Cavuto on Business

Recap of May 25: Wall Street's Terror Trump Card

Neil Cavuto was joined by: Jim Rogers, President of; Jason McCabe Calacanis, CEO of Venture Reporter; and Karen Gibbs, FNC Sr. Business Correspondent.

Wall Street's Terror Trump Card

New terror threats hitting the market again last week. Will stocks rebound like they have after previous warnings? And should you be selling or buying stocks when the government issues a terror warning?

Terror Warnings Dow's drop after warning Dow since drop
October 10 -3% +11%
October 29 -5% +12%
April 19 -4% + 3%

Jim says investors should not sell or buy on terror warnings alone. They should still focus on market fundamentals. He thinks the market can learn to live with terror warnings, and recommends buying raw materials if you are worried about future attacks hurting the market. Jason agrees that investors should not base investment decisions on terror warnings.

More For Your Money: The Perfect Time to Buy?

Should you focus more on "when" you buy and sell a stock, than "what" stock you actually buy and sell? According to Stock Trader's Almanac, investing between November-April is much more profitable than investing between May-October:

Returns of $10,000 re-invested in Dow Industrials stocks for each 6 month period between 1950-2000:

BUY Nov 1 - SELL April 30 BUY May 1 - SELL October 31
$415,890 $1,743

Jim says he is "selling in May and going away," but he does not think investors should only buy and sell during November-April months. Jason says investors should buy stocks that they think will make them money no matter what month it is.

What stocks should you sell or buy in May?

Jim recommends selling AOL Time Warner (AOL), Microsoft (MSFT) and Nike (NKE). He recommends buying Matsushita Electric (MC).

Jason recommends selling PayPal (PYPL) and JetBlue (JBLU). He recommends buying AOL Time Warner (AOL), Sony (SNE), Oracle (ORCL), and Sun Microsystems (SUNW).

FOX On The Spot

Jason: Political fighting on Capitol Hill will hurt markets.

Jim: Problems in Afghanistan and Central Asia get worse.

Karen: Revenues at Midtown Manhattan restaurants will drop 30% due to her moving from the area.

Neil: Estate tax will not be killed.