Laszlo Birinyi, the investor who correctly predicted financial stocks would tumble in October, said investors should sell banks and brokers after they surged during the past three weeks.

``You should look at the individual banks and realize that in the intermediate term, from now until the end of the year, they're going to struggle to make gains,'' Birinyi, who oversees more than $350 million as president of Birinyi Associates Inc. in Westport, Connecticut, said in an interview on Bloomberg Television.
``If you've made 10 percent in a stock in a month or two months, you've basically gotten a year's gain in 15 percent of a year's time.''
Birinyi said he is short selling Avon Products Inc., betting that the world's largest door-to-door cosmetics seller will slump. He favors shares of oil drillers and Apache Corp., an oil and gas producer.
The investor's model portfolios beat the Standard & Poor's 500 Index this year. The one using a ``trading'' strategy rose 8.1 percent during the first seven months of the year, according to the firm's August newsletter. The basket of ``growth'' stocks gained 5.1 percent, while the ``conservative'' shares dropped 9 percent. The S&P 500 lost more than 12 percent.
Avon has climbed 15 percent since it reported second-quarter profit that beat analysts' estimates last week on sales in Russia and Brazil. Apache has gained 3.3 percent this year and topped forecasts after crude prices surged to a record.
Birinyi's October warning that financial shares would drop preceded a 34 percent plunge in the S&P 500 Financials Index, spurred by writedowns and credit losses stemming from the subprime-mortgage market's collapse that exceeded $493 billion worldwide.
On July 14, Birinyi said investors should avoid most financial companies because their shares will probably keep declining. The group went on to surge 22 percent.
U.S. stocks rose yesterday, sending benchmark indexes to a six-week high, as better-than-estimated earnings at Cisco Systems Inc. spurred a rally in technology shares and falling gasoline inventories boosted fuel refiners. The S&P 500 declined 22 percent from its October record through July 15, and has since advanced 5.3 percent.
Birinyi said June 26 that buying and holding U.S. stocks is ``very treacherous'' because share prices are swinging too much. He reiterated that view today.
The S&P 500 fell today after American International Group Inc.'s unexpected loss dragged down financial shares and Wal-Mart Stores Inc.'s forecast for slower sales growth sent retailers lower. The index slumped 0.9 percent at 11:30 A.M. in New York.
Birinyi worked more than 10 years on the trading desk at Salomon Brothers Inc. before starting his research and money management firm in 1989. He is known for pioneering money flow analysis, which compares the dollar amounts moving into or out of a stock or index to establish whether it is being more aggressively bought or sold.
(Source: Bloomberg)