When Bernie McGinn Talks, People Listen

Photo by John Arundel To make a comparison with the Great Depression is just stupid and irresponsible," Bernie said. "Taking a short view will scare an investor off."

To paraphrase the once-famous E.F. Hutton ad of some years ago, when Bernie McGinn talks, people listen.

And these days, a cratering economy and a stock market which moves in violent swings is on just about everyone’s mind.  
 
To sort it all out, last week we thought we'd drop in on a top-rated portfolio manager. Bernie McGinn is the founder of McGinn Investment Management, Inc., with offices on the waterfront.
 
For 27 years, affluent clients have sought him out for his time-tested advice on money management, asset allocation and stock-picking.

Photo by John Arundel For 27 years, affluent clients have sought Bernie out for his time-tested advice on money management, asset allocation and stock-picking. Lately, with his large cap value-oriented equity fund up more than 50 percent since the market lows set March 9, the media has been making a bee line to his door.

Lately, with his large cap value-oriented equity fund up more than 50 percent since the market lows set  March 9 (after taking a pounding in 2008, like everyone else), the media has been making a bee line to his door.
 
The Wall Street Journal, Business Week, CNBC, Fox Business News, Marketwatch and CNN’s popular Lou Dobbs Tonight program have all been talking to Bernie by phone and in the studio, ferreting out his views on stocks and the economy.
 
A few weeks ago, a television news crew from Fox 5 even followed him up to Don Beyer Volvo on Route 1, where he met up with his longtime friend and Old Town neighbor Don Beyer to purchase a new car.
 
It seems like everyone in the media wants to get a piece of Bernie these days.
 
After calling so many stocks right and ranking in the top five percent of all value managers over the past 5-, 10- and 15- year periods, the business media cannot afford to risk getting it wrong again, after relying on the opinions of so many Wall Street analysts, some of whose picks were tainted by the investment management fees they were charging to clients.
 
One of Bernie's especially hot picks this year was Ford Motor Co. (which has owned Swedish brand Volvo Cars since 1999). In an appearance on St. Patrick's Day on CNBC, longtime anchor Mark Haines nearly laughed himself out of his chair when McGinn said he saw a lot of "green" in the Detroit automaker, and rated it a "buy."
 
The last laugh turned out to be on Haines.
 
Since his CNBC appearance, Ford's stock is up 65.2 percent. It announced that it's spinning off Volvo and it's the only one of the Big 3 Detroit automakers not in bankruptcy. McGinn even received a congratulatory email from Ford's CEO, Alan Mullaly, for sticking by the troubled company.  
 

Photo by John Arundel Together with his team of four investment advisors, Bernie has provided comprehensive money management services to high-end clients since 1991. Pictured here outside his office across from the Torpedo Factory is Assistant Portfolio Manager John Hurabiell (left) and Chief Compliance Officer Alicia H. Broehl (right).

Invited back on to the cable network recently (it appears they track their guests' picks closely), McGinn said, "The turnaround story is obviously exceeding expectations, and what's happening now is that the story is getting out into the investment community," McGinn told CNBC.  "The management team at Ford is starting to get the recognition that they're due."

McGinn is also a believer in the big drugmaker Pfizer. "It's kind of a boring story, but I think that over the next year or so, you'll see 40+ percent on a turnaround," he told Haines. Also rating high on McGinn's picks is Johnson & Johnson.  "They have continued to be strong," he said. "They continue to grow their international businesses at a good pace."

While McGinn sees signs of hope for the economy, he believes a recovery will be uneven. "Half of people think we're improving," he said. "Half of people think it's getting worse. And nobody really knows."
 
McGinn’s down-to-earth, unassuming and reassuring manner are a refreshing change from so much media fear-mongering.  

"You have to take a broad view," Bernie advises. "On average the American stock market provides an annual rate of return of around 10 percent.  Experiences such as last year are exceptional circumstances.  Unlike the Great Depression, we now have more protections for investors."
 
In short, when Bernie talks, people listen.
 
Together with his team of four other investment advisors, Bernie has provided comprehensive money management services to high-end clients since 1991, after an early career at Merrill Lynch.  Clients of his registered investment firm include individuals, families, pension plans and charitable trusts.  
 
Bernie was critical of members of the media who made hay with last year’s economic turmoil.  
 

Lately, with his large cap value-oriented equity fund up more than 50 percent since the market lows set March 9 (after taking a pounding in 2008, like everyone else), the media has been making a bee line to his door. Here, McGinn makes an appearance on Fox Business News with anchor Stuart Varney.

“To make a comparison with the Great Depression is just stupid and irresponsible," he said. "Taking a short view will scare an investor off.  While it is true that a company like Hewlett-Packard is down 20 percent right now, that value could double in a year.  HP continues to make a quality product that people need.”
 
Bernie said investors should always seek investments whose rate of return will outpace the rate of inflation for the period of the investment.  “Otherwise you have not added to your principal.  And when you take out taxes, you may have even lost money.”
 
McGinn maintains his confidence in the U.S. market.  
 
“American culture is strongly entrepreneurial," he said. "We continue to see people like Bill Gates create value and create wealth.  Gates not only made himself wealthy, he made many of his stockholders wealthy too.  They were willing to take a chance on his company.”  
 
He advises investors who have taken “a whipping” in their 401-K's last year to stay the course. “Look at the U.S. economy and the global economy,” he added, “what you see is growth, value and wealth creation.  Last year was an exception.”
 
Bernie said he believes the U.S. economy is still a great place to invest.  
 
“No short-term phenomenon is going to stop the entrepreneurial spirit of America," he said, "and I view last year’s events as short-term phenomena.”  
 
McGinn Investment Management is online at www.mcginninvests.com.
 
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