1) The stock market has shrugged off hits that I would have expected to really hurt. Is this an indication that stocks are actually undervalued? — James
I think it's more a testament to our resilience as a country and a people. Americans are inherently upbeat. It takes a lot to knock us down, but it takes a lot more than that to keep us down. Keep in mind, the experts thought after September 11, 2001 we'd be entering a multi-year recession, that we wouldn't shop, wouldn't buy, wouldn't do much of anything. We now know retail sales were picking up within weeks of those attacks and that home sales were advancing barely two months after those attacks.
I think that says something about Americans' character. We're not easily cowed, and it's reflected in our markets. In the face of constant terror threats, corporate scandals, the bursting of a bubble, and rising short-term interest rates, the markets have climbed. What's more, investors have shrewdly searched out alternative investments, including real estate...all very smart moves.
I'm not smart enough to time the next move, but I suspect those who've made a killing in real estate will spread their wealth and hedge their bets and seek out values in the stock market. There are already signs that some investors are sniffing around technology again, given the NASDAQ's recent rise to levels not seen since the end of last year. These shifts are natural market occurrences. And I'm confident we'll see more, especially when the Federal Reserve finally gives the signal it is likely done hiking interest rates. That will only provide fuel to the fire, as it did the last time the Fed sent such a signal nearly a decade ago.
2) I'm a student working to pay for college. I own a debit card instead of a credit card, and I intend to stay as debt-free as possible. When would it be ever necessary to for me to take out a loan? — Charles
You're wise to be so fiscally prudent...now if I could just hook you up with my spendthrift daughter! Seriously though, while your aversion to debt is admirable, there are times when debt can be of some value. Right now, real estate is a good example. Interest rates are low, and homes, however a hot commodity, remain a good tax and long-term investment. Acquiring debt to buy a home, whose own appreciation is measurable over time, is productive. Going into the red to buy a fancy suit is not. The fact of the matter is that when you buy real estate, you're buying comfort, and for you, and your family someday, security. It shouldn't be regarded as a "get-rich" scheme. But it should be seen as a "get diversified" scheme, one in which prudent debt is acquired for very prudent reasons: building something of value that increases over time.
3) Will the imminent domain laws affect our investment in our new home in northern California? What are the risks now for those of us who bought real estate a year ago in neighborhoods that are not the greatest and may be targeted for "re-development?" This all sounds like the government extorting from us our rising value property, right? — Andrew, Magalia, CA
The Supreme Court's ruling on this matter deeply distresses me. It used to be that a town or city could kick you out of your home to make way for a fancy highway or bridge. Now, a shopping mall will do. That's worrisome. But the practical issue here is it's very impractical to implement and even tougher to get by local residents who might feel strongly otherwise. Having said that, I've always advised investors to take a very good look at location, location, location. It's the cardinal rule of real estate. The recent Court ruling adds a new twist to this: be on the buying side of areas undergoing development, or "gentrification," as new suburbanites call it, but be leery if you're already there and afraid of being bulldozed out. Unlikely, but worth watching.
4) What are the steps that America has to take to reduce our dependence on oil and lower the price of ordinary transportation in the United States? — Eddie A.
We have an energy crisis in this country. Period. Too many Americans chasing too little available oil. We have some basic choices to make here: we either continue to rely on those outside our country, or we start looking for alternatives "inside" this country. We need to boost our refinining capacity here as well. A friend in the energy sector recently told me, it's not so much the shortage of oil that worries him as much as the inability to refine what we have. So that said, boost refineries, and that done, boost conservation efforts too. It's a multi-pronged approach. The environmentalists are partly right, and so are the industrialists. I'd sooner see them acting in concert for the better of this country than tearing each other apart and not helping anyone in this country. Bottom line, once we develop and improve and conserve our own resources here, we won't be vulnerable to the swings, moods, and nastiness of the countries that produce a lot of this stuff over there.
5) What do you think about investing in the Iraqi dinar (new Iraqi currency), and do you have any tips if I decide to do so? — Kim, Fremont, CA
I'm the last person to offer you investment advice. I wouldn't, and couldn't. Suffice it to say, I'm bullish on this country, and longer-term, bullish on our markets. Over time, they go up. Investing in currencies is a whole different matter. For one thing, currencies swing violently and significantly. You really have to know what you're doing. Imagine the finesse you'd have to have investing in a country like Iraq, let alone its currency! Don't get me wrong, I'm impressed by what I've seen out of Iraqi financiers. Their market's improving, their economy's improving, you just don't hear about it. But the dinar is very thinly traded; perhaps you'd be wiser placing your bets in a basket of Middle Eastern markets that include Iraq and other up-and-coming economies. Know full well the region and its volatility. Some foreign exposure, either in stocks or currencies or bonds, or a combination of all of them, is always intriguing. But it should never be the whole shootin' works, regardless of the country, especially, for now at least, "this" country.
Neil Cavuto is vice president of business news at FOX News Channel and anchor of "Your World With Cavuto," the No.1 business news show on cable. He also hosts the wrap-up weekly program "Cavuto on Business."