Stock Smarts: The Year of the Dow?
So far the Dow's been the star of 2002.
Dow Up 5.8%
Nasdaq Down 4.2%
S&P 500 Up 1.6%
Since Jan. 1
It didn’t seem possible a couple of months ago, but now it’s worth asking: could the Dow set a new record before year’s end? Maybe even by summer?
Dow All Time High: 11,723
Dow Friday: 10,607
Charles Payne of Wall Street Strategies says we have a real good chance to reach a new record. The only drawback he sees right now is a pattern of “comfort investing,” where people put money into companies they know, not necessary the best companies. He thinks financial stocks will pick in the latter half of the year.
Dagen McDowell of Fox Business News says that one thing the Dow does have going for it is a lack of “horrible” tech stocks to bring it down. Disagreeing with Charles, she thinks the financial stocks will be rocky in 2002.
Hilary Kramer from the Cisneros Group thinks we will hit 12,000 in the next 12 months as investors anticipate a full economic recovery over the next couple of years. She sees opportunities in the cyclicals, specifically media and oil services.
While Jonas Max Ferris of Maxfunds.com doesn’t see the fundamentals driving the market right now, he does see the Dow getting a boost from investors, who are tired of holding too much cash, getting back in into stocks.
Jonathan Hoenig of Capitalistpig Asset Management thinks we very well could see a record. But he still says the Dow is not the best place to put your money. Small stocks and foreign stocks are the plays. He points out the big indices like the Dow tend to rally in the latter part of a bull run, so the big moves on the Dow might not happen for a while.
Some members of the panel offered up some stock picks that they believe won’t buckle under the pressure of war and scandal the way many stocks have in recent months.
Hilary: Johnson & Johnson (JNJ): Charles and Jonathan both like the stock.
Jonathan: Templeton Global Income Fund (GIM): Charles and Hilary do not like the play – too risky.
Charles: Kraft (KFT): Jonathan says there are better food plays; Hilary likes the pick.
Mutual Fund Face-Off
Panel: Dagen and Jonas
Topic: The Best Global Fund
Dagen: American Funds Capital World Growth & Income Fund (CWGIX)
Minimum Investment: $250
Expenses: $7.80 for every $1,000 invested
Jonas: Atlas Global Growth Fund (AGRAX)
Minimum Investment: $2,500
Expenses: $8.50 for every $1,000 invested
Dagen and Jonathan wrapped up the show by answering some email questions from viewers:
Question: “What does it mean to 'short' a stock?”
Jonathan: It means that you are betting a stock will go down. The danger of short selling is that it’s a heavy risk.
Dagen: For normal investors, shorting can be very dangerous, since it is a speculative play.
Question: “Why isn’t Oracle (ORCL) a $30 stock?”
Dagen: Oracle doesn’t deserve to be a $30 stock. Corporate spending on tech just isn’t there right now, and that’s what Oracle needs for a boost.
Jonathan: It’s more likely for Oracle to become a $6 stock.
Question: “Panera Bread (PNRA) is up 150% in the last year with impressive growth. How long can it sustain this growth rate?”
Jonathan: Put a stop loss on it so that your brokers sells at least some if the stock falls say 5% or more, but this is a real good stock.
Dagen: The stock might look expensive, but it is a good buy.
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