Marc Baum, CEO of IPO.com

This is a partial transcript from Your World with Neil Cavuto, November 16, 2001.

BRENDA BUTTNER, HOST: During this time of recovery, does it pay to go public? Here to discuss how new stocks are faring and the latest market moves, is Marc Baum. He is CEO of IPO.com.

Thanks so much for joining us.

MARC BAUM, IPO.COM CEO: Thanks for having me.

BUTTNER: Well, pretty healthy week for new week for issues. We had about six, and Weight Watchers was probably the best of those. And this is the one time you can say that a 24 percent gain, is good at Weight Watchers.

BAUM: Well, yes, absolutely. No, Weight Watchers was the premier name this week, in a week where really there were seven, I think, names. And most of them held pretty significant first-day gains.

BUTTNER: You're seeing, on average, about a 20 percent gain...

BAUM: By the close today people — you know, companies held about a 20 percent gain — the companies that popped up.

BUTTNER: The one exception was DJ Orthopedics?

BAUM: Yes, DJ Orthopedics, they tried to hold to their price when they went public, but it actually has broken through its offering price, down about 15 percent.

BUTTNER: So this is a lot better than we have been seeing for a while. Is this a turnaround for IPOs? Is it time to go public now?

BAUM: Well, you know, people keep saying that. What people have to remember was that because of the events of September 11, any number of deals that would have come public earlier actually did have to delay. So what we have is a bit of a compression here.

BUTTNER: But that doesn't mean they have to go up on the opening day.

BAUM: It certainly doesn't mean they have to go up. That was helped by the markets; the same markets that you reported, you know, had significant gains this week. That actually, you know, is what gives room for IPOs to pop. Remember, most of these deals, as opposed to '99 or early 1000, where no one know how to price things, these were priced pretty realistically for the market, if anything.

You know, so price expectations have come down. They actually then went public into a very strong week.

BUTTNER: Well let's step back and take a look at that strong week, and actually strong two months. Amazing gains; the Nasdaq up some 30 percent, the Dow up 20 percent. Is that sustainable?

BAUM: Well, we don't actually think it's sustainable. The same basic economic factors that were there prior to September 11 are still there. We were an economy going into recession; we didn't know when that was going to end, we didn't know how bad it was going to be.

One of the interesting things that happened September 11 is that stocks took a real dive. We thought maybe that would be all right, it would give us a baseline to begin a recovery. The problem with this bounce back up is that suddenly we have nowhere to go from here exactly.

BUTTNER: Well, we can keep going up.

BAUM: We could, but for that to happen, you actually need companies to be reporting earnings that look pretty good. No one is expecting that immediately.

BUTTNER: Not immediately, but the stock market's a leading indicator...

BAUM: It is a leading indicator, which means, you know, and maybe we're recovering that quickly. But we think there's probably a little bit of a gap between the appreciation we've had so far and where it can go from here right now.

BUTTNER: Right; so would you say, get your money out of the market now, or hold it where it is? I mean, if you're an investor, not a trader.

BAUM: You know, we don't really given investment advice. But what I think is people — it wouldn't be surprising if the markets kind of held within — were sort of range-bound through the end of the year, that you begin to need to see some very good reporting from companies for equities — to have prices go up from here. We're still at historic highs in terms of PEs.

BUTTNER: Right, the price tag for a stock.

BAUM: Yes, you don't want to be at historic highs when you're putting new money in. And remember, because there's no inflation right now — you know, one of the things you were talking about is oil...

BUTTNER: Yes, cheap oil, cheap money; those are great things for the market.

BAUM: They're great things for the market; they're also great, you know, to feel comfortable that if you're holding your money in cash or something that's yielding less — a fixed-income asset — that you're not going to lose when you're holding it there. So, cash is reasonable when there's not inflation.

BUTTNER: Although a lot of money has been running from the CDs, from the money-market funds into stocks. It's almost like panic buying.

BAUM: Well, because one of the problems is we got so used to — in the '90s we got used to these enormous returns only in the equity markets. You know, when I was growing up, 2 percent, 3 percent in noninflationary times was considered good for risk-free investing. Remember, there is a risk in equities. And when there's a noninflationary environment, if you're earning 4, 5 real percent, that's real money.

BUTTNER: Right. Dow 10,000, when are we going to see it?

BAUM: You know, we're pretty close to Dow 10,000 again. You know, I think most of the year we've been around it. We might hit it before the end of the year; it might be the beginning of next year.

BUTTNER: All right, thanks for your insights. Marc Baum, the CEO of IPO.com.

BAUM: Thank you very much.

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