Recap of Sat., August 31: Stock Smarts: $igns

Stock Smarts: $igns

Signs – life is full of them, and the stock market is no different. So what are the signs from Wall Street saying right now?

Charles Payne of Wall Street Strategies says that the signs he’s reading suggest that people want to be bullish. Many are rationalizing a rebound in the economy, helping the recent run-up in stocks. But the signs that we need to see are expanding profits from corporations, and a rally in the stock market with real volume.

Jonas Max Ferris of usually looks at fundamentals to gauge the stock market, but recently he has been looking at mutual fund investors – and there has been a lot of money taken out of mutual funds as of late – a very bearish sign.  And he is also looking at the business scandals – which he says are still hurting the markets.

Gary Kaltbaum of is also paying attention to the news, but he really cares about the market’s reaction to the news. He likes to pay attention to volume and sector movements. We are in a pullback mode right now, he says,  and he is looking to October, not September, for a potential move up. He says markets don’t sink or swim in a day – there is a process.

Wayne Rogers of Wayne Rogers & Co. believes that volume is a key sign to watch and there was no volume on the recent bull run. He says the market is always telling you something about the economy and thin volume in the market means little confidence in the economy. He does think that interest rates will be up in the next year.

Jonathan Hoenig of Capitalistpig Asset Management thinks that the best indicator of the market is the market itself. He likes to follow the trend - and he says that the trend right now still points to bonds, and interest rate sensitive stocks (like REITs). He doesn’t see an interest move higher anytime soon.

“Buy” Signs

Which stocks are flashing “buy” signs right now? Some members of the panel offered their picks.

Jonathan’s Buy: Commercial Net Lease Realty (NNN)
52-week high: $16.40
52-week low: $11.25
8-30-02: $15.80

Both Gary and Charles like this pick, noting that it is a safe, conservative play.

Gary’s Buy: Doral Financial (DORL)
52-week high: $45.39
52-week low: $29.45
8-30-02: $42.64

Jonathan likes the stock, and thinks it could head higher from here. Charles also likes it, but says it’s more of a momentum play.

Charles’ Buy: Harrah’s Entertainment (HET)
52-week high: $51.35
52-week low: $22.00
8-30-02: $47.54

Gary likes the pick (people love to gamble). Not one of Jonathan’s favorite.

Mutual Fund Face-Off: Bond Fund Redux

As the bear mauled stocks, bonds have been big winners in the past two years. Last September (9-7-01) we asked Dagen and Jonas to pick their favorite bond funds. So who is on top? We faced-off to find out.
Jonas – Harbor Bond Fund (HABDX)
Since 9-7-01: UP 8.9 percent
Minimum Investment: $1,000
Expenses: $7.80 for every $1,000 invested

Dagen – Vanguard Total Bond Market Index Fund (VBMFX)
Since 9-7-01: UP 6.4 percent
Minimum Investment: $3,000
Expenses: $2.20 for every $1,000 invested

They also picked a couple of alternative bond funds in addition to the past selections:

Jonas – Northeast Investors Trust Fund (NTHEX)

Dagen – Vanguard Intermediate Corporate-Term Fund (VFICX)

Money Mail

Dagen, Jonathan and Wayne capped off the show by answering some of your questions.

Question: “Who did Martha Stewart sell her Imclone (IMCL) stock to anyway? Are they going to sue her?”

Dagen: She sold those shares on the open market, so she doesn’t really know who bought the shares. But she points out that when a sale is made, someone is buying on the other end which is why insider trading is not a victimless crime, since someone is getting shares of a stock that are being dumped for a reason.

Question: “I own 1,000 shares of Vivendi (V) that I bought at $38.15. It’s way down. Should I sell or hope for a turnaround?”

Jonathan: I think you should cut some of your losses.

Wayne: Vivendi is in a similar situation to both Disney and AOL/Time Warner. Cut your losses and get out.

Question: “Everyone seems preoccupied with whether we are in a bull or a bear market.  Does it have to be one or the other?”

Wayne: We are in a bear market now that started a couple of years ago.

Jonathan: It matters what kind of market we are in. The market can move in a trading range – not going up or down.

Dagen: People want to know  what other investors are doing – are they bullish or bearish – as opposed to what the market is doing.


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