Stock Smarts: Winning in a losing market.

It's been a rough summer for stocks.  The Dow traded below the 10,000 level last week for the first time since April. And as the economy continues to show signs of an extended period of slow growth, there seems to be no proverbial "light at the end of the tunnel" for investors. But can you win in a losing market? Are the any opportunities for gain in the current climate?

Jonathan Hoenig of Capitalist Pig Asset Management says not to look at the bad fundamental news, but to watch the stocks. He thinks that stocks will recover faster than the economy.

Hilary Kramer of The Cisneros Group agrees the market looks pretty scary right now, but she also says that it's always darkest before the dawn. She sees the stock market as a leading economic indicator, moving ahead of the economy.  Right now she likes sectors, like media and financials, that have been hurt by the economic slowdown. She believes these will comeback ahead of an economic recovery.

Todd Eberhard of Eberhard Investment Associates echoes Jonathan's sentiments to watch the stocks. He says to avoid looking at sectors and focus on individual stocks.

Keith Keenan of Wall Street Access thinks it's best to have some of your investments in cash. He also stresses to stay away from the tech sector as a whole.

So, which stocks are these folks buying now?

Hilary: Morgan Stanley (MWD)
Todd: P G & E Corporation (PCG)
Jonathan: Buenaventura (BVN)
Keith: Nabors Industries (NBR)
 
Mutual Fund Face Off

Panel:
Dagen McDowell of SmartMoney
Jonas Max Ferris of Maxfunds.com

Topic: What's The Best Telecom Fund?
It's among the worst performing sectors over the past year.  But if you're hoping for a comeback and plan to place a bet, which fund should you bet on?  Dagen and Jonas picked the two they like best and faced off.
 
Dagen  INVESCO Telecommunications Fund (ISWCX)
Jonas  T. Rowe Price Media and Telecom Fund (PRMTX)

Power Plan

Super-hunk Fabio made a killing when he invested in shares of Yahoo! (YHOO). But long after he sold his shares and took his profit, Fabio was tempted by the stock's dramatic fall in price.  He bought back in around the $100 level.  But the bubble had burst and Yahoo! hasn't seen triple digits since.  In fact it's trading in the $11 range now.
 
So what to do? Does Fabio ride this out and hope for the stock to make a run back to the level where it was bought? Or does he cut the losses and dump?

Jonathan says for Fabio to cut his losses and get rid of the stock now. He points out that Fabio had to pay a capital gains tax on his initial profits, and that it makes no sense to hold on to the losing shares when selling them would give him a loss to offset those gains on his next tax return.  If he still believes in Yahoo! as a long-term investment he can buy back his shares after 30 days. That way he gets the stock and the write-off.

Hilary Kramer says buying back into a stock that is falling after you've made a killing is tempting, but not always a good idea.  Hilary says you need to do some research before you try it because a lot may have changed since you last owned the stock.  She tells Fabio to dump Yahoo! and to look at stocks that should benefit from an economic recovery.  She likes Park Place Entertainment (PPE) and Six Flags (PKS), both leisure and entertainment companies.

Money Mail

Dagen and Jonathan wrapped up the show by answering some email question from
viewers.

If you want to have your question answered during the "Money Mail" segment,
email us at cash@foxnews.com.

Transcripts

If you are interested in receiving a transcript of the show, please
call 888-443-6988.