Brenda Buttner was joined by: Gary B. Smith, RealMoney.com columnist; Pat Dorsey, director of stock research at Morningstar.com; Tobin Smith, founder and chairman of ChangeWave Research; Scott Bleier, president of HybridInvestors.com and Price Headley, BigTrends.com investment strategist.
Three years ago in the big bull market, if someone told you to invest in bonds, annuities or money markets you'd probably have laughed. But now? People are flocking to those investments like they were dot.coms in 1999.
And who can blame them? The Dow, Nasdaq, and S&P 500 are looking at three straight years in the red for the first time since before World War II.
But Scott said that if investors abandon stocks right now, they will be sorry later. As a matter of fact he thinks now is the time to buy stocks.
Price said that the current market is just too risky, because financial institutions are selling stocks. But, this trend should only continue until October, and that's when it will be safe to buy stocks again.
Tobin advised investors to buy stocks that are growing, have real cash flow, real earnings and also to stay away from once high flying tech stocks. He said there's more to investing than owning 5 tech stocks.
Gary B. said no one is going to know when the market hits its bottom, but he thinks now is the time to start buying stocks. He likened today's market conditions to 1975, and charted the Dow from 1975-1985. He said in 1975 people hated stocks, but by 1985 the Dow had made a 100% gain.
Pat emphasized that investors must have reasonable expectations of about a 7-8 percent return over next couple of years. He said if you set your expectations at this reasonable level, there are plenty of undervalued stocks.
Tobin said the world has changed, and so must your investing philosophy. Price indicated that the problem is that investors rotated out tech and rushed into anything but tech. But before the market bottoms, there will be a massive sell-off. Pat commented that a falling dollar will increase the value of foreign assets. Foreign stocks have had a bad 10-year run and are cheap relative to US stocks. Tobin agreed with Pat and said he especially likes Indonesian telecommunications company, P.T. Telekomunikasi (TLK).
Tobin, Scott, and Price were each asked to pick a stock that is risky but could be headed for a big payday.
So watch outyou've had your warningthere's risk ahead!
Price selected Gold Fields (GFI) because the gold market is in a bull market and he expects it to last the next couple of years. Tobin likes gold, especially in a terror filled world, but would wait for its price to drop a bit before buying. Scott expressed a bit of concern because it is up 150 percent this year, but thinks that Gold Fields is a good foreign gold stock to buy.
Tobin picked digital video game publisher, Take-Two Interactive Software (TTWO). He thinks the stock was beaten up too badly and is now very cheap when compared to its competitors. Also it has two big video games coming out soon. But, if there is any hint of more SEC investigations, the stock will take a hit. However, Tobin has been told that these investigations are over. He sees the stock going to $30. (It closed on Friday at $16.83.) Scott enunciated that if the company is clean, which is unclear at this moment, it is dirt-cheap. Price likes the video gaming sector, which grew 43 percent last year. He foresees short-term pain, but long-term gain for Take-Two.
Scott chose double-click (DCLK) as his profit or pain stock because it is a survivor of the internet. He said it has a great risk reward ratio and should double from its Friday close of $6.22. Tobin and Price both do not like the stock.
Consumers have been the big hope for the economy, but are retail stocks the best hope for the stock market?
Up first, the top US consumer electronics store, Best Buy.
Gary B. does not think the stock is a best buy and is bearish on it. He charted its performance since September, and said the stock has been in a death spiral since May.
Pat also does not like the stock, even though he admitted Best Buy is an extremely well run business. He thinks its best days are probably behind it and would not buy the stock unless it fell to the low $30's. (Best Buy closed at $36.73 on Friday.)
Next the duo gave their opinions on popular clothing retailer, Abercrombie & Fitch.
The "B" in Gary B's name must have stood for Bear this week, because he didn't like this stock either. He also charted this stock's performance since September, noticing that its uptrend has been broken and it has been locked in a downtrend since May.
Pat disagreed with the Chartman and likes the trendy clothing retailer because the company has great management and a solid balance sheet. Also, Abercrombie doesn't discount its clothesand gets away with it!