Stock Smarts: 2002 Money Maker$?

Early victories in the war against terrorism boosted confidence on Wall Street. But even with the fourth quarter rally, stocks finished 2001 down, marking a second consecutive losing year.

There were some winners in 2001, however:

Small Value Stocks: up 14.0%
REITs: up 13.0%
Bonds: up 8.4%

So what will work in 2002?

Bob Olstein, president of the Olstein Funds sees a difficult market in 2002. While he thinks the economy will begin to pick up and pull out of the recession, which doesn’t mean the entire market will rally forward. It is a stock pickers market. He does like the insurance and financial sectors.

Hilary Kramer of the Cisneros Group predicts a bull market for 2002, but it will be a volatile year. We are winning the war against terrorism, and will ultimately prevail, which will help the markets. She too sees a stock pickers market, and says you should look to companies that are ripe for takeover.

Jonathan Hoenig of Capitalist Pig Asset Management still likes the REITs in 2002, although don’t expect the same returns as 2001. He continues to stress that investors need to break the mindset of just investing in the large cap stocks. Portfolios must be diversified, combining both large cap and small cap stocks.

Jonas Max Ferris of Maxfunds.com likes the small cap value stocks, but he does not think they will perform as well as they have over the past two years.
He is looking abroad for possible plays in 2002.
 
Dagen McDowell from Fox Business News says you should look at the small cap growth stocks and funds in 2002, as these stocks tend to do well coming out of a recession.

Members of the panel offered up some “war-proof” stock for 2002: stocks that will be able to weather the storm of our war against terrorism.

Hilary: American Express (AXP). Jonathan thinks it is a weak stock; Bob likes the company and thinks the stock is fairly valued.

Jonathan: Northwest Natural Gas (NWN). Both Hilary and Bob like this stock.

Bob: Philip Morris (MO). Hilary says yes, a total “war-proof” play; Jonathan says no – the money’s been made with this one.
 
Mutual Fund Face-Off

Panel: Dagen McDowell and Jonas Max Ferris

Topic: The best new funds. Dagen and Jonas pick funds that have been in existence for less than 12 months.

Picks:

Dagen: Turner Tax Managed U.S. Equity Fund (TTMEX)

Date of inception: 2-28-01
Minimum investment: $2,500
Expenses: $12.50 for every $1,000 invested

Jonas: Royce Value Plus Fund (This fund does not have a ticker symbol.)

Date of inception: 6-15-01
Minimum investment: $2,000
Expenses: $14.90 for every $1,000 invested

Money Mail

Dagen and Jonathan wrapped up the show by answering some of your investment questions.

Question: “What is your outlook for Krispy Kreme (KKD)?”

Jonathan: Loves the stock (doesn’t own it, but is thinking about getting some)

Dagen: Too expensive – buy the donuts, not the stock.

Question: “Does the SEC regulate how long a mutual fund can hold contributions as cash before the money must be invested in stock?”

Dagen: Once you are in a fund, you own “shares” of whatever that fund owns. The manager might decide to put some of the fund’s assets in cash, so in that sense, part of your money will stay in cash.

Question: “How will gold mining stocks do in 2002?”

Jonathan: Loves the gold stocks.

Dagen: Bad – don’t get in.

Transcripts

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