Dave Gaffen Chats on AOL, July 25

Dave Gaffen Chatted on AOL's MarketTalk, hosted by Sage, on Wednesday, July 25 at 11 a.m. EDT.

Comment: Live from New York, N.Y., please welcome Dave Gaffen, senior markets reporter, TheStreet.com. Dave can answer questions about the markets and investing.

Tscnygaff: Hey there. I'm happy to answer all your questions.

Question: What's your take on Value (Al Frank) vs. Growth (William O'Neil)?

Tscnygaff: This may sound generic, but there should be a mix of both. Value's what's been working for a while now, and that may remain this way for some time to come.

Growth, of course, can't be reduced to "tech," which is what many have done for a long time. There's need for both, though being cautious now seems to be the strategy that's working.

I'd like to say it's time to turn from defensive-oriented value toward growth, but the economic situation still doesn't just yet seem to warrant it. Even if it did, valuations aren't justified by expected profits.

Question: What are short-term stocks you would recommend?

Tscnygaff: In keeping with TheStreet.com's policy, I'm not allowed to recommend specific stocks, either as short- or as long-term plays.

Question: Do you think that PG&E's troubles all started when that Erin Brockavich started snooping around their operation?

Tscnygaff: I think it was actually around when Julia Roberts won her Golden Globe award.

Question: Are Amazon.com, Inc.'s plans on getting into the (PC) and software retailing business a bad mistake on the company's part, and will that further prohibit Amazon.com from achieving profitability?

Tscnygaff: Amazon is certainly taking its time with this profitability thing, isn't it?

AMZN, as our retail writer Tim Arango has pointed out, has a number of ongoing problems that aren't getting any better. They're having trouble with their customer base, tightening credit agreements, and declining working capital.

They're a proven bookseller, and unlike other dot-coms, they don't seem to be "running out of time" so quickly, but nothing they're saying can be construed as encouraging.

Question: Do you see EXDS being a buy now? Will they survive the next 2 years, or is bankruptcy around the corner?

Tscnygaff: I think there are a lot better things that people can be doing with their money than contemplating investing in a $1 stock. EXDS has a number of problems, and the stock's only been going down.

Question: With OPEC likely to cut oil production by 1 [million] to 1.4 million barrels per day over the next 10 days, would this perhaps stabilize oil prices and the behavior of the stocks of energy-related companies as well?

Tscnygaff: I would expect oil prices to stabilize, yes. The Baker Hughes Rig Count has been steadily rising and overall levels of supply have been increasing in recent weeks, so the much ballyhooed energy crisis seems to be abating from its peak in May.

Right now it looks as if enough reserves are being built up to avert any kind of problem in the winter, as well as the summer. The slowing economy has something to do with that also.

I'm not sure about the stocks, then. If the greater world's economies start to go into a prolonged slowing, there can't be much hope for energy demand, at least in the near term.

In the U.S., demand should be OK, but we've seen in the past what can happen to oil prices when energy demand around the world isn't very strong and supply is high. It was oil for $13 a barrel.

So for the stocks, I'm not sure; but the peak in energy prices has probably already been seen. At least, for now.

The energy situation has improved because of rising supply and lower demand. So OPEC is probably prudent to cut back production a bit, especially if they want to keep oil in the $25 a barrel range.

It's been an ongoing issue -- how those prices hurt other companies in terms of higher costs.

As far as I'm being told, folks, we're having a bit of technical difficulty, so it'll just be a minute with your questions, and I'll resist serenading all of you with my lovely singing voice.

Question: What's the best thing I can do with my money at these times for a relatively new investor?

Tscnygaff: Make sure you're diversified, but the first thing to do is to get a financial planner.

Find someone you trust who can help you put your money in a variety of places.

Second, don't worry about short-term gains in the stock market if you're new at this.

That's about it. It isn't a game, or a race, so don't worry. Just be smart; find someone who's qualified to help you.

Question: If the interest rate cuts are not having the desired effect on capital spending, what can the federal reserve/government do to spur capital spending to boost the economy again?

Tscnygaff: The Fed can only do one thing -- lower interest rates. They've done it. It's hard to see how they could do much more. They will do a little more, but they've done a lot.

The government can't do too much right now. They've cut taxes for individuals, and as a result they're going to put their own budget in a precarious position in the next few years. Cutting taxes for corporations would be an option, but politically it's a total loser as an option. So that basically just leaves time.

After so many years of economic strength, euphoria inevitably creeps in.

It's something that Fed Chairman Alan Greenspan discussed during his testimony before the Senate Banking Committee yesterday. With that euphoria comes the feeling that you can do no wrong. So you keep spending. Companies invested in a boatload of capital, and now they're not getting a return on that investment

They may not get a return for a long time. They've got to cut their costs, and cut their debt. So spending isn't going to come back because of the government's magic wand, or anything else. It's just time. Time, time, time.

Question: What if you don't know any financial planner and who is trustworthy? How can you find one?

Tscnygaff: For one, poll your friends. Perhaps they know somebody out there in the world.

Or, perhaps a mortgage broker, a lawyer or someone else you trust, like a smart niece, or a good-looking cousin. Or, you can go to this Web site: CFP Board Web site. That might help.

Question: Financial planners are usually pro-companies they work for, that can be a bad decision.

Tscnygaff: Right, any conflicts need to be investigated, so I'll agree with that.

However, for a new investor, a trained professional is a better option than simply going out on your own and randomly buying up whatever you think is the best "fad" at the moment. Preservation of capital, and augmentation of capital, is the most important goal here. It's therefore important to find someone qualified to help you answer those questions.

Comment: Thank you for joining us today, Dave!

Tscnygaff: Thanks very much! I appreciate all these questions. Keep reading TheStreet.com.