James Dines on Palladium among other things:
Long-term Outlook Still Bullish For Internet Stocks Despite
Recent Rally
KANGAS: My guest Market Monitor this week is James Dines, editor and publisher of the widely followed "Dines Letter." And welcome back, Jim.
JAMES DINES, EDITOR, THE DINES LETTER: My pleasure, Paul.
KANGAS: You have been calling this the mother of all bull markets for many years now and in recent weeks, many of the popular averages, especially the NASDAQ Composite, have been regularly setting new highs. Even so, it seems that the big gains are being recorded by a relatively small number of stocks. Does this signal trouble ahead?
DINES: No. They've been saying that all the way up. Everybody's been finding a reason why they should not be buying the Internet stocks. As you know, I've been saying that the Internet is the biggest thing I've ever seen in my career. I think you can compare it to the creation of libraries after the Dark Ages. This is huge. Do you know how many people there are in China who are wired on the Internet? There are just four million and there are over a billion more to go. We are in the first inning. This is going to go on for a long time to come.
However, there will be short-term setbacks. I'm looking for a sloppy, choppy December and I'm looking for resumption of the up trend early next year toward a top in the spring. But long-term, these Internets are the place to make a lot of money, and I'll tell you something, people have been making killings on them.
KANGAS: Yeah. So you'd better be in technology of one sort or another is what you're saying?
DINES: Yes, especially Internet and -- especially the Internet.
KANGAS: Yeah.
DINES: Especially the Internet.
KANGAS: But the stock market has been unscathed by the recent sharp rise in oil prices to nearly three-year highs. Won't this bring on some inflation?
DINES: In a bull market, you normally get group rotation. Now, we're getting a subtle shift in here from the financial side of the stock market toward the natural resources. The entire natural resource sector has been picking up. It's not just oil. It's also the base metals -- I've been pointing that out in my letter most of the year -- such as copper and the all the rest of them. And you're also getting it in, I'm talking about a tremendous boom coming in palladium. Even gold perked up lately.
KANGAS: Right. That's one of your favorites is Stillwater on the American Exchange?
DINES: Oh, yes.
KANGAS: It's down about four points from where it was when you last recommended it in early May.
DINES: Oh, yeah, but when I first recommended it at 10 on this show, it's now 22 and it doesn't, but that's going to 100 some day. I wouldn't sell that for anything.
KANGAS: And your favorite is still Franco Nevada among the gold stocks?
DINES: Yes, Franco Nevada.
KANGAS: OK. And that's about where it was last May when you were with us as a Market Monitor.
DINES: Yes.
KANGAS: OK.
DINES: Hold it and hope it doesn't go up because when it does, it's going to be a rough market.
KANGAS: OK. We have some questions from viewers and the first one is how will technology and Internet stocks be influenced if China becomes a member of the World Trade Organization? The question tonight from Cathy Sminkey of Chelmsford, Massachusetts. Go ahead.
DINES: Well, first of all, they already are -- well, they're going to be a member of the WTO. But I think it's only good for China and what's good for China is good for the world. I did a lecture series in Asia in 1979 and came back rampantly bullish on Asia, especially China.
KANGAS: OK.
DINES: I think they're going to be very important and I think it's, these Chinese stocks, of course, have had a big run the last few days. I'd pull back. I'd wait for a pull back before I'd run. They're getting a bit frothy.
KANGAS: OK.
DINES: But China's a tremendous influence.
KANGAS: The second question from a viewer. Do you think business to business commerce on the Internet will be bigger than consumer commerce? And that comes from Leonard Himes of Inglewood, California.
DINES: The answer is yes. But that doesn't mean that there'll be tremendous opportunities in both B to B and also the consumer side of it, too. There's profit, the money is lying on the street. This is the biggest profit opportunity you'll ever get in your lifetime. You should get on to the Internet as soon as possible.
KANGAS: OK, some of your recent recommendations in early May, Real Networks was at 96. It's now 154. Very nice. Stay with it?
DINES: Oh, absolutely that's one of my favorites.
KANGAS: OK, Inktomi was at 104. It's now 136?
DINES: Oh, a buy. A strong buy.
KANGAS: Stay with it. At Home is way down, from 78 to about 45. What do you do with that?
DINES: Strong buy.
KANGAS: Strong buy?
DINES: Yes.
KANGAS: OK. You're not phased?
DINES: No.
KANGAS: Mediconsult (NASDAQ:MCNS) is down from about 12 to 8 1/2, 8 3/4.
DINES: The truth is that we first recommended that on your show at $1 a share. It's now around $8 or $9. Strong buy.
KANGAS: OK. All right. Of course you always have been with Amazon.com and AOL. Are you staying with those?
DINES: Yes. We got into those at $5 a share. Just hold them.
KANGAS: OK. We only have a half a minute left, Jim. New additions to your buy list?
DINES: OK. Now, my whole Internet list is up 180 percent this year. I can't give you the whole list but here are a few. CMGI is an incubator of 50 Internet stocks and we've recommended this on your show since it was 11. It's now 120.
KANGAS: OK, quickly.
DINES: I would definitely get that one. Two, Safeguard Scientifics SFE, another incubator. Three, Star Media STRM, a Latin American Internet growth stock.
KANGAS: OK. All right. We have time for one more, Jim.
DINES: Well, Infosys INFY, which is in India, a growth stock, an Internet growth stock in India.
KANGAS: OK, there you have it. Thanks very much.
DINES: My pleasure.
KANGAS: My guest Market Monitor, Jim Dines.
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