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CNN Live Today
Stock Tips
Aired June 03, 2003 - 10:21 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: Now for people looking to put money in the market mutual funds, usually they are a good bet. But there are some things you should watch out for if you're looking at mutual funds.
So now let's look at and talk with Gerri Willis. She's a CNNfn personal finance editor and she's here this morning with her top five tips on mutual funds.
Good to see you, Gerri.
GERRI WILLIS, CNNfn CORRESPONDENT: Good to see you, Leon.
HARRIS: And it looks like your first tip is the one that you usually start with, and that's doing your homework.
WILLIS: That's right. Well, you know, the first place that most investors turn when they're researching a stock is analysts reports from Wall Street. But, you know, we found out that some of those are compromised. Let me suggest something to you you may not have thought of, actually look at the annual report or quarterly filings. You can find these at sec.gov and these are very sober documents, I have to tell you. They describe their businesses, the up sides and the down sides.
HARRIS: All right. Now, after you've done that, though, you say that people should be a bit cautious about the red hot stocks?
WILLIS: Well, you remember Qualcomm, Pets.com, WorldCom? What do those have in common? They lost a lot of money.
HARRIS: They were red hot. Yes, that's true. That's true.
WILLIS: So...
HARRIS: But how do you know which ones are legit, though?
WILLIS: Well, you have to do your research, look at the fundamentals, understand the business, right? And then you have to sit around and think about is this stock over valued? Am I paying too much for the earnings here?
You know, the red hot sector right now, biotech, I think that's going to be the next sector that people could get burned in if they don't pay attention to these very issues I'm describing.
HARRIS: Yes, and it's the first on the NASDAQ to actually make a rebound right about now, too, as well.
Now, next you say understand your trading costs.
WILLIS: That's right. You know, a lot of individual investors forget to think about how much they're paying for their investments. And a recent General Accounting Office report showed that the biggest mutual fund costs were up 11 percent. That's a big increase. It comes right out of your gains. Make sure you understand the loads and the costs of buying those mutual funds if you're buying funds.
HARRIS: OK, now you say next stay diversified. What do you mean by that?
WILLIS: Well, you know, if the stock market continues to trade higher and higher like this, what people will find is that stocks take up more and more of their portfolio. So it's up to you to trim that back to a level that's manageable, that matches your asset allocation needs for your age and your needs for retirement. Keep that in mind as you're buying stocks down the road.
HARRIS: So there's no one formula that fits all, then?
WILLIS: No. There's not. It all depends on how many years you have left to retirement. And remember, it's not just stocks and bonds, it's also real estate. We're starting to look at all kinds of sectors now to diversify your holdings.
HARRIS: Now, finally, your tip this morning is one that should resonate with a lot of people, don't buy yesterday's winners. That's what happened a lot of times with that big bubble that we saw build up a couple of years ago.
WILLIS: You bet. That applies to stocks and to mutual funds. I can't tell you how many people ask me, what's the biggest mutual fund gainer right now over the last three months or the last year? That's no way to pick a fund. You want to look at the long-term history of the these things and how they perform in up and down markets to make sure you're getting the best fund or even the best stock.
HARRIS: Exactly. There you go. There you go. Good advice, as always.
Thanks, Gerri.
WILLIS: Thank you, Leon.
HARRIS: Gerri Willis from CNN Financial News.
See you tomorrow.
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 June 3, 2003 - 10:21 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LEON HARRIS, CNN ANCHOR: Now for people looking to put money in the market mutual funds, usually they are a good bet. But there are some things you should watch out for if you're looking at mutual funds.
So now let's look at and talk with Gerri Willis. She's a CNNfn personal finance editor and she's here this morning with her top five tips on mutual funds.
Good to see you, Gerri.
GERRI WILLIS, CNNfn CORRESPONDENT: Good to see you, Leon.
HARRIS: And it looks like your first tip is the one that you usually start with, and that's doing your homework.
WILLIS: That's right. Well, you know, the first place that most investors turn when they're researching a stock is analysts reports from Wall Street. But, you know, we found out that some of those are compromised. Let me suggest something to you you may not have thought of, actually look at the annual report or quarterly filings. You can find these at sec.gov and these are very sober documents, I have to tell you. They describe their businesses, the up sides and the down sides.
HARRIS: All right. Now, after you've done that, though, you say that people should be a bit cautious about the red hot stocks?
WILLIS: Well, you remember Qualcomm, Pets.com, WorldCom? What do those have in common? They lost a lot of money.
HARRIS: They were red hot. Yes, that's true. That's true.
WILLIS: So...
HARRIS: But how do you know which ones are legit, though?
WILLIS: Well, you have to do your research, look at the fundamentals, understand the business, right? And then you have to sit around and think about is this stock over valued? Am I paying too much for the earnings here?
You know, the red hot sector right now, biotech, I think that's going to be the next sector that people could get burned in if they don't pay attention to these very issues I'm describing.
HARRIS: Yes, and it's the first on the NASDAQ to actually make a rebound right about now, too, as well.
Now, next you say understand your trading costs.
WILLIS: That's right. You know, a lot of individual investors forget to think about how much they're paying for their investments. And a recent General Accounting Office report showed that the biggest mutual fund costs were up 11 percent. That's a big increase. It comes right out of your gains. Make sure you understand the loads and the costs of buying those mutual funds if you're buying funds.
HARRIS: OK, now you say next stay diversified. What do you mean by that?
WILLIS: Well, you know, if the stock market continues to trade higher and higher like this, what people will find is that stocks take up more and more of their portfolio. So it's up to you to trim that back to a level that's manageable, that matches your asset allocation needs for your age and your needs for retirement. Keep that in mind as you're buying stocks down the road.
HARRIS: So there's no one formula that fits all, then?
WILLIS: No. There's not. It all depends on how many years you have left to retirement. And remember, it's not just stocks and bonds, it's also real estate. We're starting to look at all kinds of sectors now to diversify your holdings.
HARRIS: Now, finally, your tip this morning is one that should resonate with a lot of people, don't buy yesterday's winners. That's what happened a lot of times with that big bubble that we saw build up a couple of years ago.
WILLIS: You bet. That applies to stocks and to mutual funds. I can't tell you how many people ask me, what's the biggest mutual fund gainer right now over the last three months or the last year? That's no way to pick a fund. You want to look at the long-term history of the these things and how they perform in up and down markets to make sure you're getting the best fund or even the best stock.
HARRIS: Exactly. There you go. There you go. Good advice, as always.
Thanks, Gerri.
WILLIS: Thank you, Leon.
HARRIS: Gerri Willis from CNN Financial News.
See you tomorrow.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
