Stock Smarts: Terror, Nukes or Martha?
We’re fighting terrorism, staring down nuclear weapons in Iraq and North Korea and watching the Feds take on Martha Stewart in court. And stocks still managed some gains last week:
Dow: UP 2.4 percent
Nasdaq: UP 2.0 percent
S&P 500: UP 2.5 percent
So which one of these threats should the market fear the most: Terror, Nukes or Martha?
Jonas Max Ferris of Maxfunds.com says scandals of the sort that Martha Stewart is accused of represent the most imminent threat to the market right now. Investors need to believe that investing is not a “rigged game” and each new “insider” scandal out of Wall Street further demonstrates that it investing is not a level playing field and the average investor will be a victimized if they take part. That is a huge threat to the market. He says, if federal regulators don’t bust the Enron Executives and the WorldCom executives responsible for losing so much investor money the market will suffer.
Hilary Kramer of A&G Capital says indicting Martha Stewart sends an important message to Wall Street: “Nobody is above the law.” She says that in the end Stewart’s indictment will be a good thing for the market. (It did rally more than 100 points the day she appeared in court.) But she thinks that the real threat to the market right now is terror. She says we are in bull market right now because there have been no terror attacks in America for some time.
Charles Payne of Wall Street Strategies agrees that terror represents the greatest sustainable threat to the market right now. He says corporate malfeasance is always going to be a “dark cloud” over Wall Street, but he thinks it’s fading away as a threat at this point, and investors are focused on the market’s own momentum. He says Martha Stewart is more of a social story than a stock market story: “It’s rich versus poor, it’s women’s justice versus justice for men, but it’s not a stock market story.”
Wayne Rogers of Wayne Rogers & Co agrees with Charles that the Stewart indictment is a social, and not a market, story. He questions why so many men on Wall Street have not been indicted like “the top guys at Enron, or Bernie Ebbers and the guys at WorldCom.” But he points out that the market has gotten over plenty of Wall Street scandal in the past and he thinks terror is still the biggest threat to the market right now.
Jonathan Hoenig of Capitalistpig Asset Management says what worries him about the Martha situation is that “in this country we are entitled to equal treatment under the law, and if Martha is being singled out because she’s rich, or successful, or a woman, I think that’s a real sad day in America.” As for the market, he says it looks like “investors are trusting corporate America a little bit more because we’ve seen a rally in stocks but corporate bonds are also really on fire here.”
Mutual Fund Face-Off: Peace Fund$
President Bush was in the Middle East last week looking to broker a deal for peace. Dagen and Jonas say that’s an investment opportunity. So what funds do they think will benefit from a peace pact?
Dagen – Driehuas Emerging Markets Growth Fund (DREGX)
Year-to-date performance (as of 6-6-03): UP 16.8 percent
Minimum investment: $10,000
Expenses: $21.60 for every $1,000 invested
Jonas – First Israel (ISL)
Year-to-date performance (as of 6-6-03): UP 40.8 percent
Minimum investment: $10.37
Expenses: $24.50 for every $1,000 invested
Cashin’ In Challenge
So who is taking charge of the $10,000 “Cashin’ In Challenge”?
Wayne bought 50 shares of Enterprise Products Partners (EPD) at $22.56 a share last week on June 2. He says it’s a large solid company that provides service to natural gas producers. He likes the business, the management, and the 7 percent dividend.