Froehlich optimistic, “three bears” are dead

As for Froehlich, he’s exuberantly optimistic about the stock market’s future and predicts the Dow will close above 15,000 on Dec. 31, 2002. He bases his optimism on several factors:

—The three factors most critical to a bear market — inflation, rising interest rates and increased government spending — are all dead. Froehlich has written a book by that name “The Three Bears Are Dead!”

—Baby boomers are only just now reaching the stage in life where they can save — previously they’ve been paying off mortgages and raising children — and they’re inheriting money from Depression Era-parents who refused to invest in equities. The boomers don’t share their parents’ reluctance to invest.

—The Western World may have fewer babies, but Asia has its own boomers. With 1 billion people between the ages of 10 and 24 — prime consumer ages — Asia will needs lots of products, and American companies will supply those things.

Additionally, Froehlich believes in a long-range strategy and says investors shouldn’t worry about daily market activities. He doesn’t recommend individual stocks but suggests the pharmaceutical industry is a good place to look. For a diversified equity portfolio, he recommends 60 percent investment in U.S. companies, 30 percent in European stocks and 10 percent in Japan.