Stock Smarts: Show Me the Money!
Big isn’t always better. In fact, when it comes to stocks, big has been downright bad. Take a look at some of these better-known large cap issues and the performance since April 19, 2000:
General Electric (GE): Down 33%
Intel (INTC): Down 49%
IBM (IBM): Down 15%
On the other hand, some lesser-known, under-the-radar investments have gone off during the same period:
Gold stocks: Up 55%
REITs: Up 46%
US Small-Cap Stocks: Up 30%
Big or small - which is the way to go?
Jonathan Hoenig of Capitalistpig Asset Management says “the trend is your friend,” and thinks the gold stocks, the REITs and the small cap stocks still have room to run, partly because a lot of people have not been investing in these issues. The opportunity is there, certainly more so than in the large cap stocks.
Dagen McDowell of FOX Business News thinks that the small cap stocks could keep on running up because of the “herd mentality,” in so much that as more people invest in these stocks, the higher the prices will go.
Jonas Max Ferris of Maxfunds.com says his main concern is that while gold stocks and REITs are performing well, the fundamentals that they are based on (gold and real estate) are not holding up right now. So he wonders how long the stocks can run up.
Hilary Kramer from Montgomery Asset Management says to watch out for the current “unfavorable sectors,” especially the pharmaceuticals. There is serious growth potential coming out of the recession in some of the large cap stocks that are beaten down right now.
Matt Kelmon of Kelmoore Investment Company likes the large cap stocks, also calling out the drug sector for opportunities. He thinks investors have to look ahead as opposed to behind, and with that in mind, a lot of large cap stocks are good plays because they have gone so low.
Show Me The Money Stocks!
Some members of the panel offered up some picks that could help you get back into the game and into the money.
Hilary – Teva Pharmaceuticals (TEVA). She says it’s a $50 stock that should be a $75 stock. Jonathan says it’s more like a $50 stock that should be a $30 stock – he would even consider shorting TEVA. Matt likes the play. (Hilary has a position in TEVA.)
Matt – Microsoft (MSFT). He thinks it’s a great buy at these levels. Hilary says it’s a good long-term play. Jonathan does not like the stock. (Matt has a position in MSFT.)
Jonathan – Dow Jones US Real Estate iShares (IYR). Jonathan still loves the REITs. Hilary and Matt both do not like this play. (Jonathan has a position in IYR.)
Mutual Fund Face-Off : The Best Exchange Traded Funds
Dagen: Vanguard Total Stock Market VIPER (VTI)
Year-to-date (as of 4-19-02): DOWN 1.2%
Share price: $105.18
Expenses: $1.50 for every $1,000 invested
Jonas: Dow Jones US Utilities iShares (IDU)
Year-to-date (as of 4-19-02): UP 2.9%
Share prices: $65.63
Expenses: $6.00 for every $1,000 invested
Dagen and Jonathan wrapped up the show by answering some email questions from viewers:
Question: “AT&T (T) has lost a lot over the past two years. With the reverse stock split, is it worth hanging onto?”
Jonathan: A reverse stock split is just a cosmetic change to make a stock look more attractive. Sell it.
Dagen: Not a good bet – long distance is a bad business.
Question: “I've been looking into small-cap value funds and I think I have a winner: N/I Numeric Investors Small Cap Value Fund (NISVX). Thoughts?”
Dagen: This is a really good fund, but it was recently closed to new investors. If you want to invest with this company, check out the N/I Numeric Investors Mid Cap Fund (NIGVX).
Jonathan: It’s all about asset allocation, and having some investments in small and mid cap stocks is a good play.
Question: "Is Qwest (Q) a good candidate for a short sale?"
Jonathan: Not at all. It’s already too low for a short play.
Dagen: If you short it at these levels, you are basically betting it will go out of business. Don’t do it.
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