Stock Smarts: Nasdaq 5000 Three Years Later
Three years ago we had peace, prosperity and a sizzling hot stock market. Monday, March 10, 2003 marks the third anniversary of the Nasdaq’s all-time closing high of 5,048. And how things have changed:
Since Nasdaq 5,048:
CEOs were heroes
CEOs are villains
Friday's Close: 1,305
Back then it seems we had a perfect storm of positive news boosting the market. Now it appears we have the reverse. So where to from here?
Charles Payne of Wall Street Strategies says there’s a new paradigm for the market that he calls “The Age of Meandering.” He says we will be in a range-bound market for a long time where we will see periodic rallies. He points to the amount of money that is on the sidelines and says occasionally that money will go to work causing magnificent spikes like the one we saw in October. But for the most part the market’s fundamentals will take a while to recover. He says on a psychological level investors need to become accustomed to living with terrorism and geopolitical concerns and he doesn’t think we have done that yet. Still, he thinks a bull market doesn’t mean that the Dow goes up 100 to 200 points a day - it means that the bias is to the upside, and we could get there in another year.
Jonathan Hoenig of Capitalistpig Asset Management thinks the next move for the market is lower. He points out that the Japanese stock market has remained depressed for twenty years, which proves that a market that is down doesn’t necessarily bounce back quickly. He says if you are too skittish to short the major indices here, the best way to try and make money is in bonds, as it’s the only bull market right now.
Jonas Max Ferris of MAXfunds.com points out that the war situation is the biggest fiscal event for the global economy in our time, and he says the only reason the bonds are still rallying is because people are running to their perceived relative safety. But he says on a psychological level, all the negative news could signal an approaching end to the downside for stocks in the same way that the perfect storm of positive news in March 2000 turned out to be an end to the market’s upswing.
Hilary Kramer of FOX Business News says the market is entirely focused on war and the psychological impact of going to war and liberating Iraq will free up money and send it flowing into the market. But she says you need to stay balanced between stocks and bonds.
Dagen McDowell of FOX Business News agrees that a quick victory in Iraq could force the money that is on the sidelines into the market and turn it around very quickly.
Cash Count: Some Past Stock Picks
Hilary's Loser: American Express (AXP)
Picked on Jan. 5, 2002
DOWN 12 percent since then
Friday's close (3-7-03): $33.07
Hilary points out that she misspoke last week when she said she had recommended AXP at lower prices. In fact, the stock was trading higher when she recommended it on past shows, but she says she still likes it and it will enjoy a comeback when war concerns are over.
Hilary's Winner: Intel (INTC)
Picked on Oct. 5, 2002
UP 17 percent since then
Friday's close (3-7-03): $16.01
Hilary still like Intel. She says a new chip for wireless computers will improve profits at this company.