THE investment/brokerage firm of Dean Witter Reynolds has just had its best year ever in Hawaii, best of 75. Yet its top man here, Paul Loo, still rides coach in airplanes, still phones from hotel lobbies for 25 cents instead of paying the $1 charged for calls from his room. Honolulu broker
Paul Loo is
optimisticHe has the Chinese habit of thrift and saving, he says, even as he revels in joyous predictions of good things to come for the financial markets of the U.S. and most of the world. He even sees good things for Hawaii stocks, but longer term than for a lot of the rest.
Loo years ago predicted a Dow Jones average at 10,000, thinks it will happen in 1999 or 2000 at the latest. He sees 20,000 in 20 years or so. Around 2008, he says, the Dow Jones average will surpass the once-soaring Nikkei stock average for Japan, now around the 14,000 mark.
He has some mind-boggling comparisons. The $308 billion market value of General Electric Co. stock by itself surpasses the market value of all the stocks in Thailand, the Philippines, Indonesia, Korea, Malaysia and Mexico combined. It is twice the value of all the stocks on the Taiwan market.
Such values are one reason why the Asian flu hasn't badly hurt the U.S. Ditto with Russia.
The values, he says, reflect the most creative nation in the world with giants like Bill Gates contributing their creativity to the economy and the stock market.
He sees previously absent financial discipline developing in Asia with great growth ahead there because of a well-educated populace with a strong savings habit.
He sees Europe becoming stronger with the fiscal discipline imposed in connection with its conversion to a common currency.
He looks on population growth as an engine of market growth, sees baby boomers who have reached mid-life in America now saving more and investing more, and our older generation commanding over $10 trillion in assets that will be shared as they die about 50-50 between their heirs and the Internal Revenue Service. Think of what $5 trillion will do to help keep the U.S. in surplus if we continue our fiscal conservatism, he exclaims.
His firm used to make most of its money from fees for brokering stock.
Now its big emphasis is on growing its customers' wealth for a percentage of the assets and profiting -- often with much less stock churning -- as their assets grow in value.
Buy and hold is something he believes in, with the qualification that all investments should be periodically reviewed. In January a janitor who lived frugally and worked until the month of his death at age 90 shocked friends by leaving to Olympic College and the Bremerton YMCA in Washington assets well over $1 million. He had simply bought stocks all his life and held them.
Loo's view of Hawaii is that our publicly held companies need to diversify more but stay close to core areas of strength. He has kind words for First Hawaiian's merger with BancWest and Hawaiian Electric Industries' banking investments, thinks Pacific Century will prosper as the Asian flu recedes.
He feels Alexander & Baldwin should have diversified more away from its dependence on Matson, which in turn depends on the survival of the Jones Act.
MAUI and the Big Island strike him as our two islands with the greatest growth potential. The science centers developing on the Big Island and around University of Hawaii research are very encouraging to him.
American creativity, savings and investment and a renewed fiscal conservatism in government can help fuel America to a tremendous 21st century, he says, with most of the rest of the world's economies moving upward, too.
A.A. Smyser is the contributing editor
and former editor of the the Star-Bulletin
His column runs Tuesday and Thursday.