This is a partial transcript from "Your World with Neil Cavuto," March 14, 2006, that was edited for clarity.
NEIL CAVUTO, HOST: My next guest made a bundle on the baseball diamond, but he also lost a lot of it letting others manage his money. Today, Lenny Dykstra, the former three time All-Star, known to fans and enemies alike as "Nails," owns or heads up a variety of companies, is managing his own stock portfolio, with the help of that other guy, Richard Suttmeier, the chief market strategist for Joseph Stevens & Company.
Guys, good to have you.
RICHARD SUTTMEIER, CHIEF MARKET STRATEGIST, JOSEPH STEVENS & COMPANY, INC.: Thank you, Neil.
LENNY DYKSTRA, FORMER NEW YORK METS & PHILADELPHIA PHILLIES OUTFIELDER: Thanks for having me, Neil.
CAVUTO: Lenny, I didn't realize it, you're a darn good investor. But you practice a lot of Richard's strategies. What do you look for, bottom line, when you invest?
DYKSTRA: Yes. I am a good investor. And I'm not afraid to say that. I'm a winning investor. And I have a strategy that, unlike any of the people I know that invest, I buy deep-in-the-money calls, and I buy I buy deep-in-the-money calls to eliminate using margin.
See, to control stock, OK, meaning, like, for instance, Intel (INTC) right now is trading near $20. I love Intel. Well, I don't want to pay $20,000 for 1,000 shares. So, I will go out and buy a July $17.50 that I paid $2.75 for, meaning $2,750. I'm in control of 1,000 shares of Intel stock until the third Friday...
CAVUTO: So, you like options.
DYKSTRA: Only deep-in-the-money calls.
CAVUTO: I know. I know. But that's risky.
DYKSTRA: But what I do, Neil, is, actually, the lowest risk and the highest reward way you can approach the market.
And the reason I say that is, you have limited downside, meaning your cash that you pay for this option is the — you can't lose more than that. A stock can go to zero as we know — like Enron.
CAVUTO: Right. You can lose a whole investment.
DYKSTRA: You know, a good friend of mine is over there, kind of doing some work there.
Richard, I have had you as a guest many times. And this is part of a pretty grand strategy of yours. You have had a great track record over the many years I have known you.
But this isn't for amateurs, right? I mean, you have taught Lenny a lot. A lot of people are going to watching this, Richard, and thinking, gee, I can do the option thing, too. What do you tell them?
SUTTMEIER: The thing about this market and this strategy is, you want to be able to buy on weakness great companies that are out of favor in the market. Like, Intel right now, since it had a brokerage downgrade a few weeks ago, the stock went down to 20.
Lenny comes to me and he says, Rich, how low can this go? Where is your key support? And I tell him, I got a 1966 semi-annual support from my model. So, then, he goes back and uses that in his strategy to determine that he wants to use a 17-and-a-half deep-in-the-money call.
CAVUTO: All right. For God's sakes, Richard...
SUTTMEIER: Now, this strategy is not...
CAVUTO: I beg you to stop, because you're sounding like CNBC here. But, obviously...
CAVUTO: It's a brilliant strategy. You both are making money at it.
But, is there a theme, Lenny?
CAVUTO: Is there a general theme that you like, sectors that look good to you right now?
DYKSTRA: Well, I like the chemical sector — Dow Chemical (DOW), Lyondell Chemical (LYO), way undervalued.
Intel — I mean, right now, I'm buying as much Intel as I possibly can.
CAVUTO: What about other technology names, Lenny? Any others in that field?
DYKSTRA: Well, there's other names.
CAVUTO: Give me some.
DYKSTRA: But, see, that is why I'm a winning investor.
CAVUTO: Give me some. Lenny, people want to hear more.
DYKSTRA: Well, I don't — here's the thing about me.
I don't like to get involved in too many things. I like to stick with what I know.
Right now, I am dialed in on Intel. I know everything about them. I mean, we're talking about AMD (AMD) — it's like a September call-up, OK? They're getting called up. They're a flash in the pan. Yes, maybe they will stick in the big leagues. Maybe they won't.
Intel is a proven veteran player. They're going to be there no matter what. What do they spend on research?
CAVUTO: All right. All right, Lenny.