Stock Smarts: Where's $anta?

It's called the "Santa Claus" rally - and with good reason. The last two weeks of December are often the best two weeks of the year for stocks. But even with Friday's (12-20-02) gains, so far in December investors have only received a lump of coal. 

Is there any chance of a late Claus comeback?

Charles Payne of Wall Street Strategies thinks we will have a late Santa Claus rally. He notes that the market came up fast in October - and right now we are pausing. He expects a rally to come after Christmas. He also thinks that even though gold (as an investment) is tied to geopolitical risks and the dollar, both gold and stocks can be up at the same time.

Hilary Kramer of Montgomery Asset Management says that no one wants to put money on the table due to geopolitical risks - the war on terror, a potential war with Iraq and the current crisis in Venezuela. The resignation by Trent Lott is good for the markets because it helps President Bush - one less distraction, making it easier to get a tax package through Congress.

Jonas Max Ferris of Maxfunds.com says that the market has been pretty resilient, and he sees strength in the future. He thinks that investing in gold is just speculation - playing off of people feelings.

Wayne Rogers of Wayne Rogers & Co. we've had a good run up - but he doesn't see a big rally during and after the Christmas holiday. He does think gold is a great hedge against the dollar.

Jonathan Hoenig of Capitalistpig Asset Management there is money to be made, but not necessarily in the major indexes. You have to think beyond the major indexes - he is still looking at international telecom, bonds and gold. But basically he is in a holding pattern to wait and see what the market has in store.

Stocks for 2003

We like to say there is always a bull market somewhere. And that was true in 2002, even as 75% of the S&P 500 lost ground. So which if this year's winners will keep making you money in 2003?

Charles' 2003 Stock
Int'l Gaming Tech (IGT)
52-week high: $80.10
52-week low: $47.75
Friday's close (12-20-02): $74.30

This is a stock that will do well during any time. Hilary likes the pick. Wayne likes the pick too, saying there will be new gambling venues coming up all the time. Jonathan says it is a strong stock, but is concerned that the stock doesn't have much more left going forward.

Wayne's 2003 Stock
Vimple Communications (VIP)
52-week high: $36.40
52-week low: $20.62
Friday's close (12-20-02): $33.00
*Wayne owns this stock

Vimple is a Russian cell phone company - he loves the company's growth, and likes the stock at $30.00. Jonathan does like the international telecom sector. Charles doesn't think it's a bad play, but he prefers China as a growth area. Hilary says it's a great way to play the Russian market.

Hilary's 2003 Stock
Unilever (UL)
52-week high: $39.64
52-week low: $28.82
Friday's close (12-20-02): $37.27

Hilary says this is a great company to be in. Charles and Wayne see limited growth potential with this stock, as it trades in such a narrow range. Jonathan thinks it's a strong stock.

Jon's 2003 Stock
American Century Int'l Bond (BEGBX)  
52-week high: $12.13
52-week low: $9.81
Friday's close (12-20-02): $12.13
*Jonathan owns this fund

Jonathan thinks it is a great time to be an income-oriented investor - and this is a core holding for him. Wayne likes gold as a better alternative to stocks. Hilary thinks this is a good bond fund, but sees more opportunity in the international equity markets. Charles does think diversification is important, but he wouldn't be loading up on bonds right now.

Mutual Fund Face-Off: The Gift Exchange

Our fund foes have called a truce for the holidays - they've each brought a gift fund for the other.

Dagen's gift for Jonas - Vanguard LifeStrategy Growth Fund (VASGX)
Year-to-date (as of 12-20-02): DOWN 15.6%
Minimum Investment: $3,000
Expenses: $2.80 for every $1,000 invested

Jonas' gift for Dagen - Fidelity Spartan International Index Fund (FSIIX)
Year-to-date (as of 12-20-02): DOWN 17.6%
Minimum Investment: $15,000
 Expenses: $4.70 for every $1,000 invested 

MoneyMail

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

Question #1: "I bought McDonald's (MCD) at $27 last spring. It hit $30, then dropped like a stone. Should I sell?"

Wayne doesn't think this stock is going to turn it around - he would get out and take a tax loss. Jonathan says that for a while the restaurant sector was pretty strong, but now it is weak - he would trade out of MCD. Dagen thinks the price makes MCD appealing.

Question #2: "I have inherited $115,000 and want to invest in something that will give me 5-7% income. I am 59 years old."

Dagen says you can get close to 5% income from a corporate bond fund - she likes the Vanguard Intermediate-Term Corporate Bond Fund (VFICX). Wayne would look at AAA Bonds.

Question #3: "I am a beginning investor with limited funds. I have been told that penny stocks might work for me. Thoughts?"

Joanthan says a beginning investor with limited funds is really a "saver." When Jonathan thinks penny stocks, he thinks bad companies. But Wayne says there are penny stocks, like a Lucent, that are companies that could eventually turn it around.

Transcripts

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