The pundits: Voices that can move markets

NEW YORK -- Amid hundreds of voices on Wall Street, three rang out clearly this past week.

In three consecutive sessions, stocks tumbled on pessimistic messages from well-regarded Wall Street pundits. The market's dramatic response to Abby Joseph Cohen, Mark Mobius and Julian H. Robertson Jr. underscored the power market gurus hold over an investing public that's ravenous for the latest good idea.

Cohen, the chief investment strategist at Goldman Sachs, was first, recommending on Tuesday that clients pare their stock holdings a bit and put the extra money into cash.

The following day, Mobius, a renowned mutual-fund manager for the Franklin Templeton group, warned that global Internet stocks appeared to be reaching their likely peak.

And Thursday, Robertson said he would shut down Tiger Management, the family of hedge funds that once held as much as $23 billion in assets. In a frank, rueful letter to Tiger's partners, Robertson said he was no longer able to make sense of a market gone mad for technology stocks.

Technology stocks plummeted for three days in a row, knocking the Nasdaq composite index into a ''correction'' -- a drop of at least 10 percent from a peak, signifying a reversal of an upward trend. Analysts say the pundits weren't solely to blame for the selloff. But in a market already on edge over rising interest rates and sky-high prices for many technology stocks, the downbeat missives took on extra weight.

Cohen, Mobius and Robertson each have different investment styles and varied audiences. The common bond: All three have been correct, and not just once.

''On the Street, you don't command respect the first time you're right,'' said Jeffrey Hirsch, vice president at the Hirsch Organization, which publishes the Stock Trader's Almanac. ''It's being right consistently over a long period of time.''

In the past decade, one of the most correct and most consistent Wall Street analysts has been Cohen. In 1996, when most pundits were predicting that the market was headed for trouble, she accurately predicted stocks were headed higher. When stocks tumbled in October 1998, she urged clients to see the drop as a buying opportunity. Wall Street recovered, and Cohen's name became nearly synonymous with the bull market.

Of course, previous market eras have had their gurus, too. In the 1970s, Henry Kaufman, chief economist at Salomon Brothers, routinely moved markets with his dour forecasts.

And in the 1980s, Elaine Garzarelli, head equity strategist at Shearson Lehman, became famous after correctly forecasting the Black Monday crash of October 1987. She later accurately predicted the market's recovery, but she's fallen out of favor since turning somewhat bearish in 1996.

In recent years, with the explosion of financial-news networks, Web sites and business magazines and newsletters, there's more room for more voices. And in an increasingly volatile market, just one good call can make a name.

Consider Henry Blodget, Merrill Lynch's chief Internet analyst. In December 1998, when Blodget worked for the smaller firm CIBC Oppenheimer, he predicted shares of Amazon.com would reach $400 within a year. In just 14 trading days, Amazon hit its mark. Blodget was rewarded with waves of publicity and, eventually, a new job at Wall Street's largest brokerage.

The cyclical nature of the stock market means that a pundit's day in the sun can't last forever. A relentless bull will lose credibility if stocks plummet, and the handful of bearish Wall Street analysts have faded to the background in recent years.

''People get hot, and people get colder,'' Hirsch said.

Ironically, it was Robertson's refusal to change his strategies that derailed Tiger. Yet even in closing the fund, Robertson fiercely defended his value-driven style of investing.

''In a rational environment this strategy functions well,'' he told partners. ''But in an irrational market, where earnings and price considerations take a back seat to mouse clicks and momentum, such logic, as we have learned, does not count for much.''

This past week, the Nasdaq composite posted the steepest losses of any major index, falling 390.20. Friday brought some relief, with the index regaining 114.94 points to close at 4,572.83.

The Dow Jones industrial average fell 190.80 points on the week. Friday, the Dow fell 58.33 to 10,921.92.

The Standard & Poor's 500 index slipped 28.88 to 1,498.58 during the week. On Friday, the index rose 10.66 points.

The Russell 2000 index of smaller companies fell 34.92 this past week. A gain of 7.53 on Friday left the index at 539.09.

The Wilshire Associates Equity Index, which represents the combined market value of all NYSE, American and Nasdaq issues, ended the week at $14.30 trillion, off $455.46 billion from last week. A year ago, the index was at $11.77 trillion.