Recap of July 5: A Stock Revolution!

Stock Smarts: A Stock Revolution!

Call it a stock revolution – just about the time risk became a “four letter word”, the riskiest stocks began to take off. Internet, biotech (search) and computer stocks ruled the market for the first half of 2003:

Internet UP 52 percent
Biotech UP 34 percent
Computers UP 19 percent

Dow UP 7.7 percent

Will that trend continue through the rest of the year?

Jonathan Hoenig of Capitalistpig Asset Management says the trend actually began in the fourth quarter of last year, and he thinks it will continue. He says Internet, biotech, tech and telecom is where the action is right now, and he thinks stocks in those sectors are headed higher from here.

Hilary Kramer of A&G Capital disagrees. She says a new group of stocks is ready to take off in place of those high-risk plays. She believes dividend yielding stocks that people have been afraid to buy, like Bristol-Myers (BMY), El Paso (EL), or Verizon (VZ), are the ones they will gravitate to now.

Jonas Max Ferris of says he does not think the trend in high-risk stocks will continue. He says investors need to recognize that these stocks have been driven higher on unrealistic earnings growth expectations and should take profits before they disappoint.

Adam Lashinsky of Fortune magazine says tech will deliver on growth and earnings but the price gains are already baked into the stocks. He agrees with Hilary that people will go back into dividend yielding stocks that have not performed well, but he says the reward will not be as big as the reward investors have received for investing in tech and biotech this year.

Wayne Rogers of Wayne Rogers & Co says the trend toward risky stocks makes him a bit nervous, but he thinks it will continue for a while longer.

Be$t Bets: No Gut$, No Glory!

So which stocks are set to bring glory to you and your wallet for the rest of 2003?

Hilary's Guts & Glory Play: Microsoft (MSFT)
52-week high: $29.48
52-week low: $20.70
Thursday's close (7-3-03): $26.45

Hilary owns shares in Microsoft.

Jonas says this stock has been dead through the whole tech recovery and he doesn’t see it taking off anytime soon. Adam says Microsoft should see slow growth, but he doesn’t see “explosive” growth in Microsoft’s future.

Adam's Guts & Glory Play: Micron Technology (MU)
52-week high: $25.14
52-week low: $6.60
Thursday's close (7-3-03): $12.81

Jonas says he doesn’t see enough demand for this company’s products to drive growth. He doesn’t like the stock right now. Hilary says Micron will do very, very well in the next six months. She’s bullish on the stock.

Jonas' Guts & Glory Play: Nomura Holdings (NMR)
52-week high: $15.60
52-week low: $9.07
Thursday's close (7-3-03): $14.12

Hilary thinks U.S. brokers are a better bet than Nomura. Adam agrees with Hilary. He says, “Don’t buy a Japanese company when you can buy a non Japanese company in the same business.”

Power Plan: All-Star Stocks with Joe Torre

Joe Torre has led the New York Yankees to four World Series titles by playing aggressive – which is how he plays the stock market. Our crew came up with some all-star picks for the skipper’s “play money”.

Jon's All-Star Pick: Videsh Sanchar Nigam (VSL)
52-week high: $6.40
52-week low: $2.95
Thursday's close (7-3-03): $5.56

Jonathan owns shares in VSL.

Wayne thinks this Indian telecommunications play will do well. Dagen says she would prefer investing in emerging markets through a fund rather than buying a stock like VSL. She says a fund is less risky.

Dagen's All-Star Pick: Fidelity Select Leisure (FDLSX)
52-week high: $62.15
52-week low: $43.60
Thursday's close (7-3-03): $61.57

Jonathan says he doesn’t think this fund has enough octane for Joe’s “play money.” Wayne says the fund relies too heavily on telecom and cable stocks.

Wayne's All-Star Pick: AirTran Holdings (AAI)
52-week high: $11.44
52-week low: $2.34
Thursday's close (7-3-03): $11.40

Wayne owns shares in AirTran.

Jonathan likes AirTran. He thinks the stock will go higher. Dagen thinks there is not much upside left in AirTran shares. She’s bearish on the stock.

Money Mail

Jonas, Jonathan and Wayne answered some of your questions.

First up: a look at winners and loser so far in the Cashin’ In Challenge, check out the website for the latest details.

Question: “I bought 200 shares of Plains All American (PAA) 6 months ago when Wayne mentioned it. It's up $5. Should I hold or sell?”

Wayne says he thinks of himself as a good buyer, but a terrible seller, and he’s just not sure if it’s time to sell PAA, but he says the stock pays a good dividend. So if you want dividend, he says stay in the stock, but if that’s not what you are looking for, then take half of your position off the table and let the rest ride for now.

Question: “I am looking for something to teach children 10-14 years old about the stock market. Can you help?”

Dagen recommends you try and hold children’s attention by buying a stock they know and love like Starbucks (SBUX) to show them what it’s like to own shares in a company. She also recommends a book by famed money manager Peter Lynch entitled “One up on Wall Street.” Jonathan says his book “Greed is Good” also has some helpful hints. He says start with a mutual fund, but also stress the importance of a job for young people.

Question: “What's going to happen to the stock market when “Baby Boomers' start cashing in their investments to retire?”

Jonathan says he believes the issue for retiring “Boomers” will be how to generate income with interest rates so low right now. He says he’s not sure how that will play out in the market, but that’s what will drive their investing decisions.