Money manager Charles Allmon says the Dow Jones industrial average closing above 10,000 is a meaningless milestone.

"It doesn't mean a thing to me," said Allmon, a Bethesda-based longtime bear who publishes the Growth Stock Outlook newsletter.

"It just means it's a fool's paradise, he said. "We don't have investors anymore. We have gamblers and fools out there buying stocks."

The United States is enjoying its longest postwar economic boom ever, and is consistently growing at a noninflationary pace. But investors fail to understand the significance of other economic indicators, Allmon said.

For example, three-quarters of mutual funds were down last year. Two-thirds of all common stocks declined in 1998. There is global deflation. The commodity index is at a 26-year low. And oil prices in the United States are at their lowest since the 1930s, adjusted for inflation.

Worst of all, Allmon said, there are about 100 stocks -- mainly technology and Internet companies -- that are keeping the market alive.

"No one's looking at risk. No one's looking at value. All people know is the market is going up," Allmon said.

Allmon has been a market watcher since the 1950s, and began publishing his newsletter in January 1965 while on staff at National Geographic. He left the magazine four years later and has been working on his newsletter full-time since then.

Allmon's approach is simple.

"I'm a bear when everyone else is bullish and vice versa," he said. "I'm not a crowd follower. I'm used to being called wrong."

Allmon has been extremely bearish since Oct. 19, 1987, when the market plunged by more than 500 points, a 22 percent drop. Months before the plunge, Allmon had predicted that the Dow could drop by as much as 160 points in one day, and go on to lose as much as 35 percent to 50 percent.

His current forecast, which he has held since 1997, is that the Dow would climb quite high before a decline of between 40 percent and 60 percent by 2000, plus or minus a year.

Beyond that, the market will either become a huge bear, or go sideways for 10 or 15 years, he said. "There's plenty of precedents for both," Allmon said.

"I will wager anybody five figures or six figures or seven figures that my forecast will be correct," he said.

"I haven't had a single taker, not even from the biggest windbags on Wall Street," he said.

Pub Date: 3/30/99