ALFRED Hitchcock never made a movie about Wall Street, but that isn’t a deterrent for market wonks seeking new and innovative ways to explain the recent behavior of stocks.
The market is suffering from “valuation vertigo,” said self-professed Hitchcock fan Rick Jaindrain, the chief investment officer for One Group Mutual Funds, the asset management unit of Bank One.
Like the master filmmaker, Jaindrain isn’t satisfied just coming up with a simple concept. He’d like to extend the metaphor as much as he can, using Hitchcock’s classic hit “Vertigo” — starring Jimmy Stewart and Kim Novak — as a source of inspiration.
“This is a disease arising from the shock to the head that investors got in 2000,” said Jaindrain. “And one of the symptoms is earnings downgrades. If you looked at the chart where we plot earnings revisions, it looks like a fall off a roof. So we know the disease, and we know the symptoms, so what’s the cure? Well, Nurse Greenspan is injecting medicine in 50 basis-point doses. We think we will continue to get more medicine until the patient recovers.”
It’s too bad investors can’t adopt new personalities — as did the character played by Novak in Vertigo did. Most investors would inevitably choose to be one of the few who sold all of their equity holdings at the very beginning of last year, before the freefall began.