, you should first try to get into something you understand, try to own companies that you kind of understand and take a long-term horizon. Don't expect to get rich overnight. That means don't try to chase the latest momentum trends. I tend to like the usual suspects, the big, dominant-type companies, because I think if you own a bunch of them, they consistently make their numbers.... Periodically, you'll get one that will blow up, but most of them tend to keep you in the hunt and give you a decent return over time.

KELLEY-WATKINS: When I think about novices attempting to approach Wall Street, my first advice is to get professional advice. That can take the form of just outright brokers or money managers like people here at this table. That's probably your best thing. When you go to buy a house, you study it and you know what you buy. You also went, in most cases, with a real estate agent. So take a professional with you as you begin this walk.

CARTER: I would just say that diversity is the key thing. I think you need to look at small cap, large cap, international, growth, and value and all of those things. For a novice person, I think just getting in the market is the most important thing. I think one way to do that, a low risk way, would be to buy an index fund. [It's] a cheap way, which gives you diversity and gives you 500 stocks, and use that as a basis to start to understand the market and then maybe go out and buy an individual stock on your own. That will get you acclimated to reading materials on that company, maybe reading the stock tables and that sort of thing. For the very, very novice, I think generally a good way to play the market, if you don't feel very comfortable and you don't have the resources to get professional help, is just to start putting some money, on a dollar cost averaging basis, in an index fund, and use that as a basis to go higher.

COLEMAN: I guess the only advice I would give an individual investor is to hire us. Our minimum is $5,000, and we're available through www.wegrow money.com. That's the advice I would give. I think it's essential. You have four professionals who each approach it slightly differently, although Stephen Humphrey is closest to me. I have always said that it's important to buy what you know, that the familiar is the safest. If you have had a favorable consumption experience, and so favorable that you are loyal to the brand or the product or service, then you are okay.

Doris Kelley-Watkins, Evergreen Utility Fund

                                 Price at         5-Year Estimated
Stock (Exchange: Ticker)         Recommendation   EPS Growth Rate

Nextel (Nasdaq: NXTL)              $57.00              30.3%
Crown Castle (Nasdaq: TWRS)         36.47              51.4
Consolidated Edison (NYSE: ED)      32.38               3.4

Nextel Communications. "They have a good fundamental business story in the wireless communications industry, Nextel also has an international arm, both in the U.K. and in Canada. They have above average revenue per subscriber, which they can sustain because of unique features like their "direct-connect" button, which almost makes a customer feet as if he is getting a long distance phone call for absolutely nothing. It was the darling in 1999. It's fallen upon hard times now, which again is nothing more than an entry point for me."

Crown Castle International, "Crown Castle owns, operates, builds, and acquires telecommunications towers, Crown Castle has a big international presence mostly in the U.K. They own a lot of broadcast towers, which gives them more vertical real estate, and that's more opportunity for revenue."

Consolidated Edison. "This is an above-average choice, currently more than 6%, from a utility that no longer fits the traditional description. They sold off most [power] plants, and I expect nuclear will be sold off over the next 12 months. Then they are only going to be an electricity distributor. That's all. There is good profit. It's stable. It's not controversial. Con Edison already is about to complete its merger with Northeast Utilities, which just makes it a bigger distribution company in some of the most highly populated parts of this country. So Con Edison is just an excellent income opportunity."

SOURCE: ZACKS.COM

Stephen Coleman, Daedalus Capital

                               Price at         5-Year Estimated
Company (Exchange: Ticker)     Recommendation   EPS Growth Rate

Adobe Systems (Nasdaq: ADBE)      $116.75            25.8%
Broadcom (Nasdaq: BRCM)            238.94            46.7
Great Plains Software
  (Nasdaq: GPSI)                    23.81            31.3

Adobe Systems. "They have 78% market share in delivering digital imaging, digital data, digital everything. It's Adobe software. If you are really a heavy consumer of that type of product, you must use Adobe. When I bought them, they were talking about 15% sales growth. Well, they're over 25% now. They were in the right place, at the right time, with credibility and killer products."

Broadcom. "What Broadcom generally brings is an idea as big as Intel. I think it's even, perhaps, bigger. They are innovators of the first order; in every way that someone is trying to deliver broadband. They have the only 10-gigabyte solution in fiber optics right now. Whether it's a digital set-top box [or] satellites, they have a solution."

Great Plains Software. "It's a CRM (customer relationship management) play. They are an enterprise software company, Small business is their core market, [and] they are the dominant player in back-end software, the core of it being an accounting software package. They partnered with Siebel Systems on front-end [software], so now they have a complete end-to-end solution."

SOURCE: ZACKS.COM

Stephen Humphrey, Lord Abbett Large Cap Growth Fund

                              Price at         5-Year Estimated
Company (Exchange: Ticker)    Recommendation   EPS Growth Rate

General Electric (NYSE: GE)      $53.38              14.7%
Corning (NYSE: GLW)              267.00              27.8
EMC (NYSE: EMC)                   85.50              31.3

General Electric, "With GE, we're talking about a company that is generating revenues of more than $126 billion. They are going to do total earnings of more than $11 billion, which is bigger than the GNP of a lot of countries. I look at GE as a director or maybe even a fund manager of terrific companies, from industrial plants to aircraft engines, from plastics to medical systems."

Corning, "The company got rid of Corningware and reinvented itself [after they recognized] that deregulation was coming to the telephone and the communication industry, and it was an opportunity for them and they got into it in a very strong way. Now, they are growing. A dominant company in fiber cable, they create the glass wire through which everything else flows, and also the amplifiers. Those are the two areas that they dominate."

EMC. "It is the dominant company in the enterprise storage market. Essentially, we expect that market to triple, over the next five years, to go from a $40 billion market to a $120 billion market. The big drive is the Internet All the transactions that happen on there basically have to be stored somewhere. For EMC, it doesn't stop there. Besides being dominant in that technology, they also dominate in the storage management and delivery of solutions."

SOURCE: ZACKS.COM

Nathaniel Carter, Lakefront Capital Investors

                              Price at         5-Year Estimated
Company (Exchange: Ticker)    Recommendation   EPS Growth Rate

Sara Lee (NYSE: SLE)             $19.06             10.2%
Compaq Computer (NYSE: CPQ)       29.00             27.3
Tricon Global Restaurants
  (NYSE: YUM)                     27.75             13.9

Sara Lee. "They are heavily exposed in Europe. Basically, the company has been hurt by a weakness in the euro. They own Coach Leather Goods, Hanes Underwear, and household products such as Brylcream. New management came in. They have decided to IPO the Coach business and to sell off the Monarch Food Service business, which will generate about $2.5 billion, which they are going to redeploy in their core businesses. They are really focused on growing earnings and having quality revenues."

Compaq Computer, "Compaq is a manufacturer of PCs and servers and storage devices. It lost ground, over the years, to Dell, and even to Hewlett-Packard Gateway, and so forth, but they do remain the margin share leader. They brought in a new [CEO who's] better in tune with the needs of the corporate customer. They are doing some innovative things. They are developing streamlined Internet products."

Tricon Global Restaurants, "Triton was a spin-off of Pepsi-Cola when [Pepsi] decided to focus on their snack food and soda pop business. Tricon [which is the holding company for Kentucky Fried Chicken. Pizza Hut, and Taco Bell] is actually the largest restaurant group in the world, if you look at units, The company was spun off a few years ago and overloaded with debt, probably unfairly. They have been in a mode now of trying to pay that debt down, They have done that through selling off stores and trying to find highly motivated franchisees To purchase those stores and then use the proceeds to pay down debt."

SOURCE: ZACKS.COM

1999 B.E. Rountable Stock Picks

Dawn Alston Paige > Loomis Sayles MidCap Value Fund

                             Current      Price at         Total
Company (Exchange: Ticker)    Price    Recommendation(*)   Return

SCI  SYSTEMS (NYSE: SCI)      $51.19       $25.75           98.76%
ALLMERICA FINANCIAL CORP.
  (NYSE: AFC)                  61.25        59.47            2.99
SAKS INC. (NYSE: SKS)           9.75        23.87          -59.15

Kim Lew > Ford Foundation

                             Current      Price at         Total
Company (Exchange: Ticker)    Price    Recommendation(*)   Return

EMC Corp. (NYSE: EMC)         $89.56       $29.47          203.90%
Nortel Networks Corp.
  (NYSE: NT)                   76.00        21.64          251.20
Oracle (NYSE: ORCL)            81.12        19.31          320.09

Walt Pearson > Alliance Capital Management

                             Current      Price at         Total
Company (Exchange: Ticker)    Price    Recommendation(*)   Return

Tyco International Ltd.
  (NYSE: TYC)                 $54.62       $50.10            9.02%
IBM Corp. (NYSE: IBM)         120.62       123.24           -2.13
Cisco Sytems. (NYSE: CSCO)     64.31        31.78          102.36

Craig Simmons > Williams Capital Management(**)

                             Current      Price at         Total
Company (Exchange: Ticker)    Price    Recommendation(*)   Return

FDX Corp. (NYSE: FDX)         $41.56       $43.00           -3.35%
Sylvan Learning Systems
  Inc. (NYSE: SLVN)            15.37         8.87           73.28
Venator Group Inc.
  (NYSE: Z)                    13.94        12.56           10.99

Bill Thomason > Thomas Capital Management

                             Current      Price at         Total
Company (Exchange: Ticker)    Price    Recommendation(*)   Return

PeopleSoft Inc.
  (NYSE: PSFT)                $24.81       $14.31           73.38%
Borders Group Inc.
  (NYSE: BGP)                  13.93        12.56           10.91
Mattel Inc. (NYSE: MAT)        10.62        21.31          -50.16

(*) PRICE OF STOCK AS OF 8/9/99; ALL PRICES ARE SPLIT ADJUSTED

(**) FORMERLY AT ASHLAND GLOBAL SECURITIES

SOURCE: YAHOO FINANCE