Question: JDS Uniphase Corporation (JDSU) dropped from $3.50 down to $2.70. It has been fluctuating in the high twos since. Will their new products out send their stock prices higher? Thanks — Steve
Mike Norman: I like your idea of looking at the techs. No question about it, they have been lagging for a long time and I predict that very soon, capital investment will return in a big way. Having said that, however, why would you want to gamble with a perennial money-losing company like JDSU when there are so many other great tech names to buy that have become so incredibly cheap? My advice, invest in Intel at $17 and do your gambling in Vegas.
Question: I currently have some stock in Baxter International (BAX). Is it time to dump this stock, seeing that it hasn't done anything in over a year? I would appreciate any advice you have. Thanks for your time. — Miller
Mike Norman: The stock appears to be a little overvalued at this time and could pull back some more, perhaps 15 or 20 percent. However, it is a good company in a very important field — health care — so if you are a long-term investor, I'd hang in there and add to this position if the price dips below 30 per share.
Question: With market correction, is Google (GOOG) going to hit 400 or higher? Thanks! — Mike
Mike Norman: In the late 1990s when everyone was playing the dotcom craze, Warren Buffet, the second richest man in the world (who made all his money investing in the stock market), decided to stay out because he said he "did not understand what was going on." He was ridiculed and chastised for this — however, in the end, Buffet's judgment proved correct. Similarly, I cannot give you advice on a company that trades at such a huge multiple because I have long stopped following it. However, I can tell you this: I recommended buying Google at $87 per share when it came out with its Initial Public Offering and I made that call on a segment of "Your World with Neil Cavuto," on FOX News.
Question: How do you feel about NovaStar Financial, Inc. (NFI)? Thanks — Todd
Mike Norman: Looks excellent! This is a money machine. Stay with it and be patient.
Question: How do you think the huge increase in government spending over the last few years is currently affecting the economy? I have been concerned about it being at least a partial factor in driving up interest rates because of its stimulating effect on the economy. Do you agree? — Greg
Mike Norman: Stop worrying. Government spending, as a percentage of GDP, is virtually unchanged compared to the so-called "surplus" years under former President Clinton. Moreover, even with oil at record levels, GDP growth above 5 percent and the Fed jacking rates up for two years straight, interest rates are still lower than where they were in 2000 at the peak of the surplus. Finally, there is no correlation between government spending and interest rates — NONE! In WWII, the deficit mushroomed sixfold and long-term interest rates stayed at 2.4 percent the entire time. More recently, the government of Japan built up the largest deficit in the history of the world (in order to jump-start their collapsing economy) and interest rates remained at zero. Do not believe all the debt doomsday propaganda. It's nonsense!