Return to Transcripts main page

CNN Live Today

Tips For Today's Stock Market

Aired June 17, 2002 - 10:19   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: With today's market so difficult to figure out for individual investors, what should people do now? That is the question that many are asking, and our next guest this morning has hopefully got some answers. He's comparing Wall Street to a circus game that we absolutely can not win. Bill Mann, he is a senior editor for "The Motley Fool," which produces commentary on the markets, on and off-line.

Good to see you this morning. How are you doing?

WILLIAM MANN, "THE MOTLEY FOOL": Hey, Leon, I'm doing great. How are you?

HARRIS: I'm doing okay. Now, how will the markets be doing? Do you see any settling out patterns shaping up at least some time in the near future at all, or what?

MANN: Well, eventually that is going to happen, Leon. What you have right now, you don't have any good news out there. And it goes from earnings to all of these different -- you have companies that have CEO making $100 million while their stocks are getting she lacked.

There is not a whole lot that is good out there, which is the time that I start to get a little bit excited about what is going on.

HARRIS: Excited which way?

MANN: I start looking for companies that are going to be around once these things get shaken out, because a lot of times when you get to a point like this people say, you know what, I have had it with the market, I have lost 50 percent of my money. In 1997, people told me I could just put money in and hold it and it was going to go to the sky. That hasn't happened.

So people start selling not only the bad companies, the companies where you have these bad situations, but also start selling the good companies as well, and that interests me.

HARRIS: OK. Tell us how you tell the difference between what is a bad company and a good company. That may be a really basic sounding question, Bill, but...

MANN: Call them up and ask them. HARRIS: I'm sure they would all tell you, we are a great company. Like this morning, we're hearing about XO (ph). They are out now. They have filed bankruptcy. A short time ago, people would have thought that was a no-brainer there. What kind of guidelines are you using right now to determine what company is a good company and which one is not. I know some people in the past have been looking at earnings, and now people are saying you can't look at that even any more.

MANN: Well, you can certainly look at earnings, but one of the things that you are seeing with all these accounting companies that are getting taken down is that companies play with earnings. So I look at a balance between the earnings and the cashflow, which is another basic element, and if you see companies that have a balance between the two and it stayed very stable, you have got a good idea that is a company that even in bad economic times like we have now is going to come out OK on the other side.

And they're out there. More than 60 percent of the companies in the stock market actually went up over the last year. They just weren't the ones that we really think about, and unfortunately, they aren't the ones that a lot of people hold, but there are companies out there right now that have been taken down, and investors on our Web site are out looking for them now. We have got some very interesting ideas in terms of what companies are going to come through on the other side.

HARRIS: You say some of the companies, companies people don't hold. Why is that, and what companies would these be?

MANN: Well, one of the companies that I've written about in the past would be a Church and Doyd (ph), for example, which most people haven't heard of...

HARRIS: I'm one of them.

MANN: But that's Arm & Hammer baking soda. Arm & Hammer baking soda is what it is. And you think about, you know, when you go to the grocery store, even if times are tough, if your refrigerator stinks, you get Arm & Hammer baking soda, right. It's not one of those things. It's not like you are a company trying to decide whether or not you want to buy an half million dollar router. This is a 69 cent item that people are still buying, and they were hammered over the last two years, but it's still a great company, and, you know, if you can name another type of baking soda out there besides Arm & Hammer, I have a dollar for you, Leon.

HARRIS: Good point. You know what, that's a rather apropos suggestion, because for most of us, it's our portfolio, not the fridge that stinks. So if your portfolio stinks, get some baking soda.

MANN: That's right.

HARRIS: Bill Mann, thanks for the advice. Appreciate it. And we'll have to keep an eye on you and the Web site from here on out. Have a good one. MANN: Thanks, Leon.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com