Recap of Jan. 18: The Iraq Factor!

Stock Smarts: The Iraq Factor!

The Iraq factor front and center as thousands of American troops amass in the Middle East with thousands more on the way. A key U.N. Deadline is just a week away, and the day after that, a possible call to war from President Bush when he delivers his State of the Union address to the nation. A lot coming down the pike including tensions with North Korea. Should we expect more wild swings in the stock market?

Dagen McDowell of FOX Business News says this market is in for a rough ride. At the beginning of the year the market shot up as though we had already gone into Iraq and won the war. People were betting on a quick victory and since nothing is certain this market is going to continue to be choppy.

Randall Jones, editor-in-chief of Worth magazine, says, “Investors hate crazy nuts and we’ve got a crazy nut in Iraq right now and we don’t know how to deal with him. That creates an enormous amount of uncertainty and a great deal of volatility in the market.” He says investors in a focus group he conducted recently were extraordinarily skittish, but they were looking for opportunities in this down market and moving money out of some large cap names and into more defensive plays like Darden Restaurants (DRI) and Krispy Kreme (KKD).

Hilary Kramer of Montgomery Asset Management says she’s not worried because ultimately she believes, “Iraq will be liberated and oil prices will come down, and we’re going to see profitability, and the global recession will lift.” But she says, “We do have to get though this period and we could see in the next two quarters some real volatility in the stock market.”

Wayne Rogers of Wayne Rogers & Co. says he’s concerned about the stock market because there is so much uncertainty, and he agrees Saddam is a “total nut” and we don’t know what’s going to take place after a war in Iraq. Even if Saddam is ousted, something is going to fill that power vacuum and we don’t know what that is yet. He prefers to bet on higher yielding stocks right now like Plains All American Pipeline (PAA), which is yielding better than 8 percent, for the stability of income.

Jonathan Hoenig of Capitalistpig Asset Management agrees there is concern but he doesn’t think people have to keep all their money in a low-yielding money market accounts because of it. He thinks there are still ways to make money in this market despite the volatility. He says he’s putting money to work in energy trusts like the ones he’s talked about in recent weeks (Buckeye Partners (BPL), Enbridge Energy Partners (EEP) and Valero L.P. (VLI). He says he also sees opportunities in corporate bonds and even in some high yield bonds. He shorted the Dow last week and made money there. He thinks the Dow could go significantly lower form here.

Mutual Fund Face-Off: Get Even Funds!

Mutual fund investors lost $7,500 on average last year, or 20 percent of their investment. That’s a big chunk of change. It will take a bold bet to make it all back this year! So which mutual fund can do it for you? Dagen and Jonas faced-off.

Jonas: T. Rowe Media & Telecom (PRMTX)

2002: DOWN 28.4 percent

Year-to-date (as of 1-16-03): UP 7.5 percent

Minimum Investment: $2,500

Expenses: $11.40 for every $1,000 invested

Dagen: Fidelity Capital Appreciation (FDCAX)

2002: Down 21.3 percent

Year-to-date (as of 1-16-03): UP 6.1 percent

Minimum Investment: $2,500

Expenses: $9.10 for every $1,000 invested

Be$t Bets: Get Even Stocks!

Which stocks could help you make back that 20 percent you lost last year?

Wayne's "Get Even" Stock: Oracle (ORCL)

52-week high: $17.50

52-week low: $7.25

Friday's close: $11.44

Randy says he loves the company and he never underestimates its leader, Larry Ellison, but he’s concerned about negative comments about the future coming from some other big cap tech companies hurting Oracle stock. Hilary loves the management, and she thinks this stock only has upside, and she’s betting it’s even better than 25 percent.

Randy's "Get Even" Stock: Weight Watchers (WTW)

52-week high: $50.39

52-week low: $31.50

Friday's close: $41.61

Jonathan says he sees some recent weakness in the stock’s chart. Hilary likes the pick. She says the product works, and if it works, it will sell. Wayne says this stock took a year to go up 12 percent and he doesn’t see it running up 25 percent in the near future.

Hilary's "Get Even" Stock: Cedar Fair (FUN)

52-week high: $24.80

52-week low: $19.59

Friday's close: $23.05

Wayne says he doesn’t understand this company. Jonathan says he owned the stock last year and sold it for a profit, but is not interested in it now.

Jonathan's "Get Even" Stock: Telecom Argentina (TEO)

52-week high: $6.40

52-week low: $0.60

Friday's close: $3.45

Hilary says this is not the time to be touching anything in Argentina. Wayne says it’s a big risk for a possible big reward. He likes it and he thinks this stock has a good chance to be up big. Randy thinks it’s too risky for most individual investors.

Money Mail

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

Question: “Is AOL Time Warner (AOL) a buy now that Steve Case is out?”

Wayne says AOL is a big ship that is hard to turn around and he doesn’t see it changing very much in the near future. He says the company has got to do something dramatic, and the stock is not on his buy list right now. Jonas says getting rid of Steve Case is a negative for the company, not a positive. He says AOL is a hold at best.

Question: “How do you think Microsoft (MSFT) will do in 2003?”

Jonas says this stock is not a growth stock, nor a dividend-paying utility, even now that it says it will pay a dividend. He thinks announcing a dividend is like an admission that it can’t grow anymore, and he doesn’t like the stock. He says don’t own it. Jonathan says the stock split worries him because the stock price will fall to around $25 and he thinks that weakens the stock.

Question: “Is it a okay for General Electric (GE) employees to hold GE stock?”

Jonathan thinks the company is wrecking its brand by giving up “We bring good things to life” as a slogan, and he would avoid the stock right now. Wayne says right now GE is not a buy. Jonas says if you work at this company, that’s your investment! You don’t need to own it too. He says don’t buy it!


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