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American Morning
America Recovers: Financial Question Answered
Aired October 05, 2001 - 09:46 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.
PAULA ZAHN, CNN ANCHOR: Drum roll. Here we have it, your financial questions for Andy Serwer of "Fortune" magazine. Let's get straight to the questions. The guy's under fire.
This one comes, the first one, from Barry Cantor, Palm Bay, Florida: "I'm considering buying some oil stock. I think it will go up in the next few months. Which of the oil stocks do you think has more potential?"
ANDY SERWER: OK, the oil patch changed a lot over the last couple of years. Chevron, Texaco, BP, Shell -- a lot of mergers. Some companies drill. Some companies refine. Some companies distribute. Some companies do all of the above. But I have to say, ExxonMobil never go wrong with this stock. Disclosure, my family has owned a little bit over the years.
ZAHN: How much?
SERWER: Just a little bit.
ZAHN: Tell me.
SERWER: Just a few hundred shares. That's what it worth today.
ZAHN: So you can't change the direction of the company.
SERWER: No, I cannot. But it's been a great stock to own. It pays attend. And over time, it's always beaten technology stocks, just a very well-run company.
MILES O'BRIEN, CNN ANCHOR: But of course gas prices are way down. Isn't that bad news for these companies?
SERWER: It can be. But again, if they're drilling, that offsets that part of the business. That's why an integrated company I prefer, like an ExxonMobil.
O'BRIEN: All right, question number two. Al from Ohio has this: "Our retirement funds have been in money markets since late August. When should we get back in the stock market?"
That's a different one than the one we see on the screen.
Let's do Nelson Delgado, shall we? "I've been investing into my 401k with Scudder's with the use of my company payroll. Is their any law that will protect us in any big losses?" That was from Nelson Delgado.
I apologize for that, Andy.
SERWER: Yes, Nelson, I don't think so. I mean, your money in the bank is insured, but I don't your money in a mutual fund is, so you've got to be careful there. Do your own due diligence.
ZAHN: We will move on to the next question. I am going to wait to read it until I see it on the screen. Come on. Let me go to this one. Al from Ohio. You haven't had a chance to answer this one, right? I'm a little confused.
SERWER: This is about the retirement fund.
ZAHN: When should he get back in stock market.
SERWER: When should he get back in the stock market? Last week. No, that's really true. This week -- I think it's a good time to be getting back in the market.
Again, this is a guy who was timing the market. He put money in cash when he saw the market going down. Again, that's exactly the wrong thing to do. You are supposed to buy when stocks are cheap. I think you should sort of dollar average in. I think five years from now, stocks will look cheap.
ZAHN: Miles, you get the next question.
O'BRIEN: Sort of hammered Al there. All right.
Burt in Ridgewood, New Jersey has this: "How do you account for the recent upsurge in the market? Is this a real recovery? What are the chances that the market/Dow will retest its low of 8,200?"
SERWER: OK, Miles, I think it's a real recovery from the panic we have. I do not think it's a real recover from the recession we are in or from this possible military action. I do think we will retest those lows.
But again, you have to get in at some point. I don't think it's a bad time. The worst thing to do would be to go out and buy some stocks today. The market go down. Test those lows and you sell. Don't sell when the market goes back down if you are buying today.
ZAHN: Have you see how much his thinking has evolved? I mean, he now definitively said we're in a recession. You've been skirting around that the last couple of days.
SERWER: I've been skirting around. I was hoping...
ZAHN: The fact is the economist say this doesn't mean the classic definition. You think...
SERWER: I never want to be accused of being an economist, OK. First, I'm a journalist. But I think we are, yes.
ZAHN: All right, next questions from Robin Bradley of West Virginia. Her question is "shorting the market a strategy that an individual investor can include as part of their overall investment plan? Can you explain the potential and the risk?"
SERWER: No. You should not do that. The potential, the risk is, simply you will lose all your money. That's a huge risk. And I don't think you ever want to do that. You have unlimited downside risk. It's a crazy thing to do. Let the professionals do that. You know, you buy a stock like Exxon, the chances of you losing all your money buying Exxon are absolutely zero. Shorting the market, you can put $1,000 into doing that and lose it all. Crazy to do that.
ZAHN: Would you take the next question from Posh? Do you have the one from Posh. He doesn't have a last name.
O'BRIEN: Posh with no last name.
ZAHN: Does Posh have a friend named Spice?
O'BRIEN: All right, Posh says this, "Does the recent 10 day, 10 percent rise in markets establish firmly the floor for intermediate and long-term, or is it simply a short squeeze?"
Posh has got the nomenclature down.
SERWER: Posh is a sophisticated investor apparently, and I don't know whether she got this information from Sporty Spice or came up with it on her own, or his own. I don't know who Posh is.
O'BRIEN: Old Spice.
SERWER: Yes.
ZAHN: Oh, he's on a role.
SERWER: There has been a short squeeze here, no question about that. People had to cover their short positions, but you know, the rally is for real. Stocks were oversold. There were so much doom and gloom right after the attack, after the market crashed, and stocks are back.
Whether they go back down or not a lot, we don't know. But I think we are establishing a base, and we have to go on from here. But, you know, the economy is the great unknown here, isn't it? I mean, we really don't know how bad things will get. Warren Buffett saying he thought things bad. Mr. O'Neill says he doesn't think quite so bad.
ZAHN: He said October would be rough. Then he pointed to some increased sales in light trucks and other segments prove that consumer confidence shooting up. Although consumer confidence levels are at record lows, are they not.
SERWER: They are. But the administration people of course have an agenda, don't they?
ZAHN: Well, they have a stimulus package. They want...
SERWER: They want to talk the economy up. So, you know, I think the jury is out, and we're going to be finding out -- I think things will deteriorate a bit over the next month or so, and the question is, is it going to be a short one or a long one, and really no one knows, but you know, I was saying you had to stay in the market during that dismal month that we first started trading, and I think that was really borne out.
O'BRIEN: All right, I think we have one more e-mail. This one comes from Lisa. But I don't know what it is until I see it.
ZAHN: There it is.
O'BRIEN: There it is.
"Do you have information about the unemployment extension that the president has been talking about and who it will help? And when it will begin? My husband and I were both unemployed before the attack?"
SERWER: Now, you know, that's a tough one. I don't have information on that right in front of me, but I'll tell you what, we will...
ZAHN: They're talking about extending for -- is it 12 weeks, something like that yesterday. I think that's the plan.
SERWER: Thirteen weeks.
ZAHN: Thirteen weeks, OK.
SERWER: We will look into that, and I'll tell you what, maybe we can about talk that on Monday.
O'BRIEN: Big picture question for you. Clearly the events of September 11th have accelerated things, accelerated perhaps the "r "word word -- you used it. Does that accelerate a recovery?
SERWER: That's a very good questions, Miles. You're right. I mean, a lot of people are saying if we were going into a slow burn recession, then the recovery would take a lot longer. This would accelerate the whole process. I think you can make good case that it will, particularly with the government stimulus. If we going into just sort of a slow burn recession. There's no way we would be getting a $75 billion bailout package from President Bush. But now that we seem to be getting something like that, the chances of us bouncing back faster are much greater.
ZAHN: You did a fine job Andy Serwer, and even better than your performance were the questions of our audience. We really appreciate your e-mailing Andy.
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