If you had any doubt that the securities industry is doing well, cast them aside and look at these numbers, courtesy of New York-based brokerage Smith Barney: There were 269,369 stockbrokers nationwide in the first quarter, an all-time record, and up a hefty 28.3 percent from 209,890 in the first quarter of 1991.

By the way, the major "wire houses" the Merrill Lynches, and the PaineWebbers are not leading the charge, according to Smith Barney researchers.

Industry growth, in terms of head count, is happening at regional brokerages, at investment banks, and at the discount chains.

The big boys have started to grow again in the last couple of years, but have had it tough because of discounters that offer to trade for less, according to the study.

A word from Snavely

Chairman and Chief Executive H. Wayne Snavely of Torrance-based Imperial Credit Industries Inc., the lender that Snavely has diversified in recent years with spectacular results on profits and on Wall Street, dropped us a note last week.

As you may recall, Snavely is now one-third of a three-man executive team leading Dabney/Resnick/Imperial LLC, the Beverly Hills brokerage. Imperial Credit, under Snavely stewardship, extended a convertible loan to the brokerage, which Snavely said he intends to convert into a controlling stake. Co-founder Judy Resnick remains a part-owner and chairman of the firm, which recently laid off its equity department.

At any rate, Snavely tells us that Imperial Credit is using, and intends to further use, Dabney/Resnick as a funnel to place Imperial's debt and we are talking big dollars.

"(Imperial Credit) annually issues in both equity and debt approximately $2 billion in securities, in most of which Dabney/Resnick/Imperial will be able to participate," wrote Snavely.

Long story short: Dabney/Resnick will do fine, somewhat on the basis of underwriting and placing Imperial-originated debt, said Snavely.

As proof of the pudding, Snavely sent along a prospectus for a $174.6 million mortgage pass-through underwriting, in which Dabney/Resnick is an underwriter, along with such big names as J.P. Morgan & Co. and Morgan Stanley Dean Witter.

By the way, the Imperial Credit prospectus has a floppy disk attached to the inside cover. The disk contains additional financial information and spreadsheets on the mortgages and the offering. It's the first time I have ever seen a computer disk attached to a prospectus.


In the past five, 10 or 15 years, the plain vanilla U.S. stock market has trounced just about every other investment class, be it gold, overseas equities markets, real estate, bonds, or stamps and coins.

So it is no great surprise to learn that stocks have also beaten convertible bonds since 1975, according to the Westwood-based Froley Revy Investment Co. Inc., a money manager specializing in convertibles.

(For those unencumbered by a lot of financial jargon, a convertible bond is a corporate debt issue that can be exchanged for stock in a company, when certain conditions are met.)

From the start of 1975 through the first quarter of 1997, the S & P; 500 index is up at a 15.87 annually compounded rate, vs. a not-bad 14.87 rate for convertibles (based on a Froley, Revy index of 50 convertible issues), according to the firm's July newsletter.

The old theory on convertibles is that they should outperform the stock market in the long run. In an up market, convertibles would capture most of the upswing, but in down markets, the interest-bearing bonds would offer some protection because of their yield. Hold a mix of convertibles through a couple of market cycles, and you'll come out ahead that's the idea.

But the long, long bull market has gored a lot of expectations, as it has been many moons since we have seen a sustained bear market. We saw the last market cycle about the time buffalo nickels disappeared from circulation.

Therefore, for the past 15 years, all the usual bromides such as, "Diversify your asset classes" haven't worked. What has worked is being in the market.

Of course, nothing lasts forever.

Still, people only live so many years, and have even fewer years in which they can invest. If this bull market continues very much longer, it could conceivably end up encompassing most of the prime "investment years" of many people say, the years between 45 and 65, as higher incomes are earned, but before retirement.

In fact with the advantage of hindsight those people would have been better off in the stock market, and not diversified into other asset classes.

It is interesting to ponder this: Will the resolve (some say obsession) of the Federal Reserve (governor of the nation's money supply) to fight inflation result in a long-term trend of slow growth and low inflation? If so, what kind of asset diversification makes sense?

GE Capital

The idea of industry consolidation, also called "roll-ups," is one of the hottest investment plays of our time. The idea is simple: Find an industry that is fragmented and then, through financial resources, acquisitions and superior management, create a national player.

(The publicly held Santa Monica-based Veterinary Centers of America Inc., is the idea in action. They are creating a national chain of veterinary facilities.)

Mark Gudis, senior vice president in the Beverly Hills branch of GE Capital Services, has just extended $64.5 million in loans to Colorado-based Aspen Marketing Services Inc., which plans a roll-up in what is called the "promotional and incentive marketing businesses."

One example of promotional marketing: The ads you see attached to your credit card bills, entreating you to buy a miniature boom-box for $9.95.

GE Capital, through its merchant-banking operation, will also take equity in the deal. GE Capital is an arm of Fairfield, Ct.-based General Electric Co.

The major owner of Aspen is none other than an investment fund formed by our own West Los Angeles-based venture capital firm Brentwood Associates.

Brentwood had merged together two industry leaders in the promotional marketing business, and was seeking capital for expansion and acquisition, said Gudis, who just joined GE Capital this year.

Gudis is looking to finance deals in the $25 million to $500 million bracket, although he says his "power zone" is from $50 million to $250 million.

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