Saturday, April 11, 1998. My notes from todays program. LAST HOUR ONLY. First 2 hours were Red Wings baseball.
A caller asked what the wash sale rule was. It means if you are going to take a loss in a taxable account you cannot go right out and repurchase the stock. You have to wait 31 days to repurchase the stock. If you dont wait, the loss you thought you took gets put off until later. He recommended doubling up on the stock (if it went down), then you could take the loss on half the shares and still have a position. I find this confusing !! A 58 year old caller asked if 70% stocks 30% bonds would be better if it were 60/40 stocks to bonds. Bob liked the idea.
He spoke of Motorola getting beat up this week. He spoke of Travelers having a positive impact on the Dow, and that the Dow only gained 13 points this week. Travelers was up 11 points week accounting for approximately 35 points for the Dow. He said that one of the most fascinating stocks this week was Yahoo. Yahoo said earnings were better than expected. "The shorts got clobbered having been caught off guard". "Internet stocks have become a market obsession at this point". He rattled off huge gains of the stocks in the group. "If you try to put a value on these internet stocks, its a very difficult thing to do." Yahoo has 95 million pages accessed each day. This is a 46% quarter to quarter increase. The stock is very richly priced however. "They have great management, but are very richly priced". "Its very hard to put a buy recommendation on these stocks because of these amazingly high valuations." Fund managers throw money into these stocks because it is their job to own them. Some are putting outperform recommendations on them as one of the Morgan Stanley analysts did this week, and she has never followed the stock until now as I understood it. Yahoo is trading at 149 times earnings. "Do I hear 150 ??" To follow up, he said as to risks in these stocks, one must consider regulation by Washington of the internet. This of course in addition to the aforementioned valuation risk.
A caller asked if it was a good idea to dollar cost average out of the market. This idea did not make sense to Bob. He went on to say if there were a bear market you would be better off getting out of the market all at once rather than dollar cost average out. Also, he talked of how the market during a bear will exhibit rallies that will fail followed by new lows.
Bob would like to see Jack Nicholas pull out the Masters. However, he is impressed with Paul Azinger. "He is my sentimental favorite. I'd like to see him pull one out". He finished the show by saying: "You may have noticed something in the market lately. Since we started playing peekaboo with Dow 9000, notice the market has stopped going straight up. It went thru 8000 like a hot knife thru butter, 8500, then 9000. It has struggled since it hit 9000. " This is because it is trading at 24 times earnings. People are asking "how much is this market worth ?"
Hope this helps, Have a Nice Easter Holiday.
Regards,
Joe |
