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American Morning

What to do in the Uncertain Economy

Aired August 31, 2001 - 11:15   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LEON HARRIS, CNN ANCHOR: Let's talk more about the markets and whether or not those of you who are in it should stay in it. Michael Sivy joins us now from New York. He's editor at large for "Money" magazine, and his specialty is stocks and the economy.

And it's good to see you; and I want to know what you think about what's going on. Everyone says that we have not seen the bottom yet, Michael, but what did you think? And do you think if we haven't seen it, it's fairly, I guess, quickly around the corner -- to come, or what?

MICHAEL SIVY, "MONEY" MAGAZINE: Well, you know, we're in a bear market. And when bear markets get drawn out, they can end in one or two ways: You can either get a climactic sell-off, the way we did in 1987 with a crash; or you can sort of get recurrent waves of selling. And that's what is happening now.

And we're retesting the lows that the market set in April. And this will keep up until everybody who wants to sell is sold or we see some signs of an upturn in the economy. And I think the recovery is taking longer than people had hoped. You know, there was a lot of optimism earlier in the year that we'd be seeing a recovery by now. It looks like it's more likely to be something like October.

HARRIS: With that being the case, then -- and you say this persistent selling is going to go on for a little while then -- is now the time to buy, because it seems like there might be some -- I mean, I'm thinking as a non-expert, of course, but there's got to be some kind of bargains out there. And if there are, where are they?

SIVY: Well, you know, I think if you're talking about the average investor, it's really important to keep a long-term kind of time frame. You know, if you're looking at this market with a three- to-five year time frame, a lot of stocks are very cheap. You know, it doesn't matter if they go another 5 or 10 percent lower or not if you're looking at that kind of long-term investing outlook.

And I do think there are things that are good buys, but I think it's also very important to be well diversified, because technology -- some of the technology sector is still expensive, and it's still likely to get hit.

So I think you want to have some money in drug stocks. I think you want to have some money in banks. I think you want to own some tech, but be careful there and maybe wait a little bit longer on some of them. I think having some bonds or some money in a money market fund is a good idea at a time like this, too.

So, you know, I think you do want to be looking for bargains, but you also want to be protected against any short-term sell-off.

HARRIS: You got it. You know Michael, some of us just ant to have some money, that's all. Michael Sivy from "Money" magazine, thanks much, we'll talk with you later on.

SIVY: Good to be with you.

HARRIS: All right, take care.

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