Cashin In

Recap of Saturday, June 22: Trampled By 'Bull'!

Stock Smarts: Trampled By "Bull"!

There’s lots of bull on Wall Street these days, and it’s not the kind that’s good for your stocks. It seems not a week goes by without another report of inflated earnings, insider trading or some other form of bad behavior from corporate America. With all that "bull" around, it’s no surprise the market is overrun with bears. So what do we need to see to bring the buyers back?

Wayne Rogers of Wayne Rogers & Co. says that investors need to see "real" earnings and cash flow before the buyers will come back to stocks.

Jonas Max Ferris of says investors need to see corporate criminals do some jail time to rebuild their faith in the system and get them buying again. Right now there’ not a lot of trust.

Hilary Kramer from Montgomery Asset Management agrees with Wayne that trust will return with real earnings. Once earnings come back, then the institutions will invest, and finally individual investors will come back into the market so they won’t miss the upswing. She thinks that the biotech and pharmaceutical stocks will lead the move up.

Charles Payne of Wall Street Strategies says that earnings won’t be back for awhile. And he agrees with Jonas that we need to "throw the bums out" of the corporate board rooms in order to restore investor confidence in the markets. He sees people getting ready to rotate money out of "comfort stocks" (retailers, home builders), but with so little confidence out there he’s not sure where they are going to go.

Jonathan Hoenig from thinks that we need new leadership from some new stocks, because we won’t get it from the old, large-cap issues that have traditionally led the market. He says new leaders that can lead the market higher will get buyers back into the market.

Keeping The Faith

Even in the best environment, buying a stock is a leap of faith. And faith is in short supply on Wall Street these days. Which stocks might restore your faith? Our panel offered some picks:

Jonathan’s pick: Commercial Net Lease Realty (NNN). Hilary does not like the play, as she thinks there is a bubble in commercial real estate that is about to break. Charles thinks it is a relatively safe play. (Jonathan has a position in NNN.)

Hilary’s pick: Bristol-Myers Squibb (BMY). Jonathan and Charles do not like this stock. (Hilary has a position in BMY.)

Charles’ pick: Johnson Controls (JCI). Hilary says it’s a winner. Jonathan says it is not a bad play, but it is not on his buy list.

Mutual Fund Face-Off: Sinners vs. Saints

Sinners – mutual funds that invest in companies that appeal to our wild side. Or saints – funds that look to a higher moral ground. Which one should you bet on? In June of 2001, Dagen and Jonas faced off over this subject. We looked back at the picks to see how the funds have performed:

"Sinner Fund"

Dagen: Invesco Leisure Fund (FLISX)
Minimum Investment: $1,000
Expenses: for every $13.60 for every $1,000 invested
Past 12-months (through 6-21-02): DOWN 11.8 percent

"Saint Fund"

Jonas: Winslow Green Growth Fund (WGGFX)
Minimum Investment: $5,000
Expenses: $14.50 for every $1,000 invested
Past 12-months (through 6-7-02): DOWN 24.0 percent

Money Mail

Dagen, Jonathan and Wayne wrapped up the show by answering some e-mail questions from viewers:

Question: "What in the world is going on with AT&T (T)?"

Wayne: Competition and some bad strategy hurt AT&T.

Jonathan: AT&T is like your old high school sweet heart at the reunion, it just doesn’t look quite the same as it used to. No reason to buy it right now, and you should probably sell it.

Dagen: Price competition will continue to hurt AT&T.

Question: "Would Jonathan consider General Electric (GE) a buy below $25?"

Jonathan: I am still short AT&T, and I think it will get below $20 in the next 12 months.

Wayne: It’s still a fundamentally sound company.

Dagen: No need to buy it, as many people have it as part of a large-cap mutual fund.

Question: "Prudent Safe Harbor (PSAFX) has some gold stocks and is supposed to benefit from a weakening dollar. Is it a good bet now?"

Dagen: This fund is a bit expensive. Check out the American Century International Bond Fund (BEGBX) for an alternative play.

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