Stock Smarts: Build Up, Stock Up?

U.S. planes, tanks and troops continue to gather in the Gulf, ready to strike on short notice. As the build-up for war intensifies over there, is it safe to stock up on stocks over here?
 
Wayne Rogers of Wayne Rogers & Co. says no - it is not safe to “stock up” on U.S. stocks. You have to be extremely selective. He echoes past sentiments that war brings uncertainty. He also notes that volume has shrunk, and that adds to his skepticism. He’s playing the run-up in gold – with stocks like GoldCorp (GG) which he bought a couple of months ago. And he says, news such as the Trent Lott scandal doesn’t mean much to the markets.

Jonathan Hoenig of Capitalistpig Asset Management says it is not time to jump back on the U.S. stock market bandwagon. He is interested in other investments, like gold and international stocks it is a good time to be a trader not investor – and that can mean shifting your positions. Don’t add to your positions in something like tech – but maybe expand your position in something that you don’t already have.

Gary Kaltbaum of TradingMarkets.com does not like anything right now. Gold breaking out has him worried about stocks – and the shape of the dollar has him worried as well. The world markets follow the U.S. markets – but they have been lagging a bit. You might see some seasonal strength in December, but on the whole, he sees a bear market continuing.

Dagen McDowell of Maxfunds.com says the new economic team, the new tax package, and all that comes with a possible war – points to having a diversified portfolio – U.S stocks, international stocks, gold. And she notes that trading is very difficult to do after transaction costs are figured in.

Hilary Kramer of Montgomery Asset Management says the new trend going forward will be international stocks and dividend yielding stocks. Emerging market stocks will come back after we have a new economic team in place.

“Stock Up” Stocks!

So which stocks should we be stocking up on right now?

Hilary's "Stock Up" Stock: Goldman Sachs (GS) 
52-week high: $97.25
52-week low: $58.57
Friday's close (12-13-02): $73.10

The stock has been unnecessarily depressed and Hilary likes it going forward – she says he market will rally over the next 18 months and this stock will benefit. Jonathan thinks this stock is really weak – but he does like the smaller banks. Wayne is pretty neutral on this stock – doesn’t see it in the charts. Gary is betting on the market going lower, so he doesn’t like this play.

Wayne's "Stock Up" Stock: PEC Solutions (PECS)
52-week high: $44.44
52-week low: $17.05
Friday's close (12-13-02): $30.59

Wayne likes this stock’s strong earnings, revenues, and the fact that it focuses on government solution. Jonathan says he doesn’t like betting on companies that depend on the government. Gary agrees – but he loves the company’s numbers. Hilary likes the pick.

Jon's "Stock Up" Stock: TELKOM (TLK)
52-week high: $9.90
52-week low: $5.06
Friday's close (12-13-02): $8.00

Jonathan likes this sector – international telecom -- but admits it is a risky play. Hilary thinks it is a great stock to buy right now.

Gary's "Stock Up" Stock: Anglogold (AU
52-week high: $34.66
52-week low: $17.26
Friday's close (12-13-02): $33.99

Gary likes the gold stocks right now. Jonathan likes other stocks in the sector – but still likes gold (he is buying more actual gold). Wayne thinks the stock is a little extended. Hilary thinks gold will go up, making this a good pick.

Mutual Fund Face-Off: Best Dividend Funds

Stocks that pay dividends could soon be even more popular if the President's economic team cuts taxes on those payouts. How can you cash in? Dagen and Jonas face-off over their favorites.

Dagen – T. Rowe Price Equity Income Fund (PRFDX)
Year-to-date (as of 12-13-02): DOWN 12.3 percent
Minimum Investment: $2,500
Expenses: $8.00 for every $1,000 invested

Jonas – Vanguard Dividend Growth Fund (VDIGX)
Year-to-date (as of 12-13-02): DOWN 22.2 percent
Minimum Investment: $3,000
Expenses: $3.70 for every $1,000 invested

Money Mail

Wayne, Jonas and Jonathan capped off the show by answering some of your questions.

Question: “Can anyone tell me what is going on with Qualcomm (QCOM)? I hear board members are dumping shares?”

Jonathan says insider selling doesn’t really matter – he pays more attention to the market. But Wayne disagrees – he says that insider selling shows you that members of the company have no faith. Jonas says they are selling QCOM because it is just too expensive.

Question: “I had $31,000 in my retirement fund until Janus Olympus (JAOLX) went from $55 to $21. Should I hold on or look for something else?”

Jonas says that a lot of people came into Janus a little too late – they (Janus) have totally changed their investment strategy and he says he would stay away from these funds right now. Jonathan says Janus is just so up-in-the-air right now, that it’s hard to buy them right now.

Question: “I'm 70 and still work part-time. I have a few shares of Microsoft (MSFT). Should I hang on to them?”

Wayne says Microsoft is a safe enough company – but if you need the money, why not sell it. Jonathan says to take some income-oriented risks with the money instead.

Question: “What do you think of L-3 (LLL)? I think it is a growth stock trading at value price.”

No one on the panel liked the stock.

Transcripts

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