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The following is the text of an interview with The Wall Street Transcript conducted on October 8, 2001

NEW: Read the January 27th '03 WST Interview!

Or:

 The February, '03 Charleston Regional Business Journal Interview.


     TWST:  Could you just give us a brief description of Sanco Services and your responsibilities there?

   Mr. Selengut:  Sanco Services is a small and private (unaffiliated with any Wall Street firm) Investment Management firm. I own the company and manage roughly $30 million for 70-75 clients. I only invest in individual equity securities, no open end Mutual Funds of any kind. Fixed income securities include individual preferred stocks, corporate bond unit trusts, closed end municipal bond funds, Government securities, etc. Every account is different from every other. Each client account has its own set of goals and objectives, and its own asset allocation; no two accounts are identical, although many will own the same issues.

For equity investments, I deal exclusively with New York Stock Exchange companies that are B+ or better rated by Standard & Poorís (investment grade), held by major institutions, and dividend paying. Those are the quality guidelines and they never vary. Client requests to do other things are discussed and rejected nearly 100% of the time. Every portfolio is diversified; no equity (or fixed income) position will exceed 5% of the portfolio assets.

     TWST:  What are the specific characteristics that you look for in potential investments?

     Mr. Selengut:  They are quality, as measured by S&P, their ability to pay their debts, their profitability, and the fact that they pay a dividend. And thatís pretty much it. If they meet the selection criteria to get into what I call the ďSelection UniverseĒ (i.e., the list of stocks that I choose from), I then look for their price movement to determine when Iím going to buy them. I only buy stocks that are down from their 12-month highs. They must be down at least 20% before Iíll even look at them, and at that point I create a list of 10 that I feel are the ďbest buysĒ for me that day.

Now what determines the best buy for me at 6:00 AM is a little bit unusual, totally not mainstream. Iím not interested in a ďstoryĒ, or ďnewsĒ, or someoneís opinion of management. No creative research or technical analysis either. Itís not any of these popular Wall Street ďgivensĒ that people use for their more educated guesswork! A stock is a ďbest buyĒ for me if Iíve been able to turn it over rapidly in the past with an acceptable profit. Iím looking to, like I said; buy a stock thatís down at least 20% from its high, with the intention of selling it as soon as I can net 10%. No buts, no outside opinions, and no greed allowed! So, in nearly any market environment, Iíll be buying and selling the same stocks over and over again. Iíll be taking profits when other people are just starting to feel comfortable about getting back into the market, and Iíll be buying when they panic or react to temporary bad news on one of ďmyĒ companies.

Just over the past week or ten days, for example, I was in and out of Chubb for a quick 10% profit. The same was true with Nucor, Exxon-Mobil and Nike recently. But this is going on all the time. ďInstant WinnersĒ are so much fun, but youíll never do it if you get bogged down in research, timing, and analysis of any kind. Disciplined decision making is the key element for success in the market.

     TWST:  What are the specific benefits and risks of investing in this way?

     Mr. Selengut:  Well, the benefits are so, so many. For one, you never get caught with your chips on the table as nearly all private investors and Mutual Fund managers did in 2000. Most investment strategies say: ďWeíll, buy this, and hold on to it, or keep adding to it through dividend reinvestmentĒ. Others specify  ďcore holdingsĒ that you should go to your grave with. I donít believe any of that is true. I donít have any stock that I consider a long-term hold, although some hang on longer than I would like. I donít buy anything unless I intend to sell it as soon as I can.

Another benefit is that you donít wind up (as many pre-retirement portfolios do) with an impressive bottom line value in non-income-bearing securities and a huge tax burden when they have to be translated into a retirement portfolio. When a client brags: ďHey, Iíve got a million-dollar portfolio, now I can retire and live off my income.Ē Does he really have a ďuseableĒ million bucks? Not necessarily, because now that wonderful Microsoft has to be sold and Uncle Sam gets his cut first! So if you have Exxon sitting in there at an $11.25 cost basis, you are going to pay a lot of taxes when you really shouldnít have to. So I think this is (ironically) a credible long-term strategy for retirement, even though it thrives on short-term trading. At retirement age, youíve already paid your taxes. In other words, youíve paid your dues, the money is all yours, you have a proper asset allocation where you have income coming into your portfolio already and you can pick and choose what you need to sell to increase your income if you need to increase your income.

I like to bring my clients into retirement where they donít have to change a thing. Theyíve already got the cash flow that they thought they would need, and theyíve got a growth portion of their portfolio that will continue to generate money. This isnít anything new; itís just not exciting enough to be ďsoldĒ by The Street.

     TWST:  And how would you expect the portfolios to perform in both up and down markets?

     Mr. Selengut:  In up and down markets, again, itís a matter of definition. We had what the world liked to call an up market, two-and-a-half to three years ago. It really wasnít at all if you look at meaningful (non index or average) numbers. There were twice as many losers as there were gainers on the New York Stock Exchange during that time period. The S & P increase was based on the movement of less than 15 stocks, and so on. But all the speculation, all the fever that Wall Street generated at the time, put people into very speculative positions and they just kept buying, and buying, and buying in these stocks that really didnít have any intrinsic value. Then the ďpigsĒ got slaughtered, as they always do. Well, the value sector went down during that period of time and it was a down market for them. But starting in March of 2000 that sector of the market, the market that I invest in, went crazy.

My portfolios were up in value by 22% in 2000, supposedly one of the worst bear markets in history. This year, through the end of August, I didnít have one account that was down in value. And again, the media has dubbed 2001 as a continuation of a bad market. So, you know, itís a matter of definition. Wall Street likes to see indexes go up, and they manipulate them to make it happen; I like to see individual stocks go up, and that is a function of an investment strategy as opposed to a search for the holy grail!

     TWST:  How much of your research is generated internally versus externally?

     Mr. Selengut:  100%. Research that is produced outside is self-serving sales propaganda. Iíve always thought that it is useless. There was an article recently in Vanity Fair, of all places; an exposeí on analysts and their recommendations. A ďmust readĒ! I quoted in a book I wrote recently (looking for a publisher) in a section that addressed research and research analysts, the paid representatives of houses on the Street. Individual investors must learn that Conflicts of Interest are part of the Wall Street landscape. I think research is the rationalization of the speculator, and securities marketing managers know this all too well. ďOK, hereís something weíre bringing public, now letís make up a story why the investor should buy it. Then weíll give our best retail brokers a trip to Hawaii for selling it.Ē I donít look to research produced by any source.

What I look for again is just those basic fundamental numbers that tell me a company is profitable. And unless I see those ratings erode, I expect it to continue to be profitable, naturally, in what Iím interested in. Iím not interested in stories, particularly new issues. Now thereís a real crapshoot! Research stories are not for investors you know, and most people arenít really investors at all. Theyíre just speculators out there looking for a hit. Itís treated the same way as a roulette wheel, a gambling casino. I donít approach the stock market that way at all. Too bad brokerage firms donít treat losers as well as the casinos do. After all, the businesses have become quite similar.

     TWST:  You had mentioned diversification, but what other means do you evaluate and control investment risk?

     Mr. Selengut: An emphasis on quality in a selection process that includes strict diversification rules is the key risk control mechanism. Control is a management term, and I think youíve used it properly. You canít eliminate risk and still be investing, but you certainly must minimize it. The way you minimize it is with the three key elements Iíve mentioned. The first factor most people would mention is diversification, and I mean diversification by industry, by position size and age, and between Equity and Fixed Income securities. But a diversified portfolio of junk bonds is still junk, and a portfolio full of story stocks is just another hand of stud.

The absolute best way to minimize risk is to maintain the quality level of the portfolio. Finally, I also consider the generation of income by a security a factor in minimizing risk. And generally, I would say thatís it. I think the concept of trading equities, of taking profits, is a risk ďminimizerĒ as well because what is risk after all? Eventually, most securities are going to go down in price, a) because they become overpriced because of various stories and then those expectations donít pan out; or b) something happens that prompts Wall Street to say: ďOh, well, the retail stocks are all going to go down for this or that reasonĒ and the whole group gets weak.

For whatever reason, real or contrived, stock prices do fluctuate. And if you are trading with a managed and disciplined approach that includes taking your profits ďwhen you see the whites of their eyesĒ, thatís risk minimization. You donít want to wind up holding something thatís overpriced. Take your profits and find something else to invest in that has not yet gone up in price.

     TWST:  How many issues are typically held in your portfolios?

     Mr. Selengut:  The largest portfolios, over a million dollars or so, and even a million just in the equity portion of a portfolio, would probably have a maximum of 40 different positions. The smaller portfolios probably would have 20 or less. It varies. But, generally, I would say, that it wouldnít go beyond 40 at any time.

     TWST:  Do you have a sector and geographic allocation process, or is it specifically bottom-up companies?

     Mr. Selengut:  In the sense of the sector, the way I see the stock market working, itís very much of a ďgroupĒ market. If one sector gets weak, my buy list will probably contain many stocks in that sector. In other words, when the retailers are going down, Iíll wind up buying Wal-Mart, Home Depot, Loweís, and May Department Stores, among others; similar companies for different clients, with control of the overall allocation to the sector. Strong sectors, conversely, disappear from my portfolios as a result of profit taking. And then, all of a sudden, they (the retail sector) will get strong again and none of them will appear on my buy list until the next cycle. They may well be replaced on my list with drug companies, banks, insurers, etc.  So, although I donít actually make it a point to look at sectors, I do find myself looking at companies in the same sector because of what the market is doing.

     TWST:  What are some of your recent buys? Some new opportunities that you have identified and what are the reasons?

Mr. Selengut:  My buy list today, for example, contains a pretty diverse group of companies, Air Products and Chemicals, Bell South, Clorox, Coca-Cola, Franklin Resources, IDEX Corp., ITW, TRW Corporation, Lennar, and Roper. Thereís not a whole lot of sector similarity there, which tells me (something that has been pretty apparent, I would say, since September 11th ) that pretty much all  companies are ďdownĒ except defense contractors. I had Raytheon, I think, for a total two days before I took my profits on it. So generally, through September, most of the good quality companies, were down and I was buying as many of them as I possibly could. I filled up my portfolios pretty much during the month of September. And during October, so far, Iíve already been able to take a lot of profits. For example: MBNA CORP, ALLSTATE, BRISTOL MEYERS, ROYAL DUTCH, CITIGROUP, HARLEY DAVIDSON, and several more. Actually, Iíve taken profits on over 120 different companies this year, which is just a hair better than usual.

I know youíre going to ask why I sell such great companies when they are just starting to move back up. I sell out of ďloveĒ, not of the companies, but of profits! I hate to see a profit disappear because someone has greedily looked to make even more. I establish trading targets and stick to them

 TWST:  How do you determine if these companies have just gone down for valuation reasons rather than underlying fundamentals?

Mr. Selengut:  Well the fundamentals are pretty well reported in the S&P Guide weekly. I mean, you could look in the S&P Guide and each month they tell you if a stock has fallen in rating. It can also get a pretty quick clue if you hear about changes in their dividend policy. So those are the things that I look for to determine if itís no longer an investment grade security. Frankly, when you see companies like Illinois Tool, or Clorox, or one of those companies, when they are falling in price, itís really very rare that you see it accompanied by a change in the S&P quality rating. In fact, back in 1987, and my strategy has pretty much not changed since I started back in 1979.

Back in 1987, these companies were all down 30%-40%-45% and not one of them lowered its dividend. And many even raised their dividends during that period of time. So, Iíve found over the years that so long as you place quality with a capital Q as your first selection criteria, you rarely wind up buying a company thatís in financial trouble. Most investors react to negative news about a company with a ďknee-jerkĒ market order to sell. I always have a wheelbarrow ready to catch shares of good companies that others are tossing out the window. Is it easier for a company to improve on a record quarter or a dismal one? Think about it. How do I react to positive earnings, or other news surprises? Thatís where a buy list comes from.

     TWST:  Dividends are important in your selections, I believe. Can you talk about the dividends as an investment criterion?     Mr. Selengut:  The dividend is an important thing because I feel is itís a measure of the financial capabilities of the company. If a company has the ability to pay a regular dividend each quarter, out of its operating income, I want to invest in it because itís obviously profitable, as opposed to possibly profitable. I chuckle a lot when I hear ďgrowthĒ companies posture that they maintain their growth by plowing back profits (or, more likely, cash flow) into the company. Well, most of the companies that I invest in have grown pretty well while paying dividends. The only thing that you can be sure is growing in the ďgrowth companiesĒ that donít pay dividends is the salaries of top executives.

     TWST:  What is your approach to the more volatile sectors like technology and telecommunications?

     Mr. Selengut:  Well, I own many technology companies, all of which meet my quality, diversification, and income parameters. I own Hewlett Packard, for example, I own Nokia and SBC Communications, and companies of that nature. Again, as long as they meet my selection criteria, Iíll invest in them, particularly when theyíre weak. And when they go down in price as these have, I will buy more. My initial position in a stock is never my maximum position. If Iím looking to get as much as 5% of a portfolio into, letís say, a Canon or any company, not necessarily just a technology company, I donít start off at that point. I buy, maybe, half that amount, knowing that Iím buying a stock thatís been going down. If it goes down further, Iíll want to buy more of it. And if it doesnít go down further, Iíll sell it as it rebounds. But I am always happy to add to my holdings in a company when it becomes cheaper.

Wall Streetís a strange place. The normal sales pitch from a broker is: ďCome on and buy this security! Itís at itís highest price in history, and if you buy it now youíll pay more than any human being has ever paid.Ē  Well, I donít consider that a proper investment strategy, so I stay away from that type of security: those are the ones Iím selling.

     Iím buying more Tiffany right now. I just put in an order, just before you called me to buy some more American Express because theyíre down from what I paid for them by enough that I want to buy more. And I donít mind holding them for a year or more if it takes that long for them to rebound to a point where I can exit with my target profit.  So many of the companies I trade turnaround rapidly, so a few 18 or 24 month ďslugsĒ donít impact my target turnover rate, which is to keep the portfolio average under six months. Most years, my average turnover is between three and four months.

     TWST:  Would you say that this is an easy time to find these opportunities?

     Mr. Selengut:  Well, itís certainly an easy time to find things that I expect will turn out to have been good opportunities, okay? I mean that I never anticipate a very, very long down market in the quality sector. That sort of bit me hard during the time period I mentioned earlier when the speculation in the NASDAQ just went crazy. I had people sell portfolios of municipal bonds to jump into priceline.com and other IPOs. Some even started doing futures and options! It was really crazy, and scary. A said ďgood byeĒ to a lot of people who eventually got financially murdered just because they were being greedy. Many were old management friends who became convinced that my conservative approach was broken.

Those who stayed the road think I walk on water. Not quite, but they appreciate the fact that I didnít change strategies. So, during that period of time, I certainly didnít think that the quality sector was going to stay down as long as it did. I stuck with it, and I bought more of positions that had lost more than 30% of their value, and eventually I was exonerated. I wasnít right or wrong, investing is not a guessing game or a competition, and I didnít attempt to predict the future. I only know this one conservative strategy, and it has always come through any adversity in the market or in my client base.

     TWST:  Do you invest in turnaround situations?

     Mr. Selengut:  I donít know. I guess some people might label an investment right now in American Express a turnaround. I really donít look for something that somebody labels in that manner. A turnaround situation would probably be something where the company is no longer profitable, where itís not paying a dividend, and might even be in bankruptcy. I would say something like that is quite speculative and that I wouldnít be doing it. A turnaround situation for me is a Disney, or a Gillette. Good products or services and sound fundamentals, but really weak. Thatís about as speculative as Iíll get.

     TWST:  What would you consider to be some of the best bargains in your portfolios at this time?

     Mr. Selengut:  The 10 that I mentioned, for new buying right now. The stocks that Iím adding to that I think will come back to life and take profits on. Now Iím not looking for Disney to go back up into the $40s or $50s. I only need it to go into the mid-$20s and Iíll be out of there at a profit. Right now Iím adding to positions in American Express, Disney, Scientific Atlanta, and Merrill Lynch.

     TWST:  Conversely, what are some of the stocks that you have recently sold or trimmed back on?

     Mr. Selengut:  I donít trim back: when Iím ready to take a profit, I take the profit. And anybody whoís in a profit position, I sell it. But over the last two weeks Iíve taken lots of profits. I canít think of a loss that Iíve taken recently on any of the companies Iíve held too long, and I rarely do take losses on good quality companies. I hold them a little bit longer and they eventually do come back. If not, Iíll exit at a portfolio ďhighĒ.

     Iíve taken quick profits recently in Allstate, Chubb, Lennar.  (I know that I just mentioned that Iím buying it again today.) Thatís the beauty of trading. The price is the same on day 1 and on day 17, but Iíve taken profits twice during the days between. Kind of boggles the mind, doesnít it. Makes no sense at all, but it works. I just got out of it last week and itís back down again where I can buy it. Other profits are MBNA, Nucor, Harley-Davidson, Exxon, CitiGroup, Home Depot, St. Paul Companies, Nike, and Royal Dutch. Royal Dutch is interesting because thatís one of the stocks that I originally started with 30+ years ago.

     TWST:  I was going to ask if you invested in foreign securities?

     Mr. Selengut:  Yes, good quality companies with their ADRs on the New York Stock Exchange, absolutely. I donít have a problem with that at all.

     TWST:  How much work do you do, Steve, on looking for sectors that are exhibiting growth?

     Mr. Selengut:  I really donít. Iím looking at what stocks that I own are going up. And, for example, just like theyíll go down as a group, similarly, a sector will go up as a group. When the retailers get ďhotĒ, I wonít own any of the May Department Stores, the Loweís, or the Wal-Mart, and such companies because Iíll have taken my profits in them and theyíll no long be what I consider cheap. At the same time, some other sector will probably get weak, and the new pariah group will wind up on my buy list. But I donít go searching and looking for strong groups. Iíd be more likely to be looking for weak groups than for strong groups.

     TWST:  And would you call yourself a market timer?    

     Mr. Selengut:  Not at all. No, I donít think market timing is possible. I consider myself, may be, a fundamental person, or some people have said my selection criteria and the way I look for a company to be down a certain amount, is somewhat technical in nature. I donít even know that I fall into the Contrarian category because a Contrarian, as far as I know, just does things the opposite and it could be one type of speculation as opposed to another. And I donít do any speculations. I do buy on weakness. I am a firm believer in a manís capability of buying things that are low and selling them when they are higher. And I think that makes a lot of sense. My latest client owns a pharmacy, and we were talking about my way of running a portfolio and how itís very similar to the way he runs his store. With the exception of the prescription drugs, he has all his over-the-counter stuff on the shelves. When somebody comes in for a bottle of aspirin, he doesnít say, ďNo, Iím waiting for the price of aspirin to go up so I can make more moneyĒ. He sells it. Heís got a mark-up on it; he sells it; he then finds something else that he puts it on his shelf. And thatís the same way I deal with stocks. Everything I own at any point in time is for sale if I get my price. And Iíll find something else to buy, and if thereís nothing there to buy right then, well Iíll just hold a little bit more money market than usual.

     TWST:  What are the reasons you would not invest in a companyís stock?

     Mr. Selengut:  If it doesnít pay a dividend, if itís not on the New York Stock Exchange, and if itís not rated B+ or better by S&P. And then thereís company management! What a joke. Iíve been in big business. When analysts say they like the companyís ďmanagementĒ, or that the company has ďgood managementĒ, it only makes me laugh. I just donít understand that type of comment. I know an awful lot of bad managers who had an awful lot of business degrees from all the right schools. It doesnít give them any more ability to turn a profit in an organization than somebody who came out of a small school like a Farleigh Dickinson.

The Peter Principal is about the most accurate book ever written about management in large corporations. Many companies now have ďco-CEOsĒ, and ďcommittee presidentsĒ. This is not management at all, thereís a hyphenated word for it.  Iím really just looking at the quality of the companyís products and services, its balance sheet ratios, and profitability (as reported by S & P). How it adds diversification to a clientís portfolio, and the ability for it to generate income (both dividends and capital gains) is what I am interested in. Thatís what Iím looking at.

     TWST:  Is there anything that is embraced by the investment community at the moment with which you particularly disagree?

     Mr. Selengut:  Is there anything that is embraced by the financial community with which I particularly agree would be a better question. For example, many advisors, right now, are going to say: ďWell this is a time to wait and see whatís going to happen. Thereís just too much uncertainty.Ē They talk about uncertainty as if there was such a thing as certainty. And as far as I know, that just doesnít exist, except in rear view mirrors. Management, all management, is done in conditions of uncertainty. You use certain rules, strategies, and procedures to reduce risk, but you donít know anything for sure until its too late. I might buy Exxon today, or sell Exxon today. I donít know if thatís right or wrong by anybody elseís standards. I know that if I sold at a profit Iím happy. Thereís no such thing as a bad profit.

But I donít think there is such a thing as ďcertaintyĒ, and I donít think there is ever a situation where you should stay out of the market because of the ďuncertaintyĒ. Wait and see is not a management concept. There is no room for non-decisions. There are always opportunities. I canít think of a time where I had nothing on my buy list. I create a new buy list every day, and Iíve never been in that position. And Iíve rarely been in a position where Iíve had nothing to sell for a profit. Even in the wake of a 500 point decline in the market, some stocks actually will go up. And in a situation like we have now, where there arenít as many profit-taking opportunities as there were earlier in the year, interest rates have been beaten down, which makes the fixed income side of my investment portfolios go up. And if I can take a profit on a closed-end bond fund, I sure will.

So thereís always something going on, and if youíre using a profit-taking discipline like mine, youíre always able to generate new, fresh capital that you can reinvest into weak areas (weak areas in the sense of price, not in the sense of quality).

     TWST:  What are some of the negative or positive surprises that you see that others are not anticipating?

     Mr. Selengut:  I really just go along on a day-to-day basis. I think you plan for the future by having a diversified portfolio where some of your products on your shelves are going to do better while others are not doing so well. And you take advantage of your strong points at the time and add to weaker positions. From day to day, I donít try to guess whatís going to happen in the stock market or in the interest rate environment and Iíve found over the years, over the long run, that it really doesnít matter a whole lot.

The stock market, right now, I guess, is at the same place it was four years ago, or three years ago? I think that points it out real clearly. During that period of time my portfolios are probably up 40%, but the indexes are flat. And the reason is because I generate income, I add to my positions, I take profits when theyíre there, and reinvest and reinvest some more. I really donít care what happens in the stock market tomorrow, or next week, or a year from now. The income generating capital in my managed portfolios will rise steadily. Wall Street pays thousands of people millions of dollars to convince you that they can predict the future. They easily succeed at the convincing part. The prediction part is out of their league.

     TWST:  Still, what do you think does lie ahead in the economy? I notice in the last interview, you said something that struck me, you said, ďWe live in a world where good news is interpreted as bad news.Ē 

                            Mr. Selengut:  I think you hear it all the time. The Wall Street media (press, radio, and television) provides great entertainment! One guy will report that the low unemployment numbers are inflationary and the market will tumble. Another time youíll hear about high unemployment being a good thing because the Fed will lower interest rates. Lower interest rates are good for some and bad for others, but this is never mentioned. Still, the prospect moves the market. Bloomberg radio is particularly laughable. They tell us the reason for everything. This is where professional investors go for entertainment. Why, for example, would anyone care about their exclusive New York metropolitan index? If youíve in the business, if youíre in this business, you find yourself laughing out loud on many occasions. Lately, weíve had the opposite, the market going down because more people are unemployed. But there are more problems with what the media routinely reports, so knowledgeably. You must have heard that one guy on the radio reporting that Microsoft was not going to be split up. ďWellĒ, he said, ďitís right next to the end of the quarter, so you are going to see a big spike in Microsoft stock as these investment managers go in there to pick it up now to show that they owned it, to show how smart they were.Ē And you just had to laugh. said, How stupid do you think the public is? Do you think they donít know? I used to work for a major investment management company, and they did similar things all the time. ďWhen we go to our quarterly meetings with our big clients, our big pension fund accounts, it doesnít matter if weíre smart as long as we look smart.Ē And thatís what they do. And most people will go out there and buy those mutual funds that look so smart. Anyway, I always try to take advantage of that situation. I always write to my clients about this thing that I call the November Syndrome. Managers getting out of stocks that have been weak push down prices as do people who are convinced it is smart to take losses to reduce their tax bite. I go out there and buy on this artificial weakness and, generally by the following February, Iíve got my profits.

     TWST:  Do you use mutual funds?
     Mr. Selengut:
  Only the type Iíve mentioned: I use closed-end municipal bond mutual funds, and for a client who wants me to start an investment portfolio for a child and Iíve only got $10,000-$15,000, Iíll used closed-end equity funds. Other than that, I donít use any mutual funds.

     TWST:  What other products does Sanco Services offer to prospective clients?

     Mr. Selengut:  The only products I have are my time, and a book or two that Iíve written. Thatís really it. I donít have any products. I donít sell any funds. I donít get any commissions. I donít have any conflicts of interest.

     TWST:  And what are your clients talking to you about these days? What are their concerns and expectations on the market?

     Mr. Selengut:  Generally, they donít contact me a whole lot, although I have received a lot of ďthank youĒs over the last year or so. Itís just that theyíre glad that I stuck to my conservative guns and didnít get involved in the speculative fever that backfired in their friendsí faces. But other than that, close to retirement, Iíll have somebody whoíll want to come in for a meeting and see when we want to start changing an allocation. I donít get a whole lot of talk because we set up a defined program right from the beginning, and it doesnít vary. There are no surprises. They know exactly the types of securities Iím going to be in and why theyíve been purchased. They know Iím going to sell a stock as soon as Iíve made a good profit, they know that thereís going to be a lot of income generated in the portfolio. They know that Iím going to keep 70% Equity, or a 60% Fixed Income allocation, so thereís not a whole lot to change unless something happens in their lives. Then we make appropriate and gradual changes. Rarely does a change need to take place overnight. It takes place over a period of time.

I had a guy recently who called me who said his partner was going to need a sum of cash from the portfolio I manage for them. And he told me that it would probably be needed in a period of two months and he knew that Iíd probably generate that kind of cash flow thought trading. ďBut donít reinvest it because youíre going to have to take it out.Ē So thatís the type of dialogue I have. They know what Iím going to do, they know how it produces, they know what the transactions are going to be, and they let me know if thereís going to be a change in direction, or if they need some cash. They call if they are going to be putting in money also. So I donít have conversations which are addressing other issues: ďWhatís going to happen if we go to full-fledged war? Whatís going to happen if we have another terrorist attack? Whatís going to happen if unemployment gets into the double digits?Ē We donít have those kinds of conversations because they pretty much know how Iím going to react.

     TWST:  Is there anything that you would like to add, to sum up the competitive strengths?

     Mr. Selengut:  First of all, investing is not a competitive event. It is a goal oriented, managed exercise. I think what Iíd like to add is something that I think this interview should emphasize. This is the fact that a very conservative approach (although very active and based on somewhat boring parameters) has, over a 25-year span, outperformed any other type of approach out there. And in the past three or four years, where we had a spectacular rise in things called averages and indexes, and then a spectacular fall, this particular strategy has not only kept my accounts whole, but has pushed them to all-time high profit levels. I think that this is really news!

I donít think you will find too many other Investment Managers, no matter how big or well respected they are, that could honestly tell a similar story. Iíve written a series of books that really explain to people how this can be done  by anybody. All that they need to do is to develop a disciplined approach to managing their money, and apply it consistently. They can do it themselves. Iíve put it all in writing and I think itís a big story that I canít afford to advertise like a Morgan Stanley, a Prudential, or a Merrill Lynch.

I know that Iíll never get any Street recognition, certainly. I donít really want it that bad, and I would never become one of ďtheirĒ managers. But I would hope that The Wall Street Transcript or some other publication that is trying to inform the public would certainly spread this news around. I have a four part series I call ďThe Investorís CreedĒ, and Iíd like to end with the title paragraph:

                 ďTHE INVESTORíS CREEDĒ 

ďMy intention is to be fully invested in accordance with my planned equity/fixed income asset allocation. On the other hand, every security I own is for sale, and every security I own generates some form of cash flow that cannot be reinvested immediately. I am happy when my cash position is nearly 0% because all of my money is then working as hard as it possibly can to meet my objectives. But, I am ecstatic when my cash position approaches 100% because that means Iíve sold everything at a profit, and that I am in a position to take advantage of any new investment opportunities (that fit my guidelines) as soon as I become aware of them.Ē 

      TWST:  Thank you.