Stock Smarts: Battle Line$
The “Axis of Evil.” President Bush named Iraq, Iran and North Korea as a triumvirate of evil empires that the United States could target for military attacks. Will an expansion of might help or hurt stocks?
Joe Battipaglia of Gruntal & Co. says the U.S has to really show what it means in terms of going after the new targets. Diplomatic efforts? All out military strikes? We need to know this, and the best thing for the markets is decisive action. He does see this year as being good for stocks, as the country will pull out of recession with the help of deficit spending.
Dagen McDowell of Fox Business News says the markets are already jittery, and the thought of an expanded war coupled with the accounting questions and problems now facing corporate America is bad for the market.
Hilary Kramer of the Cisneros Group thinks that we can win any war, but she really doesn’t see us as a country launching an all-out attack on the "Axis of Evil". The markets are going to do well as the economy rebounds and our success continues with the war against terrorism.
Jonas Max Ferris of Maxfunds.com says that the government keeps on spending and spending, and that adds up to real money. Jonas feels that all of the spending is a negative for the markets.
Jonathan Hoenig of Capitalistpig Asset Management echoes Jonas’ sentiments of heavy government spending being bad for the markets. We had a clear mission after 9/11, and that was good for stocks. The idea of expanding the war is something the markets do not like as it adds uncertainty. He continues to stress being a selective stock picker.
Sinful Stock Buys
Boozing, Betting and all around bad behavior, Super Bowl Sunday has it all. In honor of this year's game in New Orleans, the Cashin' In crew offered up some sinful stock picks.
Hilary: Park Place Entertainment (PPE): Joe likes the play; Jonathan likes the sector, but not this specific stock.
Joe: MGM Mirage (MGG): Jonathan and Hilary like the stock.
Jonathan: Sonic (SONC): Hilary likes the pick; Joe does not, although he thinks the restaurant sector as a whole is a good place to be.
Mutual Fund Face-Off
Panel: Dagen and Jonas
Topic: Worst To First? Can a fund that was in the tank in 2001 make a run in 2002? Our panel picked two dogs from last year that they feel will be back big this year.
Jonas: Payden European Aggressive Growth Fund (PAYDX)
2001 performance: DOWN 43.4%
Minimum Investment: $5,000
Dagen: ABN AMRO Veredes Aggressive Growth Fund (VERDX)
2001 performance: DOWN 13.2%
Minimum Investment: $2,500
Dagen and Jonathan wrapped up the show by answering some email question from viewers:
Question: "Why is market timing so frowned upon? I've done it successfully for five years in my 401(k)."
Jonathan: There is nothing wrong with market timing. People tend to cut it too close (trying to get in and out at the absolute best time and failing), but playing the trend works.
Dagen: There is no real evidence that it works. It basically comes down to luck, in terms of being successful with this strategy.
Question: “I read that 500 dollars a month in the S&P 500 over the last five years returned less than 1%. Does dollar cost averaging really work?"
Dagen: This strategy does work. It can certainly pay off for a disciplined investor.
Jonathan: This amounts to a “double down” strategy. It might make sense if you want to spread out your investments over time.
Question: "What do you think of Kroger (KR)?"
Jonathan: Not too great, and the grocery sector as a whole is pretty weak.
Dagen: This stock should hold up over time. Everyone buys groceries.
If you have a question you would like answered on the air, please email us at firstname.lastname@example.org.
If you are interested in receiving a transcript of the show, please call 888-443-6988.