Stock Smarts: Stocks up! When?
Over the past 50 years, the S&P 500 has returned about 12% per year. However, the past three years has seen the market average a small decline of 1% annually.
When will the market begin to start climbing again?
Wayne Rogers of Wayne Rogers & Co. thinks that we are at or near the bottom, but is not really sure when a market recovery is going to happen. He says there is no volume in the markets. And while he does see the economy getting better, he still thinks there is a fear factor within the investment community that is a drag on a market recovery.
Jonathan Hoenig from Capitalistpig Asset Management doesn’t think we have hit the bottom yet, and he’s not convinced that stocks are going to be that much better off five years from now.
Hilary Kramer from the Cisneros Group says we are in an economic recovery. But the markets are still “negative event driven.” Whether it's terrorism or the Enron bankruptcy and subsequent government investigation, investors react to these events. She does think that if you look to the cyclical stocks, there are opportunities in this market. She sees the Nasdaq hitting 2500 by the end of 2002.
Dagen McDowell of Fox Business News thinks the best thing to do is have a balanced portfolio with cash and stocks, and she thinks that some of the small cap stocks are the ones where you will see some real growth.
Jonas Max Ferris of Maxfunds.com continues his theme of wanting to see real corporate earnings before he is convinced of a serious market rebound. He does see stocks moving back up in 2002, but he’s not sure if we will ever again see the days of 12% returns annually.
Some members of the panel offered up some stocks that they believe will make good investments for the long haul.
Jonathan: Central Parking (CPC). Jonathan likes the parking lot management industry and has a position in Central Parking. Hilary and Wayne do not see good growth here.
Hilary: Washington Mutual (WM). Hilary has a position in the financial services company. Wayne says he just doesn’t see enough growth here; Jonathan thinks there are better financial plays. He likes smaller banks and thrifts.
Wayne: Sprint PCS (PCS). Wayne has a position in the wireless phone company. Hilary likes the stock; Jonathan does not.
Mutual Fund Face-Off
Panel: Dagen and Jonas
Topic: The Best Bond Fund
Dagen: Vanguard Short-Term Bond Index (VBISX)
Minimum Investment: $3,000
Expenses: $2.10 for every $1,000 invested
Jonas: Columbia High-Yield Fund (CMHYX)
Minimum Investment: $1,000
Expenses: $8.50 for every $1,000 invested
Dagen and Jonathan wrapped up the show by answering some email questions from viewers:
Question: “I see nothing by good news on Cendant (CD), yet the stock is losing ground. Has the Enron scandal pushed it down?”
Jonathan: I’m starting to like the stock in terms of a potential large cap investment.
Dagen: Cendant has grown by acquiring business much like Enron and investors are avoiding these companies right now.
Question: “Any suggestions about the S&P 500 Index Fund? I’ve had it for about three years and have already lost plenty.”
Dagen: Don’t sell it now – that's a classic investing mistake of buying high and selling low. Over the long term, you really can’t beat the returns on the S&P 500 Index. Hold on.
Jonathan: I think this is going to underperform for a while.
Question: “Is it time to invest in I2 Technologies (ITWO)? This company has been called a ‘sleeping giant.’”
Jonathan: This stock should be put to sleep. Stay away.
Dagen: They are having some trouble selling their products. Not a good play.
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