Question: Why did the Fed chairman raise interest rates again? The stock market was almost at an all-time high, and now it's cooled off! — Renee (Baltimore, MD)
Gary Kaltbaum: Renee, you and I are in the same camp. We both don't understand the reasoning behind what the Fed has been doing. They say everything is fine. They say inflation is under control. They say don't worry about housing. They say don't worry about debt. And then, they go and raise the cost of capital for everyone, which could hurt the economy. It seems like they are chasing shadows with no method to their madness. I believe we are watching the second installment of "One Flew Over the Cuckoo's Nest."
Question: Do you think Titanium Metals (TIE) is a good investment, or is this run up in price just short term? — Christina (Texas)
Gary Kaltbaum: TIE has been a monster stock over the past year. The most important words are "has been" as it is already up 8-fold in a year. It has also had three 2 for 1 stock splits in seven months. I am not saying it won't go higher. I am just saying risk has picked up in a very big way and would be very cautious.
Question: I'm looking to invest in a large, multifaceted manufacturing corporation, and BASF (BF) seems like a pretty solid and secure stock to hold. That said, there hasn't been much movement either way lately. Is it worth it to buy? — Rich (Derry, NH)
Gary Kaltbaum: BF is up 35% in the last year...and that's not chopped liver. It's a good company with decent numbers, but I would feel a lot more comfortable buying in the mid to high 70s on a pullback.
Question: What's your opinion of Ryland (RYL)? The stock has plummeted 20 points since January, and now, it looks dirt cheap. Should I buy it? When are homebuilding stocks going to turn around? — Nick (Maple Valley, Washington)
Gary Kaltbaum: Ryland (RYL) may be dirt cheap right now but earnings are going to fall off a cliff as housing starts are going down and prices are being discounted. Ryland could bounce at any time with the rest of the homebuilders, but one must recognize when a group is in a bear market — and this group is in a bear market.
Question: I bought E*Trade (ET) at the prices $16.50. Should I sell this stock now, or wait? Thank you — Dee (MN)
Gary Kaltbaum: Congratulations on a great stock pick. Your job is to now manage the position by picking a place YOU ARE comfortable with if it starts to move down, and get out with a good profit. If it never gets there, you are going to make more money. Keep in mind, ET is somewhat of a market proxy. If the market gets in trouble, ET will go along for the ride.