Brenda Buttner and 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; Gregg Hymowitz, founder of EnTrust Capital.
Face it — we Americans are not savers. But saving is exactly what we're doing now. More money is going out of mutual funds than in, and people are even asking about passbook savings as a place to park their money.
It's been a truly awful month and a half. But how long will investors sit on piles of cash? Will that money eventually pour into the market in a stock explosion?
Pat said the improvements in consumer savings rate and debt levels are due to last year's tax cut. He cautioned that this is only a temporary effect and that unless there is some job growth in the economy, things are not looking too good for the consumer.
Tobin said there is nothing wrong with owning high yielding investments as a large part of your portfolio because you'd be 20-50 percent better off than just owning an index of stocks.
Gary B. charted the Nasdaq and showed that its current downtrend, which started in May, is proving to be too much to overcome. He said people still hate tech and he doesn't see that trend stopping until we hit Nasdaq 1000.
Gregg warned investors that now is the worst time to pull their money out of the market. He quoted Warren Buffett's advice, "Be greedy when people are fearful, and be fearful when people are greedy."
Scott agreed with Gregg and thinks now is the time to be in the market. He said individual investors have either taken their money out of the market or are waiting to break even (which he said will not happen).
It was time to get the hits, runs, and errors on the Scoreboard.
First, we took a look at the hits.
On March 30th, Scott said it was time to sell AOL (AOL), and since then the stock has fallen 38 percent. He said the company still has a lot of problems, but it is probably due for a short-term bounce.
Back in June 2001, Pat said that Home Depot (HD) would be dead money for the next year. His fundamentals nailed this one! The stock is down 25 percent. Pat still doesn't like the stock, and won't like it until it hits the low $30s.
On May 4th, Gary B. warned investors to stay away from Dynegy (DYN) and it has tumbled 55 percent. He charted the stock's performance and said it continues to be weak. He would only buy Dynegy if it closes above $8 and breaks its current downtrend line.
Just a couple of weeks ago, on June 22nd, Tobin said to buy Take-Two Software (TTWO). Now it's up 13 percent since his prediction and he thinks there are more profits to come.
Last December, Gregg came down against Disney (DIS) and said the economy and War on Terror was too much for that stock to overcome. To be fair, Disney did make a run higher, but has since fallen to a level lower than it was when he bashed it. Gregg wouldn't buy the stock right now, but he wouldn't short it at its current level.
Now, time for some of the errors.
On July 21, 2001 Gary B. said that Microsoft would double within a year, but the stock has dropped 21 percent. He looked at Microsoft's chart since that time and commented that he should have taken his own advice at the time and waited for the stock to make a new high. He thinks there is a good chance Microsoft will head past its September lows.
On June 1st, Gregg said to buy Citigroup (C) but it has fallen 8 percent since then. He still likes the stock and said if you cannot make money in this stock, the market is going nowhere.
Scott predicted on May 11th, that oil prices would rise and investors should buy Helmerich & Payne (HP). Well, oil prices aren't rising and neither is that stock. As a matter of fact, it's down 15 percent. But Scott thinks the stock is still cheap and still a buy.
Pat thought that the CYTYC (CYTC) sell-off was overdone back in the end of April and that it was time to buy it then. But apparently the sell-off still isn't over because the stock is down 54 percent. Pat fessed up and said he was wrong on this one. He explained what happened is that a merger he thought that was going to go through didn't. When that occurred, his thesis on the stock changed and it was time to sell.
On March 16th Tobin said that Amgen (AMGN) would head higher, but instead it's headed lower by 38 percent. Like Pat, Tobin said his thesis on this company changed due to problems in manufacturing.