Stock Smarts: Holiday High$?

Deck the halls! We are entering what is traditionally a sweet season for the stock market. Stocks have gained ground in 8 of the past 10 years from the time period beginning with Thanksgiving and ending with the New Year. And December has been the best month for the markets the past 100 years.

But we enter the holiday season in a recession and a war. So will history repeat itself, or are we headed for a new chapter?

Adam Lashinsky from Fortune doesn’t see a December rally. He notes that we are in the middle of a bad economy, consumer confidence is low, and we are coming off a three-week November rally.

Jonathan Hoenig from Capitalist Pig Asset Management says “throw the seasonal stuff out the window,” as he doesn’t put much stock in historical data. He is still skeptical of the major indices and large cap stocks. But he does feel that this is a stock-picker’s market, and a “silent bull rally” will continue in the smaller stocks. You just have to be very selective.

Hilary Kramer of the Cisneros Group sees a bull market for the rest of the year. She thinks that markets are largely driven by emotions, and right now, we are feeling good because the war against terrorism is going well, and investors don’t want to miss the boat for this rally. She also notes dropping oil prices as helping consumers, which in turn helps the markets.

Dagen McDowell of SmartMoney magazine looks towards the consumers to fuel the market. Confidence is still low, and people have less money to spend this season. If retail sales do not show some strength, then the markets will show some weakness. She wants to see more from the corporate earnings front to be convinced of a continued rally.

Jonas Max Ferris from Maxfunds.com also echoes the theme of corporate earnings. Without a show a real profits, stocks will slide. He says not to pay attention to the whole idea of performance tied to a specific month. Another factor to consider is investors selling off losing stocks in December to avoid tax losses.

Some members of the panel offered up some Thanksgiving stock picks:

Jonathan: Turkish Investment Fund (TKF)

Hilary: Goodrich (GR)

Adam: IBM (IBM)
Mutual Fund Face-Off

Panel: Dagen McDowell and Jonas Max Ferris

Topic: It’s turkey time! Dagen and Jonas took a fork and knife to past fund picks that each had made since Cashin’ In hit the air. Each selected a “turkey” fund for the other, where the performance left something to be desired.

Dagen’s Turkey. On the program dated 5-19-01, the panel was asked to select a technology fund that was set for a comeback. Dagen went with Firsthand Technology Value Fund (TVFQX). Here is how the fund has performed this year, since the pick, and a look at how other tech funds have performed since the fund was picked:

Year-to-date: DOWN 43.2%
Performance since picked: DOWN 21.9%

Tech fund peers (since 5-19-01): DOWN 23.0%

Jonas’ Turkey. On the program dated 5-26-01, the panel was asked to select a Janus fund. Jonas went with the Janus Strategic Value Fund (JSVAX). Here is how the fund has performed this year, since the pick, and a look at how other tech funds have performed since the fund was picked:

Year-to-date: DOWN 14.4%
Performance since picked: DOWN 15.4%

Janus Fund peers (since 5-26-01): DOWN 17.1%

Money Mail

Dagen and Jonathan wrapped up the show by answering some email question from viewers:

Question #1: How come after 10 interest rate drops, credit card companies are still charging consumers rates that are too high?

Dagen: If you have a variable rate card, you should have seen a drop by now. Call your credit card company and negotiate a new rate. If they won’t budge, then look for a new card!

Question #2: What do you think of Tyson Foods (TSN)? I like this stock in the long run because most people seem to like chicken and pork.

Jonathan: I like it at $11-$12. But I would put a stop order at $8-$9.

Question #3: My retirement plan is invested in the S&P 500. What do you think?

Dagen: It’s a solid simple way to investment.

Joanthan: Like the rest of the major indices, the S&P will continue to underperform.

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