He may not be the "Oracle of Omaha" Warren Buffett, of course but our own Charles Munger, chairman of Pasadena-based conglomerate and insurer Wesco Financial Inc., is a veteran and well-regarded investor in his own right.

Yet, while more than 10,000 of the faithful gather to hear Buffett speak every year at Berkshire Hathaway's annual pow-wow, attendance was perhaps a paltry couple hundred for Munger, when he regaled his followers at Wesco's annual meeting, held earlier this month.

Too bad. Munger offered up lucid insights for any that wished to listen, and entrance was free.

Right now, Munger thinks stocks are richly valued. Single-digit annual appreciation, at best, is probably in the cards for the next several years out. For stocks to keep rising long-term at double digits, a "Rembrandt effect" would have to take place. And that scenario is not a healthy one, warned Munger.

"If I'm wrong (about future stock market returns being in the mid-single digits), it could be for a bad reason. Stocks partly sell like bonds, based on expectations of future cash streams, and partly like Rembrandts, based on the fact that they've gone up in the past and are fashionable," Munger said. "If they trade more like Rembrandts in the future, then stocks will rise (at double digits), but they will have no anchors. In this case, it's hard to predict how far, how high and how long it will last."

But a sustained long-term rally could easily bring us to a Japan-like precipice, mused Munger. "This is not good. Look at what happened in Japan, where stocks traded at 50 to 60 times earnings. This led to a 10-year depression (after the stock market collapsed in the late 1980s)."

By the way, Munger fired a shot across the bow of those publicly held companies which are optimistically assuming that the overall stock market will appreciate at 9 percent, or even more, into the future. They are likely understating their true pension obligations, he suggested.

If Wall Street rallies less than the expected 9 percent or more, then those companies will have to cough up more in real money to meet pension obligations, Munger said.

Why are even Big 5 accounting shops letting Wall Street get away with such dreamy reporting? "Whose bread I eat, his song I sing," explained Munger.

In other words, Big 5 shops don't want to alienate paying customers. Publicly held companies want to report bigger profits, driving their stock prices up and remember, more and more executives these days have compensation packages tied to stock market performance.

Munger also took issue with public companies' liberal use of "one-time charges" against earnings, usually for writing off business flops. Often, such charges just cover for a poorly performing company. By the way, since Munger began running Wesco in 1970, its market capitalization has risen from $40 million to about $2 billion.

A "long slog," as Munger described it, and not as dramatic a story as that of Berkshire Hathaway, or Microsoft Corp., which were better plays for investors. "But there is always somebody who did better," observed Munger, and the track record isn't half bad.

So with Wall Street overvalued, what sector does Munger like? "Electricity is a huge field," he said. "It's enormously stupid to run short of electricity. There's an opportunity to make reasonable returns, and we're going to try."

Power Play

Perhaps sharing Munger's view is Ken Funsten, founder of the Marina del Rey-based money management shop Famco. Like Munger, Funsten thinks there are opportunities in energy, and he likes Denver-based Metretek Technologies Inc., which has several product lines, including one of installing electrical generation equipment onsite for industrial and commercial users.

The equipment can keep a business humming "even during a blackout," said Funsten. Many businesses, such as those which manufacture in large batches, or which run continuously, cannot afford unscheduled downtime, Funsten said.

Also getting action last week on Wall Street was another small cap named TechLite Inc., based in Tulsa, Okla., which retrofits existing commercial or industrial lighting to cut bills by 50 percent or more, while not cutting lighting levels. TechLite has announced that it is buying Sun & Sun Industries of Huntington Beach to broaden its geographic reach, and that it has been selected by New York-based GE Capital Real Estate to help cut energy bills at its portfolio properties.

Rally Time

Of decidedly a different point of view from Munger, at least on the prospects for profit on Wall Street, is John Marrone, managing director with brokerage firm Roth Capital Markets in West Los Angeles. The Federal Reserve Board is cutting rates and juicing the money supply, so "don't fight the Fed," Marrone advises.

Investors can take heart from minutes of the last Federal Open Market Committee meeting, which recently became public. Some market pundits have speculated that the Fed is concerned primarily with fighting inflation, and then economic growth, and rightly so. Helping investors win on Wall Street is not job No. 1.

But, in fact, Fed officials talk about the market, like everybody else, said Marrone, who perused the minutes. "There was real internal battle at the Fed," he said. "Contrary to what a lot of people are saying, the Fed is thinking about the stock market (and is) very concerned about the conditions" that rate hikes last year created for investors."

Fed Chief Alan Greenspan now has abruptly "taken his foot off the neck of Wall Street," said Marrone.

With Greenspan whipping the bull, "the shorts are scared to death," said Marrone.

As short sellers (who bet that stocks will do down, not up) throw in the towel, the Nasdaq this summer could easily rally past 3,000 and the Dow Jones Industrial Average past 12,000, said Marrone.

With literally trillions of dollars now "on the sidelines" in money market funds, a Wall Street upswing could draw new money into equity markets, begetting a longer and more-sustained rally, Marrone said.

Contributing columnist Benjamin Mark Cole writes about the local investment community for the Los Angeles Business Journal. His new book is "The Pied Pipers of Wall Street: How Analysts Sell You Down the River," published by Bloomberg Press. He can be reached at sevencontinents@mindspring.com.

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