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American Morning

Interview With Suze Orman

Aired March 03, 2003 - 09:42   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.


BILL HEMMER, CNN ANCHOR: It has been said that all politics is local. Well, a variation on that theme lies straight ahead for Suze Orman. She says all finance is personal, and the best selling author has some important advice for investors on how to survive in a very uncertain economy. Her new book: "The Laws of Money, the Lessons of Life." Suze Orman is here to enlighten -- hopefully enrich us as well.
Good to see you in person.

SUZE ORMAN, AUTHOR, "THE LAWS OF MONEY, THE LESSONS OF LIFE": Thank you, my dear Bill. I'm glad you're back safe and sound.

HEMMER: Good morning to you. Why, thank you -- I am glad to be back as well.

ORMAN: I look at you over there going, come home to us. Come home to us.

HEMMER: You and my mom. Appreciate it.

Law No. 1: a truth creates money, lies destroy it. Truth about what?

ORMAN: Truth about what do you have and what don't you have. We see on a corporate level how lies destroyed Enron, WorldCom, even Kmart now. But how do we lie to ourselves on our own individual levels? If you have credit card debt, you are telling yourself a very little lie that you have money that you don't have. And what happens is a little bit credit card goes into a lot. Do you know that the average person today in the United States, family, has $8,000 of credit card debt and an average interest rate of about 18 percent?

HEMMER: That is throwing money away.

ORMAN: And so people say, how do I make money today in uncertain times? Pay off your credit card bills.

HEMMER: Good bit of advice. Law no. 2: look at what you have, not at what you had. Does this means that people like Jeffrey Toobin and I have to sell our Lucent stock, which is about 17 cents?

ORMAN: Don't tell me. You didn't. You don't still own it (ph)?

HEMMER: We're riding it all the way down to the basement, Suze.

ORMAN: You see, that is the problem. Everybody says to me, Bill, really, when is it going to come back. When will I be OK?

Stop looking at what you had. It doesn't matter that Lucent was at 80 and then it went to 77 cents...

HEMMER: What about the buy and hold theory? Does that no longer apply right now?

ORMAN: It doesn't apply to this economy. Again, in my opinion. WorldCom, second largest telecom company in the United States. Good company. You bought. You held. Now you are bankrupt. Things change. We are a very fluid and rapid society now. You have got to look at your stocks and your mutual funds all the time. Bad news hits. Something goes on you have got to sell.

HEMMER: But isn't there a sense of paranoia that a company is not thinking, I'm going to (ph) wait for the next bad thing to come around? You'll probably going to be apprehensive and make that move.

ORMAN: So another mistake that I talk about in the book is that people have become all or nothing investors. They hold all their stock or they do absolutely nothing, and it is just...

HEMMER: Do you believe those that say today cash is king, and so long as it is king right now, you have to find the most effective place to put it?

ORMAN: You do...

HEMMER: Where do you put it?

ORMAN: You put it in money markets, CDs, treasuries. You know -- listen. I don't care what stock you are in, when the market overall goes down, your stocks overall are going to go down. You have got to wait until the entire market is with you so there is nothing wrong with taking some of your money and sitting on the sidelines. I've been saying that on this show now for years my dear Bill.

HEMMER: When are we going to change that, though? When to start taking the cash and putting it to work for you?

ORMAN: When you are out of debt, when you have an eight-month emergency fund, when you are putting some money towards your mortgage, when you are stopping to lease these cars, and you own your cars outright, and then, as long as you have 10 years or longer, you can put it back in the stock market.

HEMMER: Tell me what about this fear factor scale, what does that mean?

ORMAN: So many times -- this is what has gone wrong. People didn't get out of the stock market because they were afraid. They are not getting in the stock market because they're afraid. This new book is all about how do you keep what you have? Nobody even cares any more, Bill, about making a million dollars. They want to keep it. So in law No. 3, at the end of it, there is a fear factor scale that when you do it, it will show you how much should you invest, how much should you get out of market, with what should you do, and it goes and it gauges according to your own fear how you feel about your own money.

HEMMER: Got it. Thanks. Good advice.

ORMAN: All right.

HEMMER: Hopefully we'll come out of this at some point.

ORMAN: We will, sweetheart.

HEMMER: Thank you, Suze. Here is Paula.

PAULA ZAHN, CNN ANCHOR: Hey -- so, Bill, you said it was good advice?

HEMMER: Yes?

ZAHN: So why are you leasing a car?

ORMAN: You're not!

HEMMER: She laid me out on national TV.

ORMAN: No, no, no.

HEMMER: I got caught in a situation. I'll get out of it, though. It's a good car. I'll buy it eventually.

ZAHN: Good luck, Bill.

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 March 3, 2003 - 09:42   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BILL HEMMER, CNN ANCHOR: It has been said that all politics is local. Well, a variation on that theme lies straight ahead for Suze Orman. She says all finance is personal, and the best selling author has some important advice for investors on how to survive in a very uncertain economy. Her new book: "The Laws of Money, the Lessons of Life." Suze Orman is here to enlighten -- hopefully enrich us as well.
Good to see you in person.

SUZE ORMAN, AUTHOR, "THE LAWS OF MONEY, THE LESSONS OF LIFE": Thank you, my dear Bill. I'm glad you're back safe and sound.

HEMMER: Good morning to you. Why, thank you -- I am glad to be back as well.

ORMAN: I look at you over there going, come home to us. Come home to us.

HEMMER: You and my mom. Appreciate it.

Law No. 1: a truth creates money, lies destroy it. Truth about what?

ORMAN: Truth about what do you have and what don't you have. We see on a corporate level how lies destroyed Enron, WorldCom, even Kmart now. But how do we lie to ourselves on our own individual levels? If you have credit card debt, you are telling yourself a very little lie that you have money that you don't have. And what happens is a little bit credit card goes into a lot. Do you know that the average person today in the United States, family, has $8,000 of credit card debt and an average interest rate of about 18 percent?

HEMMER: That is throwing money away.

ORMAN: And so people say, how do I make money today in uncertain times? Pay off your credit card bills.

HEMMER: Good bit of advice. Law no. 2: look at what you have, not at what you had. Does this means that people like Jeffrey Toobin and I have to sell our Lucent stock, which is about 17 cents?

ORMAN: Don't tell me. You didn't. You don't still own it (ph)?

HEMMER: We're riding it all the way down to the basement, Suze.

ORMAN: You see, that is the problem. Everybody says to me, Bill, really, when is it going to come back. When will I be OK?

Stop looking at what you had. It doesn't matter that Lucent was at 80 and then it went to 77 cents...

HEMMER: What about the buy and hold theory? Does that no longer apply right now?

ORMAN: It doesn't apply to this economy. Again, in my opinion. WorldCom, second largest telecom company in the United States. Good company. You bought. You held. Now you are bankrupt. Things change. We are a very fluid and rapid society now. You have got to look at your stocks and your mutual funds all the time. Bad news hits. Something goes on you have got to sell.

HEMMER: But isn't there a sense of paranoia that a company is not thinking, I'm going to (ph) wait for the next bad thing to come around? You'll probably going to be apprehensive and make that move.

ORMAN: So another mistake that I talk about in the book is that people have become all or nothing investors. They hold all their stock or they do absolutely nothing, and it is just...

HEMMER: Do you believe those that say today cash is king, and so long as it is king right now, you have to find the most effective place to put it?

ORMAN: You do...

HEMMER: Where do you put it?

ORMAN: You put it in money markets, CDs, treasuries. You know -- listen. I don't care what stock you are in, when the market overall goes down, your stocks overall are going to go down. You have got to wait until the entire market is with you so there is nothing wrong with taking some of your money and sitting on the sidelines. I've been saying that on this show now for years my dear Bill.

HEMMER: When are we going to change that, though? When to start taking the cash and putting it to work for you?

ORMAN: When you are out of debt, when you have an eight-month emergency fund, when you are putting some money towards your mortgage, when you are stopping to lease these cars, and you own your cars outright, and then, as long as you have 10 years or longer, you can put it back in the stock market.

HEMMER: Tell me what about this fear factor scale, what does that mean?

ORMAN: So many times -- this is what has gone wrong. People didn't get out of the stock market because they were afraid. They are not getting in the stock market because they're afraid. This new book is all about how do you keep what you have? Nobody even cares any more, Bill, about making a million dollars. They want to keep it. So in law No. 3, at the end of it, there is a fear factor scale that when you do it, it will show you how much should you invest, how much should you get out of market, with what should you do, and it goes and it gauges according to your own fear how you feel about your own money.

HEMMER: Got it. Thanks. Good advice.

ORMAN: All right.

HEMMER: Hopefully we'll come out of this at some point.

ORMAN: We will, sweetheart.

HEMMER: Thank you, Suze. Here is Paula.

PAULA ZAHN, CNN ANCHOR: Hey -- so, Bill, you said it was good advice?

HEMMER: Yes?

ZAHN: So why are you leasing a car?

ORMAN: You're not!

HEMMER: She laid me out on national TV.

ORMAN: No, no, no.

HEMMER: I got caught in a situation. I'll get out of it, though. It's a good car. I'll buy it eventually.

ZAHN: Good luck, Bill.

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