Recap of Saturday, October 20

Stock Smarts: Investing During the War on Terror

With America’s war against terrorism now reacting to the threat of bio-terror, the climate on Wall Street continues to change on a daily basis. Should your investment strategy be geared towards putting money into proven companies, or is it the time to take some risks on smaller companies?

Take a look at how three of the most successful companies have fared since September 11:

General Electric (GE) Down 5%
Disney (DIS) Down 24%
Wal-mart (WMT) Up 12%

What is an investor to do? 

Dagen McDowell of SmartMoney magazine says we could be facing a long struggle again terrorism. And because of this, people should really focus on becoming long-term investors, as opposed to investors who trade stocks for quick profits. Of the three popular stocks the panel looked at, Dagen does not like Disney in particular.  Among other problems she says the media and entertainment giant has, Dagen says its ABC division is “dying on the vine.”

Jason Trennert of the ISI Group agrees that now is the time to think about safety when it comes to investing.  He says the focus should be on liquidity. Trennert says the economic landscape has changed since the attack on America and investors would be smart to look at large cap companies with proven growth. In terms of the specific stocks mentioned, he likes Disney and points out that Disney shares are trading at half of their 52-week high, and says his company believes that broadcast and media stocks do well coming out of a recession.

Hilary Kramer of the Cisneros Group thinks that the big shift in investment strategy will be in asset allocation.  She says investors who may have been comfortable putting more assets in stocks than in bonds, might now want a more equal division based on their personal “fear factor.”

Jonathan Hoenig of Capitalist Pig Asset Management says there's opportunity in every market, and that no matter what the situation (war or peace), investors want to be in good stocks. He points out that being a good company does not always translate into being a good stock. None of the big three mentioned at the top of the segment are screaming long-term buys to him right now.   He's betting against a rise in General Electric by shorting the stock.

Jonas Max Ferris of thinks that these stocks might be too popular, as they were bought up to ridiculously high levels during the 1990’s. He thinks that Disney is “one anthrax scare away from being a $10 stock.  He's also not a fan of GE.

Hilary, Jonathan and Jason then each picked a stock they didn't find attractive before the September 11, attack on America that they think makes good sense to buy now:

Hilary: Unilever (UL)

Jonathan: Templeton Global Income Fund (GIM)

Jason: Southwest Airlines (LUV)

Mutual Fund Face-Off

Topic: The best balanced fund

Panel: Dagen McDowell and Jonas Max Ferris


Dagen - Oakmark Equity & Income Fund (OAKBX)

Jonas - Dodge & Cox Balanced Fund (DODBX)

Money Mail

Dagen and Jonathan wrapped up the show by answering some email questions from viewers:

Question #1: How can we justify government bailouts of the airlines while they continue to pay their C.E.O.’s millions?

Dagen: Some airline executives are taking pay cuts (which they should be doing, she adds), but don’t feel sorry for these guys; they still made millions last year.

Question #2: What is your opinion of Honeywell (HON)? What will it be doing a year from now?

Jonathan: Not a screaming buy; at this point Honeywell is a weak stock.

Dagen: Honeywell is still a takeover target, so if you are a shareholder, you should hang on.

Question #3: Why haven’t interest rates on car loans and home equity loans come down as fast and as far as the Federal Funds rate?

Dagen: These rates have come down, as they do shadow moves by the Fed (the average fixed rate home equity loan has gone from 10% to under 9%).

Jonathan: Interest rates are low, and they will continue to drop.

If you want to have your question answered during the Money Mail segment, e-mail us at


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