Pat Fitzgibbons Chats on AOL MarketTalk, March 7, 2001

Pat Fitzgibbons chatted on AOL MarketTalk Wednesday, March 7, at 11 a.m. EST.

Comment: Live from New York, N.Y., please welcome Pat Fitzgibbons, markets editor, TheStreet.com, Inc. Pat can answer questions about the markets and investing. Pat does NOT offer individual stock commentaries or recommendations.

PFitzgibbo: Good Morning, everyone! Looks like another p day for the markets.

Question: In your opinion are small-caps more attractive investments than large-caps at present and if so, which sectors look most promising?

PFitzgibbo: I don't think that small-caps present any more or less value than large-caps do right now.

I tend to feel that this is a stocks picking market right now as opposed to the end of '99 beginning of '00 when it was buy everything you could get your hands on.

As far as sectors -- I like the defensive stocks, drugs, foods, tobacco and pockets of tech. But I'd be pretty careful with buying tech right now.

Sagecalc: What exactly is meant by a stock picker's market as opposed to other types of markets?

PFitzgibbo: Sorry. A stock-pickers market forces investors to dig into individual companies' fundamentals before diving in. It's not like in a pure bull market when, say, you can sink a ton of cash into a sector and it'll likely do pretty well.

Question: Do you feel that the behavior of the Nasdaq in the time period 2000 to the present is very similar to the behavior of the Nifty-Fifty in the 1973 to 1974 time period?

PFitzgibbo: I think there are a lot of similarities between the two periods. However, it should be noted that the economy seems to be in a lot better shape now than it was then -- inflation is not high, we are not in the middle of a (terrible) oil crisis and we don't have a war going on.

So the underpinnings of this market are actually a lot better.

Question: Why would the market take Abby Joseph Cohen's bullish call so seriously as the S&P 500 closed 16% lower than her target last year, and the Dow Jones Industrial Average was down 14% from her end of year 2000 target?

PFitzgibbo: The market takes what she has to say seriously because she is the most visible person at one of the largest firms in the world.

Whether her calls have been spot on or not, she's a very visible player and CNBC loves to quote what she has to say.

Question: Sell or continue to hold AMAT here?

PFitzgibbo: I can't make a specific rec. on what you should do with AMAT, but the Semiconductor stocks as a group have been doing very good of late.

With a holding of AMAT, you need to decide where you bought it and whether this run-up is for real or is a false rally.

Sagecalc: Referring back to Abby Joseph Cohen's call, do you think in general, investors place too much emphasis on what individual calls?

PFitzgibbo: Yes, I think so. Investors need to take a much longer look at these individual calls and see, for example, how Cohen has performed over the past few years.

We try to provide this kind of context in our stories; but get as much perspective as you can on these sorts of things.

Remember that these analysts/strategists are only doing what might be best for their clients and their firms.

Question: Any feeling as to why Yahoo! cancelled their appearance at Henry Blodget's Merrill Lynch Internet conference?

PFitzgibbo: Lots of rumors out there right now.....got to be pretty careful with this one. We were looking for other companies that might also be halted and haven't found any, say possible buyers for Yahoo!

It's pretty strange, although not unprecedented for a stock to be halted for this long pending news, and we're watching it carefully.'

p.s. -- YHOO shares remain halted, as they have been since the beginning of the session.

Question: Yahoo! is getting heavily criticized for its reliance on advertising income, but I remember there was a time when America Online was criticized for over-reliance on subscription fees and garnishing very little ad revenue. What is your opinion?

Question: What is your opinion regarding the attitude that Yahoo! needs subscription-based services?

PFitzgibbo: We have been fairly happy with our subscription formula for our sister site, RealMoney.com .

That said, I think all of the major Internet companies are going to be looking for more and more diversified streams of revenue. Yahoo!, however, has been pretty successful attracting advertisers and they may be in a somewhat unique position in that space

Sagecalc: Did TheStreet.com have an easy time opening up a portion of its site for free, and capturing an audience for its subscription-based content?

PFitzgibbo: I can't say that anything has been that easy in the dot-com world in the last year.

However, I think we have all been pleased to see the amount of people that were willing to pay what we perceive to be a very reasonable fee for some of our premium content.

No, it's not that rare. Usually when a company is ready to make a major announcement, they will halt trading so orders don't get unbalanced and rumors about a potential move don't mess up a stock's price too severely.

So, it's not rare, but in the news business it is noteworthy.

Question: Do you think the Nasdaq has hit bottom yet?

PFitzgibbo: I think we have seen some encouraging signs this week that the Nasdaq may be in a mood for a bit of a run-up.

I still think we need to be wary of weak earnings for the first quarter, but I tend to think we have hit a kind of bottom.

Question: George Scalise, president of the Semiconductor Industry Association (SIA) said current forecasts suggest an adjustment in microchip inventories could be completed by the end of the third quarter, with demand for electronics picking up later in the year. Is this forecast reasonable?

PFitzgibbo: I think this guy, despite his role, has proven to be a relatively reasonable voice. And I don't think that he helps the stocks in his universe if he speaks out of turn.

Question: How can an investor make a determination on what their asset allocation should be amongst stocks and bonds?

PFitzgibbo: I think that an investor really needs to judge what percentage of money they want to have in "safe" investments like bonds and what percentage they're willing to go a little more risky.

If you're saving for your kids education, for example, you might want to be a little more conservative and generate some solid returns. If you've got the time, though, you can make a whole ton of money looking at newer, developing technologies and their member companies.

Sagecalc: Has the long-term bond government bond market reached at peak at this point?

PFitzgibbo: I don't think so. I think there is still some room for the bonds to move higher, especially if stocks continue to have some struggles.

Question: What effect do you think a poor Q3 & Q4 will have on the market? Many are predicting a rebound then, do you concur?

PFitzgibbo: I think that if the 3rd and 4th quarter prove to be unexpectedly weak, then the market could be poised for another correction of the kind we have seen through this year.

Comment: Thank you for joining us today, Pat! We have been speaking with Pat Fitzgibbons, markets editor, TheStreet.com, Inc.

PFitzgibbo: Thanks very much for all the good questions! See you at TheStreet.com, where we'll try and figure out this Yahoo! story.

SageSaints: Thanks Pat!