Benj Gallander knows his readers are getting antsy.

They're anxious for hot tips, but he's stubbornly staying on the sidelines, waiting for what he sees as an inevitable downturn to get back into the market.

Sometime before year-end, the self-described contrarian, co-publisher of the Contra The Heard newsletter and author of financial guide called The Uncommon Investor, thinks stocks will tumble in a major way. And that's when he plans to start beefing up his portfolio.

"Last year, we bought the least amount that we have in 10 years and so far this year, we've bought even less," said Gallander, who is in Vancouver on his annual visit from Toronto. "We've cut back incredibly. We're not telling people to sell all their stocks and get out of the market, but we are urging them to selectively and aggressively prune."

The markets have been choppy because of lingering Y2K concerns, Gallander argued. Investors are uncertain so they react to every bit of news that comes out, he said, including things that would generally slide by at other times.

That nervousness and the attendant volatility are only going to increase as year-end approaches, he said.

As well, the last quarter is likely to see some slowdown for the high-flying tech companies that have been underpinning much of the market's bull run. As Y2K-related spending drops off, so will revenue and earnings for a lot of high-priced market leaders.

Gallander agrees that other projects that have been put on the backburner as the millennium looms may now reappear on corporate agendas. But he thinks that while they will make up for some lost Y2K spending, the momentum won't be the same.

Moreover, he warned that such delayed projects will take time to come on line.

Add in a lot of "insane valuations," rising oil prices, and concern about higher interest rates, and Gallander sees every reason to be bearish in the short-term.

"We are far more into cash than we've ever been and it's not because we're turning conservative," says Gallander, who puts out Contra The Heard with Seattle-based partner Ben Stadelmann. "We're sitting back and patiently waiting for opportunities that will develop. We've got about 100 companies on our stockwatch list, but we're biding our time."

Gallander and Stadelmann recommend only stocks that they own in their personal portfolio. The pair, who favour solid companies that they think have been beaten up and undervalued, have cut their holdings in the year to date to 24 issues from 31.

Several issues were eliminated because of mergers -- including Royal Lepage Ltd., Noma Industries Ltd., Unihost Corp., and Cambridge Shopping Centres Ltd.

Another two, Intertan Inc. which owns Radio Shack, and Navistar International Corp., were unloaded because Gallander figured they'd reached their peak.

A mere trio of companies has passed muster so far in 1999.

• Gallander said he likes Fleming Inc., a U.S. food distributor and grocery store operator because it has brought in a new chief executive -- a Walmart Alumni -- and is on the way to a turnaround.
  
  The company has had some struggles, but its sales remain at the $15 billion level. As well, there is considerable consolidation ongoing in the grocery industry, which could make it a potential takeover candidate.
  
  Moreover, whatever else happends in the economy, food wholesalers and retailers are in the "necessary field," Gallander said. "Everybody has to eat."
  
  He bought the stock at $7.625 US and he thinks it can hit $32.50, at which point he'll sell. Meanwhile, he's still recommending it as a "buy."
  
  
• Aur Resources Inc., a Toronto-based copper and zinc producer, is also on the buy list thanks to the improving outlook for commodities, the company's $50 million in cash, its experienced management and its lack of long-term debt.
  
  "It can hang on for quite awhile," said Gallander, who bought Aur at $1.91 and is now ranking it as a "hold."
  
  
• Tultex Corp., acquired at 62.5 cents US, is considered a highly speculative bet. Gallander said he decided "to take a flyer" because he likes the US apparel company's turnaround potential.
  
  The whole sector has been hit and many competitors have already hit the skids. "The question is whether Tultex can stay around long enough to rebound," said Gallander. "We like to think they can, but they can just as esily go bankrupt in three months."
  
  

Copyright Notice: Copyright © 1998 Barbara Aarsteinsen Reproduction of this article in whole or in part is prohibited without permission of the author.

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