By Thomas K. Meakin
Insurance and financial services stocks recorded their best gains since last May. The 121 stocks we priced in November staged a 5.04% advance. Just to refresh memories, in that merry month of May, our stocks went airborne in a 7.47% climb!
A 5% percent monthly advance should please investors. But if our stocks had done as well as the general market in November, I would be more than pleased; in fact, I’d be closer to ecstatic! Just note the general market stats.
The S&P 500 Stock Index was ahead 7.52%, the DJIA surged 8.56%, and the NASDAQ Composite climbed a remarkable 14.22%!
There were 97 issues in the plus column and only 24 losers. That produced an outstanding win/lose ratio of 4/1. 38 of the 121 stocks covered in November were double-digit winners.
All eight-industry sectors moved up, though the Reinsurance group did so by the thinnest of margins. (Plus .05%) The reinsurers’ close brush with a down month was almost entirely due to a 54.08% collapse in Vesta Insurance Group.
The Life & Health group was an impressive winner after registering a sparkling advance of 10.03%. There were 28 gainers and only 4 downers, which produced a very rewarding 7/1-win/lose ratio for Life stock enthusiasts. Phoenix Companies and John Hancock Financial were up 23.42% and 15.43%, respectively, as institutional investors became active buyers.
The Financial Services and Multi-Line stocks were almost equally in strong demand, with surges of 8.3% and 7.78%, respectively.
Big CIGNA led the Multi-lines with a 25.14% advance. An increasing number of analysts appear to be betting on managed care, and on CIGNA as a profitable premier provider.
Four of the seven financial services stocks staged double-digit recoveries. Mighty Merrill Lynch moved up 14.6% and announced a substantial employee layoff. Goldman Sachs was up 13.87% and is also cutting operating staff. Morgan Stanley followed suit and ended ahead 13.45%. American Express likewise announced belt tightening, which coincided with an 11.82% rise in AXP.
Have you noticed that expense cutting, often in the form of employee layoffs, coincides with an upward move in a companys stock? Wel, I am not in the predicting business. But our industry is certainly cutting expenses. Question: Can we expect a continuing in rise in stock prices?
Ill not answer that. Just be patient. The answer will come in my next column!
Reproduced from National Underwriter Life & Health/Financial Services Edition, December 24, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.