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American Morning

Interview with Andy Serwer, Lauren Young

Aired January 02, 2003 - 08:47   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.


JACK CAFFERTY, CNN ANCHOR: Andy Serwer of "Fortune" magazine, Lauren Young of "Smart Money" magazine here minding our business. The market is coming off three losing years in a row. It hasn't happened in a very long time. Are you optimistic that we might not have four years in a row?
ANDY SERWER, EDITOR AT LARGE, "FORTUNE": I am, Jack. I mean, there's some things we need to know here. First of all, three years now, we're now down 50 percent since the spring of 2000, we're down about 23 percent last year, the overall market. That is the good news. People are saying, we are down so far, could it go lower? The answer is yes, the market could go down again. It doesn't pay any attention to rules or what we want. But there are some positives. We are really starting to wind down from all of the excesses of the late '90s. The big thing here of course is, I think, Iraq hanging over the head of the economy. If there is a quick resolution to that situation, I really think you could see the market take off.

CAFFERTY: Oil prices being one of the things in play and whether or not there is a de facto tax on the economy. A long war in Iraq, oil prices go to $50, $60 a barrel, very tough to keep the economy growing.

Lauren, 401(k)s, people have just gotten crushed, three years of declines in the stock market, and many of these invested in tech stocks where the biggest losses were sustained. What do we do starting the new year?

LAUREN YOUNG, "SMART MONEY": Well, you're right. I mean, 401(k) is -- the joke is they're 201(k)s now. But you want to diversify. Still, you still want to buy stocks. After three losing years, they're cheap. Who doesn't love a bargain?

CAFFERTY: So you've got to go against maybe your emotion, which says three years of declines, I don't want anything to do with that. You want to go counter to that and buy them because they are attractive at prices?

YOUNG: Absolutely. And you want to use your company's 401(k) plan. That is so important. The reason why you use the 401(k) plan and why you make the maximum contribution is you reduce your overall taxable income. Make sure you max out. Less than one-third of all Americans max out on their 401(k). And finally, don't borrow from your 401(k). That's the worst thing you can do. You are basically borrowing against yourself. You're paying interest. And if you leave the company, you are going to have to pay them back immediately which could really spell trouble. CAFFERTY: And as long as the money stays in there, any earnings are all tax deferred. You don't have to pay the taxes until the money comes out later.

YOUNG: Absolutely.

CAFFERTY: What about new rules, we can actually contribute more this year to both 401(k)s and IRAs, right?

YOUNG: This is actually one of the beautiful things. You know, for so long, you could only contribute about $10,000 into your 401(k). Now, you can contribute up to $12,000, if you've below the age of 50. If you're above the age of 50, you can contribute $14,000 a year. Those are the catch-up provisions that were added under the new tax act. So that is really good. And then, IRAs, people who don't have a 401(k), and even in some cases, you can have an IRA, depending on how much money you make, an Individual Retirement Account. You can contribute up to $3,000 a year and even more, if you've above the age of 50.

CAFFERTY: All right.

SERWER: And check with your accountant, too, because Congress and the president are adamant about increasing benefits to consumers to jumpstart the economy. So we could see more changes.

YOUNG: Which would be fantastic for the stock market, too.

CAFFERTY: Might be a stimulus package around the corner.

SERWER: That's right.

CAFFERTY: We've got a Republican Congress, Republican president, some things could happen.

Roth IRAs, one other thing that certainly is worth considering, especially if you have kids, right, college, whatever. Roth IRAs, tax-free. The money is tax-free when you take the money out sometime later down the road, so ask your financial guy about that.

What are we doing in the next hour?

SERWER: We're going to be talking about jobs, right?

YOUNG: We're going to get new jobs, maybe.

CAFFERTY: Do you need a new job?

SERWER: I may.

YOUNG: Hot jobs and how to get a job.

CAFFERTY: After what I said about that funny-looking guy in North Korea this morning.

SERWER: I don't think he's responsible for your employment, though, is he?

CAFFERTY: No, no, no, but the people here, they don't like when you do this. I get these memos. I get these notes.

SERWER: Let it go.

CAFFERTY: Anyway, we got another segment on minding your business coming up in the next hour.

LEON HARRIS, CNN ANCHOR: So I guess we can go ahead and just cancel your "American Morning" appearance in North Korea then?

CAFFERTY: Well, in North Korea, yeah.

SERWER: Good deal. Sorry to hear about that, Jack.

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







Aired January 2, 2003 - 08:47   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JACK CAFFERTY, CNN ANCHOR: Andy Serwer of "Fortune" magazine, Lauren Young of "Smart Money" magazine here minding our business. The market is coming off three losing years in a row. It hasn't happened in a very long time. Are you optimistic that we might not have four years in a row?
ANDY SERWER, EDITOR AT LARGE, "FORTUNE": I am, Jack. I mean, there's some things we need to know here. First of all, three years now, we're now down 50 percent since the spring of 2000, we're down about 23 percent last year, the overall market. That is the good news. People are saying, we are down so far, could it go lower? The answer is yes, the market could go down again. It doesn't pay any attention to rules or what we want. But there are some positives. We are really starting to wind down from all of the excesses of the late '90s. The big thing here of course is, I think, Iraq hanging over the head of the economy. If there is a quick resolution to that situation, I really think you could see the market take off.

CAFFERTY: Oil prices being one of the things in play and whether or not there is a de facto tax on the economy. A long war in Iraq, oil prices go to $50, $60 a barrel, very tough to keep the economy growing.

Lauren, 401(k)s, people have just gotten crushed, three years of declines in the stock market, and many of these invested in tech stocks where the biggest losses were sustained. What do we do starting the new year?

LAUREN YOUNG, "SMART MONEY": Well, you're right. I mean, 401(k) is -- the joke is they're 201(k)s now. But you want to diversify. Still, you still want to buy stocks. After three losing years, they're cheap. Who doesn't love a bargain?

CAFFERTY: So you've got to go against maybe your emotion, which says three years of declines, I don't want anything to do with that. You want to go counter to that and buy them because they are attractive at prices?

YOUNG: Absolutely. And you want to use your company's 401(k) plan. That is so important. The reason why you use the 401(k) plan and why you make the maximum contribution is you reduce your overall taxable income. Make sure you max out. Less than one-third of all Americans max out on their 401(k). And finally, don't borrow from your 401(k). That's the worst thing you can do. You are basically borrowing against yourself. You're paying interest. And if you leave the company, you are going to have to pay them back immediately which could really spell trouble. CAFFERTY: And as long as the money stays in there, any earnings are all tax deferred. You don't have to pay the taxes until the money comes out later.

YOUNG: Absolutely.

CAFFERTY: What about new rules, we can actually contribute more this year to both 401(k)s and IRAs, right?

YOUNG: This is actually one of the beautiful things. You know, for so long, you could only contribute about $10,000 into your 401(k). Now, you can contribute up to $12,000, if you've below the age of 50. If you're above the age of 50, you can contribute $14,000 a year. Those are the catch-up provisions that were added under the new tax act. So that is really good. And then, IRAs, people who don't have a 401(k), and even in some cases, you can have an IRA, depending on how much money you make, an Individual Retirement Account. You can contribute up to $3,000 a year and even more, if you've above the age of 50.

CAFFERTY: All right.

SERWER: And check with your accountant, too, because Congress and the president are adamant about increasing benefits to consumers to jumpstart the economy. So we could see more changes.

YOUNG: Which would be fantastic for the stock market, too.

CAFFERTY: Might be a stimulus package around the corner.

SERWER: That's right.

CAFFERTY: We've got a Republican Congress, Republican president, some things could happen.

Roth IRAs, one other thing that certainly is worth considering, especially if you have kids, right, college, whatever. Roth IRAs, tax-free. The money is tax-free when you take the money out sometime later down the road, so ask your financial guy about that.

What are we doing in the next hour?

SERWER: We're going to be talking about jobs, right?

YOUNG: We're going to get new jobs, maybe.

CAFFERTY: Do you need a new job?

SERWER: I may.

YOUNG: Hot jobs and how to get a job.

CAFFERTY: After what I said about that funny-looking guy in North Korea this morning.

SERWER: I don't think he's responsible for your employment, though, is he?

CAFFERTY: No, no, no, but the people here, they don't like when you do this. I get these memos. I get these notes.

SERWER: Let it go.

CAFFERTY: Anyway, we got another segment on minding your business coming up in the next hour.

LEON HARRIS, CNN ANCHOR: So I guess we can go ahead and just cancel your "American Morning" appearance in North Korea then?

CAFFERTY: Well, in North Korea, yeah.

SERWER: Good deal. Sorry to hear about that, Jack.

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