Stock Smarts: Nasdaq 1000: Could it go that low?
On March 10, 2000, the Nasdaq topped the 5000 level. Since that historic day, the index has been on a steady slide, dropping an average of 200 points a month. On that breakneck pace, the Nasdaq would dip below the 1000 level by December.
So is Nasdaq 1000 a real possibility?
Hilary Cramer of the Cisneros Group says absolutely. She sees the global recession and eroding consumer confidence as factors that will continue to pressure the index. She also notes a lack of demand and overcapacity (siting the $250 billion debt in the telecom industry) within the market.
Michael Kagan of the Salomon Brothers Fund thinks that Nasdaq 1000 is too extreme, feeling that only a complete disaster or boredom from investors would cause the index to slip that low. He thinks that the good companies are cheap enough to attract buyers, specifically bringing up Sun Microsystems (SUNW) (a company that he has a position in), stating that it is close to a ten-year low and is trading at a low price-to-sales ratio.
Jonathan Hoenig from Capitalist Pig Asset Management predicts some positive gains in the short-term, but overall weakness over the long haul. He sees a rally of 20%-30% from the index's current levels, bringing it up to the 2400 level, followed by a retreat back to lower levels, possibly getting to that 1000 mark. But Jon is actually more worried about the Dow, saying that it is the market to watch.
Finally, the panel offered their Mad Money plays - high-risk stocks that could make a big move up, but could also fall hard:
Hilary: BEA Systems (BEAS)
Jonathan: Russell 2000 Value Fund (IWN)
Michael: Cummins (CUM)
Mutual Fund Face-Off
Topic: The best Fidelity fund
Panel: Dagen McDowell of SmartMoney and Jonas Max Ferris of Maxfunds.com.
Dagen: Fidelity Dividend Growth Fund (FDGFX)
Jonas: Fidelity Export and Multinational Fund (FEXPX)
Actor and singer Dominic Chianese, who plays mob boss "Uncle Junior" on the television hit The Sopranos, wants to get into the investing game. However, during his years of performing, he never really saved or invested, admitting that he is pretty ignorant when it comes to the markets.
So what can someone do that will allow for a solid investing plan when that person has never been involved in making investment decisions?
Jonas Max Ferris says that "late-starters" are not uncommon, but you can't make it up all at once. He recommended two funds for different stages of late-term investing. He likes the Dodge & Cox Balanced Fund (DODBX) for a conservative investment while you continue to work and draw a salary. But when you are getting ready to retire and want something that could yield a regular dividend you should consider a move to a
fund like the Harbor Bond Fund (HABDX).
Hilary Cramer says that stocks are still the best way to get good returns on your money. She picked out three stocks that she says are diversified and defensive.
Fortune Brands (FO)
Dagen and Jonathan wrapped up the show by answering some email question from
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