Stock Smarts: When Do We Recover?
Enough Already! Since hitting its high mark way back in March of 2000, the stock market has been in a steady pattern of decline. The bursting of the tech bubble, a recession, and the horrible events of September 11 and the subsequent war against terrorism have all contributed to the slide.
Investors are begging for a sure sign of recovery to get this market moving again. When will we get it?
Gregg Hymowitz of Entrust Capital says the signs are already there, calling it a "peek-a-boo" recovery, since the good news is being shrouded by the Enron situation. The economic numbers are on the up swings, and the news on corporate earnings is more good than bad. Once the investor’s confidence returns, the market will swing to the upside.
Dagen McDowell of Fox Business News thinks that investors need to see greater conviction that corporate earnings are really turning around. But if you are going to invest in the stock market, you have to be willing to ride the market down a bit before a serious recovery.
Hilary Kramer of the Cisneros Group does not think the economic numbers are all that relevant. In her mind it still boils down to consumer confidence in terms of the stock market starting to recover.
Jonathan Hoenig from Capitalistpig Asset Management says the broad markets are treading water because large cap stocks dominate them. It is still a picker’s market, with small cap stocks and specific sectors being the way to go. He specifically mentions the restaurant sector as a small sector that could be a good play.
Jonas Max Ferris of Maxfunds.com does think that the economy is recovering, but earnings are still flat. And until that turns around, stocks will still stay weak. He says the news book on Wall Street should be called "Dow 10,000 forever," as he sees no potential for a huge breakout soon.
Sell These Stocks Now!
Which of your favorite stocks should be put on the sell block? Members of the panel offered up some advice.
Hilary says to sell Merck (MRK): Gregg says not so fast, it’s not that bad. Jonathan doesn’t like the stock
Jonathan says to sell General Electric (GE – Jonathan is currently shorting GE): Gregg doesn’t agree with shorting GE; Hilary likes the strategy.
Gregg says to sell Yahoo! (YHOO – Gregg is currently shorting YHOO). Jonathan thinks Yahoo! Is shaping up and might like it as a long-term play; Hilary doesn’t like the stock.
Mutual Fund Face-Off
Panel: Dagen and Jonas
Topic: The Best "No-Label" Funds. Most mutual funds come with labels that limit the kinds of stocks the fund manager can buy. There are funds, however, which are not tied down by labels. Our panel found two worth looking at:
Jonas: Atlas Global Growth Fund (AGRAX)
Minimum Investment: $2,500
Expenses: $13.40 for every $1,000 invested
Year-To-Date (as of 2-15-02): down 3.7%
Dagen: Olstein Financial Alert Fund (OFALX)
Minimum Investment: $1,000
Expenses: $22.00 for every $1,000 invested
Year-To-Date (as of 2-15-02): down 0.5%
Dagen and Jonathan wrapped up the show by answering some e-mail questions from viewers:
Question: "Why can’t the US Government freeze the assets of the Enron managers and Board of Directors if there is suspicion of fraud?"
Dagen: Until some specific instance of wrongdoing has been proven, nothing can be done in terms of freezing assets.
Question (asked by a class of 5th graders in Ho-Ho-Kus, NJ): "We have a small amount of money to invest. What is the best investment to make as a class?"
Jonathan: The best place to start is a mutual fund. It’s very tough to invest a small amount of money into one or two specific stocks.
Dagen: If you want to learn about a specific stock through an actual investment, you might want to check out a direct investment plan (a good website for these investment is www.netstockdirect.com) .
Question: "What is your long-term outlook for AOL?"
Jonathan: He uses the service, but doesn’t like the stock.
Dagen: Look at the radio and advertising stocks to come out ahead in the recovery.
Question: "How and why is Kmart stock still going up? Is it a time to buy Kmart stock?"
Dagen: The long-term outlook is bleak.
Jonathan: I sobered up and stayed away from this stock.
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