Stock Smarts: Ka-Bull Market?

As the news from the war-front in Afghanistan continued to show the U.S. effort gaining momentum, stocks staged an offensive last week:

Dow Up 2.7%
NASDAQ Up 3.8%
S&P 500 Up 1.6%

Is this the launch of a new bull market?

Brian Finnerty of C.S. Unterberg Towbin loved the way the markets performed last week, and he thinks that this rally really had its start on September 24, after the post-attack lows of September 21. He does think that the markets might be a little bit ahead of themselves, but is still impressed with the move.

Jonathan Hoenig of Capitalistpig Asset Management notes that even though the major markets have rallied in the short term, they are still down year-to-date. And he thinks the major indices will continue to trade in a range for quite some time. But he mentions a “silent bull market” that has been trading throughout the year in some selected sectors, so those who do their homework and look at specific stocks have a lot to gain.

Hilary Kramer of the Cisneros Group sees the current rally continuing for a number of reasons. The news of clear victories in the war against terrorism is helping stocks to gain ground. She also mentions dropping oil prices as a positive factor, in addition to consumer confidence picking up.

Dagen McDowell of SmartMoney Magazine feels that people might be getting a little too eager in terms of reacting to the good news from the war. She notes that there is a lot of bad news that will continue to come, in the form of more layoffs, and the market has not factored that in yet.

Jonas Max Ferris from Maxfunds.com says that it is still all about earnings, and even with the rally, earnings aren’t picking up and valuations are still “out of whack.” The fundamentals for a sustained rally aren’t there.

Our panel then took a look at three popular stocks that have made major moves since the lows of September 21:

GE (GE) Up 31%
IBM (IBM) Up 27%
WAL-MART (WMT) Up 23%

Are these stocks too high to buy? We had Hilary, Jonathan and Brian tell us what they think these stocks are really worth:

GE

Hilary: $40
Jonathan: "Won't touch it at any price"
Brian: $44

11-16-01 Close: $40.85

IBM

Hilary: $85
Jonathan: $140
Brian: $134

11-16-01 Close: $114.50

Wal-Mart

Hilary: $75
Jonathan: $55
Brian: $62

11-16-01 Close: $55.10

Mutual Fund Face-Off

Topic: The best international fund

Panel: Dagen McDowell and Jonas Max Ferris

Picks:

Dagen - Tweedy, Browne Global Value Fund (TBGVX)

Jonas - Oakmark International Small Cap Fund (OAKEX)

Money Mail

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

Question #1: I am refinancing and was offered a 6.75% interest rate on a 30-year fixed mortgage. Can I beat that?

Dagen: 6.75% is pretty darn good. If you want to do some comparison shopping, go to Bankrate.com to check out a whole slew of different rates offered throughout the country.

Jonathan: Mortgage rates could come down some more. But if you need a mortgage right now it's a good rate.

Question #2: What do you think of EFT’s (Exchange Traded Funds)? Specifically, what do you think of the NASDAQ 100 Trust (QQQ)?

Jonathan: In theory, the EFT’s are fantastic. But the major markets are going to be trading in a narrow range for a while, so EFT’s aren’t necessarily the way to go for a long-term investment. Better for traders.

Dagen: Great for trading, bad for the long-term.

Question #3: What do you think about the Evergreen Premier 20 Fund (EPRAX)?

Dagen: There is nothing good to say about this fund.

Transcripts:

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