Stock Smarts: Stock Market Enemy!

Is the rest of the world betting against America? Most of Europe isn’t backing us up as we try to make the world safe from Iraq, and now we find out they are bailing out of our stock market. In 2002, the European Union added about $11 billion to the U.S. stock market. That may sound like a lot, but not when you realize they put in $84 billion just two years ago in 2000.

Are foreign investors wrong to be throwing in the towel? 

Hilary Kramer of Montgomery Asset Management says that foreign investors are foolish to bail now. They think we are definitely going into Iraq, and that doesn’t sit well with them. But no matter what happens internationally, the U.S still has the strongest economy. However, Hilary does think that looking abroad with our investments makes good sense right now.

Dagen McDowell of FOX Business News says that in terms of foreign investors, Iraq is the key. It will be rough going until we actually do go into Iraq, but once that happens, the market will make a positive move, helping to bring back foreign investors.

Jonathan Hoenig of Capitalistpig Asset Management says it’s not the Europeans fault – no one says you have to be invested in U.S. stocks, and that’s the beauty of our free market system. Jonathan is looking overseas for some of his investments - both foreign stocks and foreign bonds.

Wayne Rogers of Wayne Rogers & Co. says that Europe suffers from an inferiority complex, and thinks that the foreign investors are really a non-entity. However, we do have an international economy, so we all are related in a certain respect.

Ned Riley of State Street Global Advisors says the foreign buyer is like the American retail buyer – both groups got in towards the top in 1998, and are now creating “irrational despair” buy bailing on the market.

The One Buy For 2003!

We asked our panel a simple question: if you had one stock to buy in 2003, what would it be? And the panel came up with some names that might bring you a happy New Year.

Hilary's One Buy: AIG (AIG)
52-week high: $80.45
52-week low: $47.61
Friday's close (12-27-02): $56.68

Hilary calls this stock the “800 pound gorilla” of the insurance industry, and the company’s size makes it the strongest in the sector – it should be a long-term holding. Wayne loves the stock (he owns shares). Ned likes the stock as well. Jonathan is not a fan.

Wayne's One Buy: Yahoo! (YHOO)
52-week high: $21.35
52-week low: $8.94
Friday's close (12-27-02): $16.58

Wayne thinks you could have a great gain percentage wise with Yahoo going forward in 2003. Jonathan agrees, and is seeing a little bull market in the Internet stocks, although he prefers the smaller Internet stocks. Hilary also likes the stock, but Ned does not.
 
Ned's One Buy: Nasdaq 100 (QQQ)
52-week high: $42.60
52-week low: $19.76
Friday's close (12-27-02): $24.79

Ned says the QQQ’s represent a lot of growth stocks, and is a great way to play the broad technology market. Hilary likes the play. Jonathan and Wayne are not thrilled about this pick – you should play specific stocks, not broad indices

Jonathan's One Buy: ASA Ltd. (ASA)
52-week high: $41.90
52-week low: $19.45
Friday's close (12-27-02): $41.78

Jonathan says this is a great way to play gold – it might seem like you are buying into the top, but if not now, when? Wayne also likes the gold play – he loves the chart for ASA. Hilary says when things get uncertain (like now), gold shines bright. Ned says for a short-term play, gold is great - but not for the long-term.

Mutual Fund Face-Off: Best Fund For 2003

What are the bets funds for 2003? Dagen and Jonas each came up with their picks for the New Year.

Dagen – T. Rowe Price Balanced Fund (RPBAX)
Year-to-date (as of 12-27-02): DOWN 8.3 percent
Minimum Investment: $2,500
Expenses: $8.30

Jonas – Payden High Income Fund (PYHRX)
Year-to-date (as of 12-27-02): UP 2.0 percent
Minimum Investment: $5,000
Expenses: $5.70 for every $1,000 invested

Money Mail

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

Question: “I bought BJ's (BJ) at $19.64 a couple of months ago, and it has stayed right about the same. Should I stay or go?”

Wayne says long-term this is a hold – it might drop down in the short-term, but the losses will be negligible. Jonas says the competition is too tough from other discount stores for this stock to do well.

Question: “What do you think of the Utilities Select SPRD (XLU)?”

Jonathan would look at smaller utilities as opposed to this play. Jonas thinks this is a pretty good play for the utilities sector, as opposed to a mutual fund. Wayne says this is a dividend play.

Question: “What is your outlook on JetBlue (JBLU)?”

Jonas calls JetBlue the Krispy Kreme of airlines – a great company, but long-term this is a terrible business. The only airline Jonathan would look at is Ryanair (RYAAY).

Transcripts

If you are interested in receiving a transcript of the show, please call 888-443-6988.