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American Morning

America's New War: Markets Shoot Upward This Morning

Aired September 24, 2001 - 11:02   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.
PAULA ZAHN, CNN ANCHOR: The markets rocketed out of the gate this morning. To give us some perspective on that, let's turn our attention to Andy Serwer of "Fortune" magazine.

You weren't surprised, you were following the futures all morning. You told us this was going to happen.

ANDY SERWER, FORTUNE MAGAZINE: Yes. Well, we saw the futures fall, we saw the European markets up two to three percent, and that's about what the U.S. markets are up, two to three percent. I think the impressive thing here is that they've held their gains, but not surprising. after all last week one of the worst weeks on record, that we had kind of a snapback rally here today.

ZAHN: But, do you think these gains will be sustained throughout the day?

SERWER: Yes, the day is the first question, and then the week to come is the other. I think we have to be prepared for perhaps some selling this afternoon, although like I said, it's very nice that things are holding in. I don't see this as being a -- taking off back to where we were before at this particular time right now.

ZAHN: All right, now we're going to threaten you with some questions. We had asked our viewers to lob as many of tough ones as they could this morning. We're going to start with this one, email number one:

It's difficult to get back to normal. I find myself preparing for the next attack. I'm focusing in on how I can be most effective in helping our country and preparing for the next aftermath.

Actually, I don't think that it's related to you.

Let's come back with some finance questions, because I have them actually written down here.

SERWER: Good.

ZAHN: This email comes from a man names James Elmore (ph). It says:

Hi, Andy. I can not comprehend who does the buying when everyone is selling. Simply put, who would buy stock that was dropping at prices that we saw this past week?

SERWER: Well Paula, this really speaks to the psychological component about investing that I think is so difficult. When the Nasdaq was at 5,000 in the spring of 2000, everyone felt great, everyone was rushing out to buy stock. But in fact, that was the exact wrong time to buy. We are at an all time high. What you should have been doing was selling them. Now that stocks low, I can't tell you whether this is a bottom, whether or not the market's going to go down from here, but certainly stocks are cheaper than they were before. And you are supposed to buy low and sell high.

But psychologically, that's that's so hard to do.

ZAHN: Very hard to do. Here's another email from a Susan Bowen (ph). She says:

We have three children, ages 13, 12 and 10. Their college funds are dwindling fast because of the recent financial unrest. Would it be wise to pull the money out and put it into CDs or something less risky?

SERWER: Well, if it makes you feel good to put a little money in cash here, go ahead and do it. But again, you're going to be getting out at a bottom or close to a bottom. And I guess those people -- those kids will be going to school -- college in five years or so?

ZAHN: Yes, the first one.

SERWER: That's exactly the time frame we're talking about when we say, don't you think the market's going to be higher five years from now than it is today?

I think there's really very little question about that. I hope five years from now it doesn't come back to haunt me that I've said that. But, the country will get back on track, the economy will, our markets will. So to get out now, you're getting out at a bottom, and you might be missing all those gains going back on the upside.

ZAHN: Nevertheless, if someone can't sit tight, you're saying, OK, you can pull a little cash out.

SERWER: To make yourself feel better, I can't blame you.

ZAHN: All right. Another question, this one from R.W. Revells (ph). His question is:

Considering the financial aide that the government has set aside for aid to the airline industry, would an investment in Airline or Continental be a good one to make?

SERWER: Well you know one of my rules has always been: Never buy an airline stock. I said this before this terrible tragedy.

ZAHN: Now why, why?

SERWER: Because airlines are the most incredibly volatile business known to mankind, almost. I mean the stocks go up and down, subject to oil prices, union problems, all kinds of -- interest rates. Very difficult business, and the business has been troubled over the years.

Now having said that, it is true that these stocks are down, they're going to get bailed out by the government, they may go out. But speculating in bailouts, if you ask anyone who's speculated in the S&L bailout, is not necessarily a straight shot.

Yes, it's true that Chrysler went from way down to way back when it got bailed out, when it was helped the out. But it's very, very risky. This is a risky group before and it's a risky group now.

ZAHN: You notice how that wind picked up by about 10 miles an hour when you said you never bought airline stocks?

SERWER: Yes.

ZAHN: Must be a hidden message in that, Andy. Thank you. Stay with us all morning long. We look forward to your continuing insights.

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