Return to Transcripts main page

CNN Live At Daybreak

Fall Stock Market Preview

Aired September 04, 2001 - 07:10   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.
VINCE CELLINI, CNN ANCHOR: On Wall Street, the new fall market season kicks off today, and by fall we mean autumn. But not without a not so hot summer for stocks. Will the fall be any better?

Here to answer our questions, market analyst Jordan Goodman, who joins us from New York to help look ahead. So, Jordan, a change in seasons, a change on the market?

JORDAN GOODMAN, MARKET ANALYST, "EVERYONE'S MONEY BOOK": We'll have to see, Vince. But so far I don't think it's off to a very good start. I mean the Hewlett-Packard-Compaq merger is pretty significant today. But it almost shows how weak things are that the two major leaders which have been losing money are trying to get together and trying to make something out of it. But the computer industry used to be the big leader. It certainly isn't today. And this, what happened, a major merger today, a $25 billion merger, just kind of another sign of where things are in today's market.

CELLINI: Well, let's talk about generally some things that may provide a rise or maybe more of a fall in the market.

GOODMAN: Yes, well certainly the pros, the reason the market might go up is you do have interest rates coming down dramatically. I mean we've had seven interest rate decreases so far this year. Probably the Federal Reserve is going to cut rates more, and that's certainly a positive. You've also got taxes that have been cut. We've got the rebate money back in people's pockets and more tax cuts to come. There's even talk this morning about possibly cutting capital gains taxes, as well. So that's certainly a positive kind of thing.

And maybe the sellers are exhausted. I mean there's just nobody left to sell at this point. And that's, there's a certain point at which there's no more selling and then the only people left are buyers. I don't think we're there yet, but that's a possibility.

CELLINI: At this point, you know, the tax rates cut, lower interest rates, that really hasn't jump started the economy as much as I'm sure the president would hope for. Bad omen for the fall?

GOODMAN: Well, it might. I mean, you know, people have got their rebate checks and most of them actually have been saving it and not spending it that much, which should be good to the markets, although I think people are keeping it in CDs and money market funds. They're so scared of what's happened in stocks they're not really putting it into stocks.

You need a change in investor psychology and like the old greed days, you know, how can I get in on a good thing as opposed to the fear days, which is what we're in now, how can I avoid losing principal? That's a very big psychological shift that we have to go through to have the markets really have a sustained rally here.

CELLINI: Technology wise, the dot-coms still dying?

GOODMAN: I think so. They're going under left and right every week and I don't think that was a place to invest before, but certainly not now. Many of these are down 90, 95 percent. And I just don't think you want to be putting money in dot-coms.

There are some places I think are good to put money in. Real estate is one area that's really held up quite well and as interest rates fall, that's very good for housing stocks and also so-called real estate investment trusts. You get pretty high yields, like six to eight percent yields and some good capital gains.

I still think the energy sector looks pretty good. Energy prices have come down a little bit but we basically are in a shortage position there. So I think energy stocks would look quite good going forward.

CELLINI: Jordan, finally, and very briefly, what can you tell people as they look ahead here and try to brace for, perhaps, the worst?

GOODMAN: Well, I think you have to have a diversified portfolio. You can't have it all in tech stocks, which is what people were doing. They've had huge losses there. Have some in bonds, have some in money market funds and have some in stocks and you'll do a lot better. You know, diversification may be a little bit boring, but it's certainly nice to hold onto your principal, which has not happened to a lot of people recently.

CELLINI: All right, thank you, Jordan Goodman, the money answers man with some answers for us this morning. We appreciate it.

GOODMAN: Thank you, Vince.

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