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Nuclear Weapons Dangerously Easy To Obtain; Microsoft Delivers Record Breaking Dividend

Aired December 5, 2004 - 15:00   ET


ANNOUNCER: From New York City, America's financial capital. This is IN THE MONEY.


JACK CAFFERTY, HOST: Welcome to the program. I'm Jack Cafferty. Coming up on today's edition of IN THE MONEY:

Watching and wondering: Ever since September 11, America's been on edge for another attack. We'll look into some ideas about why it hasn't happened -- yet.

Plus, fencing in the bomb: You don't need to be a big rich country anymore to get nuclear weapons. We'll look at why the bomb is spreading and whether it can be stopped.

And touched by an agent. Please. The feds are getting even more up close and personal with their preflight screenings. Don't touch me. We'll tell you what to expect the next time you travel, maybe during the upcoming holidays.

Joining me today, as always, a coupe of IN THE MONEY veterans: CNN correspondent, Susan Lisovicz, "Fortune" magazine editor-at-large, Andy Serwer.

So, we got this U.N. situation going on over there. People beginning to beat the drum for Kofi Annan's resignation as secretary general. The idea being that he was in the top job and the buck eventually stops at the top during this oil-for-food scandal. Allegations that as much as $20 billion worth of the $64 billion that was raised by selling Iraqi oil was illegally diverted in the form of kickbacks, payoffs, his son implicated by virtue of the fact he was collecting checks from a Swiss company for a period of five years after he supposedly left their employ. What do you think?

ANDY SERWER, "FORTUNE" MAGAZINE: Well, you know, you're starting hearing a lot of people saying that Kofi Annan should go, especially Norm Coleman, a senator from Minnesota, and others. But what you're not hearing, Jack, is why Kofi Annan should stay and that's because there really is no argument. He's sort an indefensible position right now. I mean, this is a situation if he was the CEO of a U.S. company, for instance, he'd be out the door.

SUSAN LISOVICZ, CNN CORRESPONDENT: Well, I mean, there's so much that makes you just want to beat your chest about Iraq: 100,000 women and children killed in Iraq since the war began, 1,200 of our men and women in uniform killed, 10,000 injured and you say why did we go there in the first place?

Well, if the sanctions had worked, if the oil-for-food had reined in Saddam Hussein, we've debated plenty about weapons of mass destruction and whether there were links to terrorism, but reigning in Saddam Hussein was sort of the root of the problem in the first place and that program failed miserably.

CAFFERTY: Became a cash cow for some.

LISOVICZ: It enriched him. It enriched him.

CAFFERTY: He was this close to getting out from under the sanctions; he pocketed who knows how many billions dollars in secret bank accounts. And had he gotten out from under the sanctions how long do suppose it might have been before he'd started a weapons of mass destruction program of some kind? The odds are it probably wouldn't have taken him too long. So, I mean, there's a lot resting on Kofi Annan.

SERWER: Well, you know what I think is interesting, you guys, is watching President Bush through this, who is obviously no friend of Kofi Annan's but he's sort of playing things close to the vest and just saying, "Well, I'm just going to let this thing run its course" and I think that he's very smart there because I think it's probably going to end up in a way that will be to his liking.

LISOVICZ: Well, basically he's not supporting him by not saying anything.


SERWER: But not he's calling for his ouster because he doesn't have to.

CAFFERTY: And of course, in a way, there's an ax to grind there because we didn't get that second resolution, we didn't ask for a vote because we didn't have the votes to get it passed. But, he went to the U.N. and lost, to make the short version of the story. And now turns out people like France and Russia maybe had another reason for not supporting the resolution to go to war in Iraq. They are allegedly getting paid off from kickbacks from the oil-for-food program. So, the whole thing has an odor to it, as they say.


CAFFERTY: September 11, 2001, feels sometimes like a long time ago, or can be as close as tomorrow. Ever since the attacks three years ago, Americans have been wondering if and when the next strike will come. Lately, we're also wondering why it hasn't already arrived. An article in "New York" magazine raised that very question this week to help us try to answer it, we're joined now by Dr. Irwin Redlener who is the head of the National Center for Disaster Preparedness at Columbia University. Doctor, welcome to our program. It's nice to have you here.


CAFFERTY: There were eight years between the first attack on the World Trade Center and the one that ultimately brought the twin towers down. Al-Qaeda is nothing, if not extremely patient and meticulous in their planning. Is it just a question of living here on borrowed time do you think?

REDLENER: Well, we're living, as that article pointed out, on al-Qaeda time in a certain respect because I think it's very difficult to predict the schedule that they operate under. They're very patient, apparently, they're very careful in their planning, so I don't think we you had should be lulled into complacency because we haven't been attacked since 9/11. I think that would be a big mistake. Nor I do think everyone's feeling complacent about it, it's just that we just don't know exactly when or what might strike us.

LISOVICZ: Dr. Redlener, one of the biggest surprises I got from reading this article was that the French intelligence have been a key in preventing attacks since 9/11.

REDLENER: Well, I guess I was surprised by that, too, but it goes to show you that things are never really as black and white as we sometimes make them out to be and I think sounds like we've gotten extraordinaire cooperation from French intelligence and that has actually probably saved quite a few lives in the United States. So maybe some rethinking about how we deal with some of our allies across the world is probably opportune, but the main thing is that we have been working hard, I think, ourselves here in New York, elsewhere around the country, and also with our international partners.

SERWER: Irwin, one thing I constantly debate with friends and acquaintances and I'm sure millions of others Americans do as well, would the next attack be in New York or Washington or would it be, say the mall of America in Minneapolis or in Kansas city or somewhere, to show that they can strike anywhere? Where do you come out on that?

REDLENER: Well, there are two schools of thought about that. One is that for maximum impact, in terms of disrupting things like the American economic infrastructure or its political infrastructure, then strikes on Washington and New York remain very, very important potential targets, as far as our planning and preparedness goes. On the other hand, as I have hey this conversation with actually Secretary Ridge, that if one wants to do psychological disruption and make the entire country feel unsettled, I guess one could make a rationale if you're a terrorist for dealing with some nonexpected kinds of targets like areas in more isolated communities around the United States, including the Midwest and other places.

CAFFERTY: How effective -- how effective have we been, in your opinion, at making this country safer? We've spent billions and billions of dollars on the Department of Homeland Security, we've tightened restrictions to the airports for people getting on and off airplanes, we've -- you know, rearranged vast numbers of bureaucrats at the federal level in the reorganization of our security apparatus. How much safer are we and how much safer, at this point, should we be, in your opinion?

REDLENER: Well, first of all, this is an extraordinarily mixed report card that we have. In some ways we have made improvements, certainly things like airport security and our ability to detect early biological attacks, for example, but in other areas we have made almost no progress since 9/11. The bureaucracies are monstrosities of confusion on some level. It's been very, very difficult. We -- there are things that can be done and could have been done a long time ago that would have, for example, improved our security at the ports or at the rail lines and other kinds of things. There's a -- we just did a survey this past summer showing a dropping public confidence in the ability of the government to protect us in the event of a terrorist attack, and a very dramatic, almost crisis-type of drop in the public's confidence in the health care system to respond appropriately. We have enormous amounts of work to do. We're trying to do -- we're trying to apply business as usual operations to one of the most direly urgent situations we've ever faced in the United States.

LISOVICZ: Let me just slip in quickly, Dr. Redlener. Bernard Kerik is somebody who's dealt with terrible situations and he is President Bush's choice as the next Homeland Security director.


LISOVICZ: As someone who is involved with emergency preparations, what are your thoughts on his selection?

REDLENER: Well, I'm encouraged by his selection. He's been extremely strong, forceful, intelligent leader, who performed very well post-9/11, and the other thing to note about New York, of course, when I was talking about the mixed bag nationally, New York has very, very unique capacity in the prevention and protection and actually the public understands this as well. So he comes from a background from New York City, having experienced 9/11, and I think the country will be, I believe well-served by Mr. Kerik in this new role, and also, we'll get, I think, perhaps greater attention paid to some of the very important needs that New York and other large cities have with reference to where support is going right now in terms of the balance of support going to more urban areas versus less populated areas in rural communities. So, I think we'll get a lot out of Bernard Kerik in that role.

CAFFERTY: This guy's a beat cop, came out of Patterson, New Jersey.


CAFFERTY: Worked his way to the very top of the government. You could -- I bet you could sell tickets for the first time he comes up against some of the career bureaucrats in Washington that don't have a clue about much of anything. I'm looking forward to those kind...

REDLENER: I'd like to be in the first row myself, there. CAFFERTY: Me too. Dr. Redlener, it's nice to have you on the program. Thank you.

REDLENER: Thanks a lot.

CAFFERTY: He's from Columbia University, head of the National Center for Disaster Preparedness.

We're going to step out for a minute, when we get back:

It's getting cheaper to join the nuclear club and Iran isn't the only country waiting in the checkout line.

Plus, going first class all the way: We'll look a new magazine that celebrates the rich lifestyles of Wall Street's trading stars. That's what the country needs.

And, what's the price-to-earnings ratio at the crap table? Find out plans to create a new investment fund that literally wants to gamble your money.


LISOVICZ: It used to be only countries with big muscle and a checkbook to match could build a nuclear bomb of their own, but the technology is create weapons fuel is spreading and these days smaller countries are getting in on the act or trying to. That means the old safeguards designed to keep the nuclear threat fenced in are breaking down. John Wolfstahl joins from us Washington for more about that. He's the deputy director for Nonproliferation at the Carnegie Endowment for International Peace.

Welcome, John, to the program.


LISOVICZ: I guess we should have a nuclear proliferation 101, if we will. How many countries are there presently that have -- have the technology and the capability to build nuclear weapons?

WOLFSTAHL: Well, it's a hard number to give you. I mean, there are eight countries right now that actually have nuclear weapons, and there are four that have given them up over the past 10 or 15 years. But, if you have a large nuclear industry, if you can build nuclear reactors, if you have a large industrial base, so if you're Germany, if you're Japan, if you're Taiwan, you probably have the means to produce a nuclear weapon, if you make the political decision to go that route.

SERWER: Well, the lists of countries that possibly could be seeking to have nuclear weapons is, frankly a scary one, John. Saudi Arabia, Syria, Egypt, Turkey, even Iraq? Is this really possible?

WOLFSTAHL: Well, again it depends on the type of future that we have. Right now, there are actually very few countries that are trying to get nuclear weapons. North Korea, many people believe has crossed the nuclear threshold quietly. Iran is obviously in the nuclear business. There aren't many countries beyond that that are actively seeking nuclear weapons, right now. But, the concern is that if those two countries, North Korea and Iran, go nuclear and the fabric that keeps countries from going nuclear breaks down you could see those countries decide to get into the nuclear business and that has tremendously negative implications for the regions and for the United States.

CAFFERTY: How do you come one the right answer to that debate about what to do about nuclear proliferation? The Israelis kind of have the short-hand version of what to do about it, when it was discovered that there were nuclear weapons plants being built in their backyard, they sent some fighters over and bombed them off the planet and that was the end of that deal. How do you -- how do you get to the -- to the decision either to take these facilities out, if you can prove they exist, or continue to try to negotiate with people like that weird little guy that runs North Korea? I mean, how you going to make a deal with that guy?

WOLFSTAHL: Well, you know, how do you go about it? Like the old joke says "very carefully." Right now, we are in the position where we're putting out fires when they happen. The problem is, of course, that in the case where Israel bombed Iraq, it wasn't the end of the story. They were able to push back the nuclear program by about a decade, but it didn't end it. Nuclear weapons programs come from larger issues, either insecurity or desire to dominate your neighbors and there is a time for diplomacy, in some cases that can be effective, but there are also going to be times when you may need to think about military means. The problem is that the system we built for 30 years, which convinced countries they were better off out nuclear weapons is breaking down. And so, the role of nuclear weapons in international affairs is growing. The United States is part of increasing that role and the sense that countries are better off with nukes is a growing sense and it's one that we have to work effectively against.

LISOVICZ: OK, so if diplomacy is one way to avert the threat, how do you address a nation like Iran, which is not exactly had great relations with the U.S.? How would you assess the progress or lack thereof with Iran?

WOLFSTAHL: Well, I think we have made some progress over the past couple of years with Iran in the sense that their program is now out in the open. They were secretly trying to build a nuclear weapon, despite what they say, and the Europeans have taken the lead in saying, "We think that Iran is going to be better off without nuclear weapons. We think that they can trade with their neighbors. We think we can provide them with the economic incentives that make it worth their while not to go nuclear."

The United States has remained on the side lines and many people believe that without the U.S. engaged the deal will not succeed, that in fact, Iran will decide the benefits of going nuclear are greater than staying the way they are. And so, I would encourage the United States to get serious what it wants to do with Iran. Do they really want to try and influence Iran's future so that they don't have nuclear weapons or would they rather sort of remain agnostic to this deal the Europeans have negotiated which could lead to its collapse without any strategy for what to do after that?

SERWER: John, how confident are you that our government is up to snuff on this issue? I read recently that George Tenet, before he resigned, said that nuclear proliferation could be the domino theory of this century. Well, of course the domino theory proved to be wrong.

WOLFSTAHL: That's true, and I think, as we saw in the case of Iraq, there's a lot of concern, rhetorically, about weapons of mass destruction, and particularly nuclear weapons, but our intelligence isn't as good as it should be. We still see high level government officials, whether it's Secretary of State Colin Powell or the president, saying North Korea has nuclear weapons. Well, we don't know they have nuclear weapons. We believe it's true, it's possible but that's a far cry from saying we absolutely know. So, we need to do better both in terms of our intelligence collection, but also in terms of how we use our words at a high political level because it does have a cost. I'm not concerned so much about the attention these issues are getting, the rhetoric is there, it's the follow-through. So, for example, the big concern we have is that terrorists are going to get their hands on nuclear weapons or nuclear materials in the former Soviet Union. We should be spending about $3 billion a year to secure that problem; we're spending $1 billion a year. So, we're greatly under funding the most important national security effort we could be engaged in.

SERWER: All right, obviously critical issues and we appreciate you coming on the program and talking about them. John Wolfstahl is the deputy director for Nonproliferation at the Carnegie Endowment for International Peace, thank you.

WOLFSTAHL: My pleasure.

SERWER: Coming up after the break

The check is in the mail: As Microsoft delivers a record-breaking dividend, we'll look at how Wall Street is reacting.

Also ahead, hands-on security: We'll look at the new guidelines for airport passenger screening. See what to expect when you show up to fly over the holidays.

And helpful hints for white collar crooks: Find out whatnot to do in prison on our "Fun Site of the Week."

CAFFERTY: Don't drop your soap.



UNIDENTIFIED MALE: Tyco international's CEO Edward Breen wasted no time in cleaning up the mess left by Dennis Kozlowski, the former CEO, who's charged with looting the company for billions of dollars. Breen replaced the entire executive board and is now streamlining the massive conglomerate and reducing its enormous debt. Wall Street is smiling on Tyco's new image. The company's stock has been rebounding ever since Breen took over.


LISOVICZ: Now let's take a look at the week's top stories in our "Money Minute." The markets just love it when we shop. Stocks rose sharply earlier this week when the October consumer spending numbers showed an unexpected rise of 7/10 of one percent. That was the biggest increase since May.

The stock market also encouraged by falling oil prices. Oil dropped below the $45 a barrel level for the first time since September. Better than expected heating oil stockpiles are helping the price drop. But, market experts also say some of the biggest oil speculators are simply cashing in their hefty profits.

And from the "we can't make this up file": Are you the kind of person who has a few too many and then makes a phone call to the boss or the ex that you regret in the morning? Well, Virgin Mobile has a plan for you. For a 25-cent fee, the company will block any number you ask them to stop you from calling at certain hours. The call blocking lasts from the time of your request until 6:00 a.m. the next morning.

SERWER: Christmas came early for Microsoft shareholders this week, as the software giant finally doled out the long awaited $3 a share dividend to investors. It's a payout worth more than $33.5 billion. Partly because the dividend excitement, Microsoft shares have started to perk up as of late. The stock has gained 11 percent since mid-August and now lots of market watchers believe a big chunk of that dividend money will be reinvested right back into Microsoft shares. That makes Microsoft our "Stock of the Week."

You know, I was just checking out their balance sheet, $64 billion of cash. Now, half of that's going to get paid out. This is a company that's still remarkably healthy, about a 90 percent market share in Window. The only other two systems out there, of course, the Apple and Linux. How many people do you know use that? Not too many. So, it's a very strong company and they are starting to show and tell investors, "Hey, we'll give you some of this money back."

LISOVICZ: Well, yeah, it was criticized for so long and so, finally when Microsoft does a dividend it does it in a huge way and I think the most optimistic thing is that so many investors are putting it right back into the stock.

CAFFERTY: Well, $20 billion, as I understand, of that money will go right to pension funds and mutual funds. So, it might not just be Microsoft shares that get bought up with this money, but the stock market in general getting a shot of adrenaline.

LISOVICZ: Which is also good.

CAFFERTY: The fact remains, though, as strong as the company is, and as much cash as they have, the stock price has not performed very well. It hasn't been above split adjusted, I think, $30 a share, for what, three years now?

SERWER: Yes. That's right, and actually, you go back to 2000, Jock (SIC), this is a $60 stock. OK, and now, today the company has a value, a market cap a value -- overall value of $300 billion. That means back in 2000 it had a value of $600 billion.

LISOVICZ: That was the height of the market, as well.

SERWER: Right, that's true. The other way to look at it, though, Susan, is that there is a lot of upside. I mean, this is not a fast, super growth company anymore. But it is a cash cow. I mean, it's so funny now that this company, which was the ultimate growth stock is now a stayed cash cow, but it really kind of is.

LISOVICZ: Right, it's going after Google. It's got X-Box. It's got the Microsoft Interactive.

SERWER: Right.

LISOVICZ: So, I mean, it's got areas for growth, if it succeeds.

CAFFERTY: Well, even the mundane old stuff they started out with, computer software. How many areas of the world don't have computers yet, don't have software yet and it's all in the pipeline, and Microsoft will, as the computers spread around the globe -- you know, like you said, it's a cash cow.

SERWER: And that really is a breadbasket for this company, because a lot of other businesses they've never made money on. It's operating software, systems software, applications software, software, software, software. I mean, that's really where they make their money. The rest of the stuff, I mean, I wish they'd -- I wish they'd never gotten into the X-Box really, and just paid it all out to shareholders like my mom out there...

CAFFERTY: Sounds like you have a few shares.

SERWER: Well, my dear old mother's got a few shares, so -- she's getting a good Christmas because she's going to be getting some of this, so good thing for mom.


SERWER: All right. Coming up on IN THE MONEY:

The hassles, the crowds, the patdowns: You already know what you can expect at the airport this holiday season, but will changes in security policy bring changes for the better?

Plus, lifestyles for the rich and frantic: A new magazine focuses on what Wall Street traders do after the market closes. Oh, be afraid.

And this man wants you to gamble with your money: Literally. He's not a broker. He's a sports team owner who thinks he can make investors more money by forgetting the stocks and betting on the slots. Stay tuned.


LISOVICZ: The hassle factor for holiday travelers could be rising with new rules from the Feds on pre-flight screening. Forget about just taking off your coat and shoes. The Transportation Security Administration is checking closer than ever for hidden weapons, sometimes with intensive pat downs. And agents are taking more travelers aside for special screening. For a look at what you could face at the airport this month, we're joined by Thom Nulty of Corporate Solutions Group, a travel management firm. Welcome, Thom.


LISOVICZ: I know you travel very frequently. I guess the most vivid example of some of these changes is what occurred to your 88- year-old mother just last month.

NULTY: Yes. She and I went to Hawaii and she had a knee replacement operation and just a few weeks -- months prior to that. As she went through the magnetometer, she set it off and had to go through a pat down search. It didn't seem to bother her much, but it did sort of bother me. It was obvious it was her knee that made the magnetometer go off, but she got a full-body pat down. The reality is it's a necessity, though. I think about Mrs. Doubtfire and Robin Williams and how they were able to make him look like a grandmother. So I guess it's a necessary evil.

SERWER: Thom, that's -- Mrs. Doubtfire that's an interesting one. Let me ask you about the TSA. Aren't they in a sort of difficult position because profiling for lack of a better word, actually sort of makes sense, targeting specific people who look like they could be terrorists or could be terrorists. Obviously there are civil liberty issues there. Random searches tick people off and they're going to be going after people like your grandmother. Where do you stand on that?

NULTY: Well, you know, I think it's once again, it's a necessary evil. I don't like it. I had to go through a secondary search myself just the other night and, you know, even patted down my bare arm. I had a short sleeve shirt on. So it seemed highly unusual to me. So nobody likes it, but I don't know what the alternative is. The only real alternative that I'm aware of is some new technology, some sniffing equipment that's actually being used in Europe and in some other areas. It's actually very similar to the magnetometers you see at the airport. When you go through it, it actually puts a little puff of air and can check for explosives.

Now when those things start being installed, then this thing won't be necessary. But up until that happens, I don't think they have much of a choice. So while people don't like it, including me, I don't know what the alternative is.

CAFFERTY: Thom, Jack Cafferty, with all of the lack of inspection that goes into cargo that's placed aboard airliners and stuff, all the access that at some airports that anybody can have to the tarmac and the flight line, porous security in those areas, we're probably living on borrowed time before an airliner is taken out of the sky here. But the things that they are doing, I think are, like you say, they are necessary. It's a first step. What can I do if I'm traveling over the holiday season to maybe cut back on my aggravation when it comes to dealing with all of these safety regulations

NULTY: One of the things I'm doing is I'm dressing for travel. I'm actually wearing clothing that, without a belt, wearing shoes that I know will not set off the magnetometer. I take my cell phone off and put it in my briefcase before I go through there. And I'm trying to go through with as little as possible and if everybody does that, then the whole thing will go that much smoother. The other thing I do is I check in online and so I actually have my boarding pass before I get there. When you do that, if you can't get your boarding pass in advance, that probably means that you've been randomly selected as somebody who's going to get a secondary search. That happened to me as well just recently.

LISOVICZ: Thom, I think about some of the really stupid things, for lack of a better word, I've done in the years since 9/11, when I haven't just gone through the contents of my purse. I've had one letter opener seized, two Swiss army knives. I've worn snug fitting -- I'm no threat, not to you anyway Andy. I've worn snug fitting cowboy boots and I've had to yank them off my feet. These are things that obviously delayed me and was a pain, quite frankly, to my fellow passengers behind me.

NULTY: Absolutely. Everything you can do to make yourself ready to go through security is great. And really taking as little luggage through there as possible is really important. There's actually a company out here in Los Angeles called Baggage Direct that's starting to pick people's luggage up at home and they are approved by the TSA and they give you a boarding pass and you go straight into line. The key is, take as little as possible through there and everybody does that, we'll all get through a lot faster.

CAFFERTY: What about this idea too of carrying just, to the degree your able to, carry-on luggage as opposed to stuff you have to check, the idea being, you get to the airport. If you go up to one of those little electronic terminal things. You can use a credit card to get your boarding pass if you haven't gotten it online and then you can proceed directly to the gate or to the security line, cutting down that whole length of time you got to stand there and check your bags and stuff. I spent a week in Chicago with a single carry-on suitcase. I didn't look very good out there, but I got in and out of those airports like a jack rabbit.

NULTY: Well, that's obviously the way I travel on most of my business trips. I do exactly that. I try and get my boarding pass online the night before. But that is really the key is to not have to wait for -- not to have to get in lines. That's really the most important thing. So anything you can do to avoid lines is very, very important. And that really works, jack.

SERWER: Thom, a quick last question here. I saw a company send me some information on some sort of human X-ray machine. It struck me as kind of out there. Have you heard about this, seen it?

NULTY: I sure have. In fact, they have been tested and they really are probably labeled X-rated because they do show all body parts and no matter what you are wearing, you can actually look through the clothing. It's the superman X-ray vision that every teenage boy wanted to have.

LISOVICZ: Not only teenage boys, I might add.

SERWER: To be fair.

NULTY: It's a true voyeur type machine.

SERWER: Will they ever use that Thom?

NULTY: They have tested it in a few places and people don't necessarily like that either. This whole security intrusion is very difficult on travelers. People just don't like it. The problem is, there isn't much of an alternative. As Jack mentioned earlier, there are other areas of security we have to worry about as well and you have to start somewhere. So while I hate all of this stuff and I hate doing it, I wish I could go back to the good old pre-9/11 days where you just walk on to an airplane, that would be great. But I'm afraid 9/11 did happen and I'm afraid those days will never be with us again. Maybe we can all start wearing togas on the airplane and then we wouldn't have to worry about anything.

LISOVICZ: Well, it sounds like some very smart entrepreneurs are already rising to the occasion with handling your baggage for you. So that's a development there that could be on the positive side. Thom Nulty, partner in the Corporate Solutions Group. Thanks for your very wise suggestions.

NULTY: Great to be with you.

LISOVICZ: Lots more to come here on IN THE MONEY. Up next -- bulls, bears and bling-bling. We'll check out a magazine that's selling a lifestyle, the one Wall Street traders are supposed to lead.

And want to put money on a sporting event? Find out why a new hedge fund could be just the bet you are looking for.


SERWER: When the closing bell rings, most high level stock traders and hedge fund managers don't exactly rush home to the wife and kids. And a new magazine is looking to cash in on their free spirited and free spending lifestyle. Joining us now is the editor in chief of "Trader Monthly," a new magazine. Randall Lane, Randall, welcome to the show.


SERWER: So tell us about this idea. Is this your baby? Did you come up with it? LANE: Magnus Grieves (ph), who's a big trader and owns a trading company in London, actually, came up with the idea. So we're generated from traders and the idea that there's a need for a community of traders to get together under a magazine and trading really is a lifestyle and that's what this magazine is trying to drive home.

LISOVICZ: And I guess the launch party, Randall, sort of set that out very clearly. It's Susan Lisovicz. Jack wouldn't be caught dead doing this, but I went to the "Trader Monthly" launch party. And for those people who weren't there, it was at a very posh ballroom, sweeping views of New York City, live band, fancy cigars, open bar, lots of food, a big crowd. I felt like "Bonfire of the Vanities." I mean, do the '80s live?

LANE: Or as far as traders call that, that's Monday.

LISOVICZ: I think it was on a Monday.

SERWER: That's just one day.

LANE: We had 800 people on a Monday. It really is amazing. These guys have such a high-pressure job during the day that at night, they need something to take it to the next level. So you see these guys in every facet of their lives, whether it's cars, whether it's watches, whether it's liquor, they want the best and they are not afraid to spend for it.

CAFFERTY: My question would be, if they are living so well, how come I'm not making more money in my account with them in the stock market?

LANE: Right now the stock market is flat. But remember that the currency market, the commodities market. I mean look at how oil is doing. Traders are doing very well this year. Even when the stock market is flat, remember that most traders then can move to other types of contracts. So traders are still doing very well. If you look at how bonuses are shaping up, traders' bonuses are actually going up for 2004, while investment bankers are flat.

SERWER: Jack, the other reason why they are doing well and you are not is because they are called brokers. Hey Randall, this is a real high testosterone group of individuals. I think they make, what, like $400,000 a year on average?

LANE: Our average reader makes $400,000 a year. It's amazing.

SERWER: So what do these guys do with their money? What are the products that they are interested in?

LANE: It's interesting because it's not just that they make so much money. It's that they spend it all. They have a different relationship than most people have with money because every day, they are up 10,000, down 10,000, up $50,000, down $50,000. So they don't relate to money the way that most people do. It's something that is meant to be enjoyed because tomorrow can be a rough day or tomorrow if you spend $50,000 on one night you can make it back. And so they are spending it on cars, the watches, the way these guys buy watches. They buy watches the way the rest of us just buy baseball cards or what not. They just collect them.

LISOVICZ: Randall, see it, make it, spend it, I believe is the mantra. You can see it with the advertisers, cognacs, fancy cars. But you and I know that the launch, the success of first-time magazines is quite high. I think 9 out of 10 magazines fail. So how long are you going to give this baby?

LANE: I think we are good. We carried 50 pages of advertising just in the first issue. Advertisers realize that this is a very hard to reach group and again, not just that they make a lot of money, which of course is very desirable for advertisers, but they spend all of it. So it's unique in that it's not just that you can target affluent people, not just affluent people, but affluent men. It's a pure buy, but then they spend everything they make. So it's a very, very unique advertising opportunity.

CAFFERTY: Are there enough of these guys out there to support a magazine like this over a period of time?

LANE: We have 100,000 coming out of the gate and we actually think we're going to be able to grow from there. We had over 1 million hits on our Web site in the first week. So we think actually there's perhaps an even greater pool. For now, the top 100,000 is good with us.

SERWER: Randall, can other people read the magazine and what happens if there's a downturn? Can the rest of us enjoy this thing?

LANE: It's sold on newsstands across the country. It's 10 buck a pop, so...

SERWER: Why didn't you make it 15?

LANE: Maybe we'll make it $20.

LISOVICZ: Randall, would it be a fair description, this is , "Trader Monthly" is "Maxim" meets Bloomberg meets the Neiman Marcus holiday catalog?

SERWER: That's very good.

LANE: I think maybe a "GQ" meets (INAUDIBLE) meets "Forbes" or however you want to do it. It's a men's lifestyle magazine, but it's very high end. I mean we're talking about -- we're not going down into the gutter or anything. This is the best of everything, the best cars, the best ways to enjoy life, the best trips, as well as ways to make more money. So it's really the embodiment of what these guys do. Make it during the day, spend it at night.

CAFFERTY: Kind of thing Gordon Gecko might have read.

SERWER: He has a subscription.

LISOVICZ: Randall Lane, editor in chief of "Trader Monthly." I really enjoyed the vicarious experience, feeling like I was hobnobbing with that very exclusive circle.

LANE: Great to have you.

LISOVICZ: OK, good to talk to you, Randall and the best of luck.

Up ahead on IN THE MONEY, hedging your pets. We'll tell you about a hedge fund that works like a sports bookie, but keeps it legal.

And take a different kind of gamble and drop us an e-mail. We might wind up reading your message on the show next week. The address,


CAFFERTY: There's always some level of gambling involved when it comes to investing but Webmaster Allen Wastler is here with the story of a new hedge fund dedicated to betting money on slot machines and sporting events and he also of course has the fun site of the week. This is that crazy team owner in Texas.

ALLEN WASTLER, MONEY.COM: Mark Cuban, dot-com billionaire and then got to be the bad boy of professional sports, owns an NBA team and whatnot. He keeps a little blog on the Internet, interesting place to go and check out and see what's on his mind. He put up a letter this week saying he's going to establish a hedge fund. But the hedge fund isn't going to invest in stocks and bonds and the usual gizmos. It's going to basically bet. The fund will go and play slots, play poker, play blackjack and also interestingly enough, bet on sports teams as well, too.

LISOVICZ: Is that legal?

WASTLER: Well, you sort of wonder how the NBA is going to react to that. They have like one company owns both a casino and one of the basketball teams. So there's already a little bit of...

CAFFERTY: You have to bet that the NBA is praying this guy has a stroke. But you know what, you said the key word. He's a billionaire. How many money managers on Wall Street are billionaires? I'd be inclined to put a buck with him.

SERWER: If you read this thing that Allen is talking about, it's fun and he's actually got a very well reasoned argument. It's interesting stuff.

WASTLER: He's got a great argument. Gambling, first all, the returns are there. He says it's patrolled a lot better than Wall Street. The gaming commissions are all over those guys. In terms of sports, how much do you know about your sports team? The moment they make one little mistake, it's all over the local papers.

(CROSSTALK) WASTLER: All of that, but try to get that kind of transparency on Wall Street. Even after all the governance issues we've had, it's still pretty difficult to do. So you're right, his arguments are just perfectly on there.

SERWER: It's provocative.

WASTLER: Now if you go back deeper into his blog though, he points out, maybe the sports world should do crazy stuff so we can apologize for it. It's publicity. Is this one of those things?

LISOVICZ: NFL commercializing.

CAFFERTY: What's the fun site of the week?

WASTLER: All right. We've been talking a lot about Scott Peterson this week. He's going to the big house one way or the other. So we've got some tips for him floating around the Internet.

SERWER: These will be tasteful, I'm sure.


UNIDENTIFIED MALE: It's the new guy, huh?


UNIDENTIFIED MALE: Can you check on him?



UNIDENTIFIED MALE: You got a problem here?

UNIDENTIFIED MALE: Yeah, can you come here and look at this thing?

UNIDENTIFIED MALE: There's a draft and there seems to be noises coming from the ventilation room and it's cold in here. I mean it shouldn't be like that right?


UNIDENTIFIED MALE: Whoa! What a hole! Hey, have you seen this? Look! You never noticed? Well, you've been lying here for four years. Oh, you poor thing.


SERWER: Oh, this is great. You always wonder who does this stuff. Who has the time to put stuff like that together?

WASTLER: That was an advertisement for a life insurance company. It's kind of interesting. But they grab them from overseas, put them on the Internet. CAFFERTY: They got a pool at San Quentin going, how long it's going to take Scott Peterson to be queen of the Friday night prom in that joint once he gets there. Everybody's got a bet on that.

Coming up next on IN THE MONEY, time to hear from you as we read some messages that you've written in to us over the last week. You can send us an e-mail right now if you like, perhaps regarding how tasteless the previous 60 seconds or so has been. We're Knock yourself out.


CAFFERTY: Time now to read your answers to our question about how you all avoid the Christmas commercialism that infects us all this time of year. Lynn wrote this, I give my children homemade gifts and we remember to stay together as a family during the holidays. We also avoid those cheesy snow covered decorations, especially since Christ was born in Bethlehem, not Fargo, North Dakota.

Bob wrote this, I don't avoid the commercialism, I love it. I think it's great to see people spending money, keeping the economy strong. It's also nice to see that people have money to spend.

And David in California -- why avoid it? Christmas has always been loaded with commercialism. Remember the three kings showed up with gold, frankincense and myrrh, none of which were chopped liver back then. Some of it's still not chopped liver. Gold at $450 an ounce or something. Giving gifts was only de-emphasized by the Scrooge-like Victorians who tried to cut down on expenses.

Time now for next week's e-mail question of the week, which is this. Could you survive a sharp rise in interest rates over the next few years? Send us your answers at and you should also visit our show page at which is where you'll find the address for our fun site of the week. If you're on your way to prison, little things you might want to keep in mind while you're going to the big house.

Thank you for joining us for this edition of the program IN THE MONEY. My thanks to CNN correspondent Susan Lisovicz, "Fortune" magazine's editor at large Andy Serwer and managing editor Allen Wastler. Check us out tomorrow 3:00 Eastern time, when we'll look at some of the reasons why we haven't had a terrorist attack here on our soil since September 11th. There are a lot of explanations and we'll try to figure out which one is on the money here on IN THE MONEY. That will be tomorrow at 3:00. Hope to see you then.


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