Okay, the Republican National Convention is over. Widespread fears of a terrorist action in America during this event have proved unwarranted. Likewise, John Kerry, beset by growing charges that he’s a flip-flopper, is slipping somewhat in the polls.

It’s all leading to a fair amount of speculation that the stock market might soon be treated to a Bush stock bounce that could turn a losing 2004 into a winning year.

One veteran money manager who sees such a scenario is Peter Vlochas, president of Manhattan-based Austin Capital Management (assets: $250 million).Wall Street likes stability, and the re-election of a president, which some polls are now beginning to suggest, is a strong market sign, clearly indicating stability, he said. He thinks market pressure stemming from fears of a Kerry win is already beginning to diminish as a result of his consistently wishy washy, unclear views.

Overall, Mr. Vlochas sees a Bush bounce that will produce about a 7% market gain between now and year’s end and roughly a 5% increase for all of 2004.

Adding to his bullish view of the market, he tells me, is an economy that continues to make progress. It’s not as strong as in the past, he notes, but it’ll still grow this year at 3.5%-plus. “Maybe that’s nothing to jump up and down about,” he adds, “but gee whiz, it’s still a positive number, especially when you factor in such additional pluses as strong productivity and low interest rates.”

Mr. Vlochas is putting his money where his mouth is; he’s practically fully invested. His favorite group is energy, particularly Baker Hughes, EnCana Corp., and Input/Output. He also likes drug companies, namely Schering-Plough and KOS Pharmaceuticals, and resource-related companies, notably Newmont Mining and Rio Tintopic. By the same token, he said he would shun retail stocks because he feels higher energy costs and rising interest rates will drain money from consumer spending.

Taking issue with Mr. Vlochas, Steve Goddard, president of the London Co., a Richmond, Va., money management firm (also with assets of $250 million), said: “I wouldn’t pounce on a Bush bounce because any such bounce, if we get one, will only be temporary.” Mr. Goddard, who accurately expressed a negative view of the 2004 market when I interviewed him last December, still doesn’t like what he sees. “Valuations (the S &P 500 is trading at 18 times trailing 12-month earnings) are excessive and I think we have another 20% to go on the downside,” he said.

Yet another sign to Mr. Goddard that the overall market is expensive can be seen in its relationship to GDP. The market has normally traded between 70% to 80% of GDP to a peak of 170% of GDP in March of 2000 when speculative fever was rampant. To generate double-digit market returns, he points out, we have to get back to 100% to 110% of GDP. We’re currently trading at 130% of GDP. He notes that before last year’s rally, we were at 90% of GDP.

As far as the election goes, Mr. Goddard argues it’s irrelevant who wins. The market, he said, will trade on fundamentals and valuation, not on who wins or loses. At this point, he believes the market will remain flat, at best, until profits catch up with stock prices. Adding to the problem, he went on, is that the accelerating profit growth we saw at the beginning of the year is slowing.

As for new stock purchases, he thinks the overwhelming emphasis should be on high quality, blue-chip investments, with the emphasis on drugs and consumer staples, such as Novartis, Pfizer, Anheuser-Busch and Cadbury Schweppes.

On another matter, he said he would shun technology stocks, including Internet companies, which he views as the market’s most overpriced sector. He’s also down on retail stocks, figuring higher energy costs and rising interest rates should drain money away from consumer spending. That may already be occurring, what with several big names yesterday reporting sluggish August sales.

The thing to keep in mind, Mr. Goddard concludes, is that “Bush bounce or no Bush bounce, there is still room for a major market decline.”

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Bush vs. Kerry: A Queens reader, Milton Roman, sent me an e-mail yesterday which read: “Dan, I read your column in which a Florida investment advisor, James DiGeorgia of the 21st Century Investor newsletter, predicted a landslide victory for John Kerry. I think he’s crazy. What do you think? Answer: I’m with you Milton. I figure it’s Bush-Cheney in a close race. Meanwhile, another reader, Bob Hunt of Hillsborough, N.J., e-mailed me to say he thought Mr. DiGeorgia’s view was “laughable.”