Molly de Ramel was the host. She was joined by Gregg Hymowitz, founder of Entrust Capital; Jim Rogers, president of JimRogers.com; Ben Stein, economist and former speech writer for President Richard Nixon; Adam Lashinsky, senior writer at Fortune magazine; and Tom Dorsey, president of Dorsey, Wright, and Associates.
Why No Post-War Rally?
Molly de Ramel: Operation Iraqi Freedom -- a huge military success. Saddam is done and the White House says the world is a safer place. So, why haven't we see a significant post-war rally for the stock market? Adam, why not a bigger run-up following the most successful war in history?
Adam Lashinsky: We had a big run up before the war. I think a lot of people expected that big rally because things were so tense. But as soon as the war was over people said, well let's look at the economy. Let's look at earnings again.
Gregg Hymowitz: The economy is weak. It's much weaker than expected. We might get a stock market recovery before we see a real economic recovery. We need jobs and we need earnings.
Jim Rogers: Stock markets anticipate and they look forward. Those jobs are coming.
Ben Stein: I don't think there's going to be rally until there's some convincing sign of a growth in corporate profits. Corporate profits are still very disappointing.
Jim Rogers: Corporate profits were up though for the first quarter.
Gregg Hymowitz: Consumer sentiment, looking forward, does seem to be showing some strength. But I do agree with Ben. We need to see earnings come through.
Adam Lashinsky: Let's not be too pessimistic. The market is up since the war ended. Earnings are not great, but they’re not real bad either.
More for Your Money: Is Market Timing the Best Way to Invest?
Molly de Ramel: When it comes to buying and selling stocks, the old saying-- timing is everything-- means everything. But how do you figure out when to jump in and out of the market to get More For Your Money?
Ben Stein says he knows. In fact he is so sure he wrote a book about it. It's called Yes, You Can Time the Market!
Ben, your previous book was called How To Ruin Your Life, many say trying to time the market should be a chapter in that book!
Ben Stein: It's not true that all times are equally good to buy into the market. But you can say that at certain times the market is historically cheap in terms of price to earnings, price to dividend, price to book, etc. Our research shows if you buy during those times and don’t sell for up to 5,10, even 15 years, you will make more money if you did not buy at those historically low periods.
Jim Rogers: I agree with Ben. The best ideas are the simple ideas and this is a simple idea.
Gregg Hymowitz: I don't understand what's so earth shattering about the concept of buying cheap and selling high?
Tom Dorsey: The problem with having fifteen year data is that 77 percent of all the wealth in America are in the hands of people fifty years or older. They don't have time to wait fifteen years for it to come into fruition.
Ben Stein: What we've done in this book is quantify when it is cheap and when it is expensive to buy.
Molly de Ramel: So, what do look for when buying in this market?
Gregg Hymowitz: I also look at cheap prices and other fundamentals. Based on that right now I would buy YUM! brands (YUM). They own Taco Bell and Kentucky Fried Chicken. I own it and like it a lot and I think it's cheap.
Tom Dorsey: I look at the ratio of buy and sell signals for certain sectors and stocks. Right now those signals point to a strong rally in the biotechnology sector. Specifically, I like Genentech (DNA). But it has been strong lately, so I would put a stop limit to sell at $33.00 just in case it turns down quickly.
Ben Stein: I'd buy the Dow Diamonds (DIA). I own and love the Diamonds for tracking the big caps stocks, which have not rallied as much as the smaller caps and tech stocks as of lately. And I would own them for the long term as described in my book Yes, You Can Time The Market!
FOX on the Spot
Gregg: SARS could cause global recession if not cured quickly
Adam: Good new$ for market: Frank Quattrone goes to jail, ending Wall Street scandal process.
Ben: No jail time for Quattrone. Profits return by Q1 2004!
Jim: Argentina's market gets short-lived boost by new president