Chris Edmonds, special contributor to TheStreet.com , and Eric Gillin, staff reporter, chatted on Yahoo!, Thursday, Aug. 16 at 5 p.m. EDT. To hear the chat, click here.
Welcome to the
chat. Chris Edmonds and Eric Gillin are here to take your questions on the market.
It's Thursday. It's 5 o'clock. It's time for
"Martini Chat Room." That is, unless he disagrees with me. Then he's toast. We're looking for some tough questions for Chris, the more obnoxious the better. This is a chat, remember?
I'll need all the help you can provide. I have about 15 seconds of material this week. So, hey, we got a full plate.
earnings are out,
blew up. Yeah, we're gonna be real busy tonight.
K.C. Swanson will be on in about 10 minutes with the 5 Dumbest Things on Wall Street, we'll talk about Tuesday's big
hoo hah, plus we'll be taking your questions. This is the debut edition of this show, which will run on Yahoo! Chat each and every Thursday from 5 to 6. Be there or we won't like you anymore.
But before we get to Chris, golf, you guys, K.C. or anything else -- and trust me, we'll get to all that today -- I'd like to make a little toast before we settle down with our drinks and kick off the shenanigans.
I'd like to make a toast to the individual investor. You guys out there. You hard-working masses yearning to trade free in this market, which is a lot like
co-called film career.
Yeah, just like the stock market, he took a late '90s hot streak
into a really bad 2000
with hopes that the end of 2001
Gangs of New York
will turn things around.
It's a trillion degrees out, all the traffic patterns around Broad Street have been changed and no one is here on Wall Street to return phone calls.
To make matters even worse, most traders and analysts are more irritable than Courtney Love at someone else's movie premiere. But no one, and I mean
, is as touchy as the individual investor.
Perhaps it's the fact that the economy has gone from 60 to 0 in 2.2 nanoseconds. Maybe it's the stinging red welt known as "my year 2000 portfolio returns." Or maybe people are just bored with a stock market that likes to do a whole lot of nothing, punctuated by bouts of standing still.
But I'm not raising a glass to those nitpicky losers who whine and blame others for their portfolio losses. Nope. Like "The Idiot."
You'd have an easier time cornering the market in
shares than you would convincing anyone of anything by typing "PUMP AND DUMP!!" a trillion times over. Or what about you
Not that we're recommending, or bashing, any one stock here, but there's a multitude clinging to the well-honed investment strategy suggesting the networking giant "just has to come back," mostly because, well, it was somewhere before.
The "This Is All Greenspan's Fault" investor is another pest I could live without. Sling whatever mud you want at Uncle Alan, but it's not his job to give you 20% returns every year. Heal thyself.
Mr. Know-It-Alls are usually seen on the golf course giving dissertations on the ins and outs of networking technology while less intelligent, but much smarter investors are talking about the homebuilders they bought back in January.
You're a Nobody, standing there in an airport Starbucks, watching
and telling the teen-age counter staff that
"just crossed the tape at 45 and a teeny," the advance decline line "shows a 14-to-11 advantage for losers," and the
"is facing resistance at 10,247."
But above all other annoyances, I'm
drinking to Warren Buffett. Speaking of which -- pretty blech day overall, but it ended nicely. The Dow rallied at the end of the day to close up 46.
Chris, I know you're out there in Atlanta? How much of today's market did you get to watch?
You told me it closed up 46 points today? I was busy watching Tiger. You sound like the Jim Rome of
Should I start calling you Chrissy?
I've been trying to sound like somebody. Maybe an Idiot is more like it.
I could have made more money today taking money from people who thought Tiger is going to win the PGA championship than I would have made in the market. I did some research on market volume and it's up year after year. Since April it's been drying up month after month. What's the deal?
On a serious note, that's a serious observation. People who should have sold a long time ago are finally beginning to see the light, or the darkness, if you will. There is a little capitulation, not as much as you'd see at the end of a bear market, that would signal the bottom. There is apathetic trading. I think people trade and then change their mind. For lack of a better definition, it's almost senseless.
Do you think we'll be ready to retest April's low?
I don't know about seeing April's low, but I think we'll wallow until we see some sort of catalyst. We have to find some set of data that provide us with a feeling that something is going to go right. We got so used to everything going up up up that it makes this bear worse. We don't know how to handle it anymore.
Volume's pretty thin overall. Not a fun place to be. The only thing that's kept us out of the economy is the strength of the consumer.
I think the consumer will turn out to be a lagging indicator. I'm not real excited looking at the retail sales numbers and other indications of consumer sentiment.
Where's that money coming from? Is the consumer a lagging indicator?
I had a friend who bought a TV on credit card. He has no job.
A lot of this is credit. To say that the consumer is going to keep the economy moving puts a lot on the back of the consumer.
There is a lot of credit, and what happens if you don't pay it?
isn't going to come and take the T.V.
No one is really thinking this is a bad thing. Stuck with bad credit isn't the worse thing that can happen -- at least not in the 22-year-old consumer's mind.
I think consumers will get the shaft. Chris, what's your take?
I'm not willing to write the consumer off entirely, but everyone who says the consumer will carry this economy to recovery on his back -- I don't buy that.
Ready KC. Now it's time to do the 5 dumbest things on Wall Street.
Why don't you run down the list...
CEO Ballmer embarrasses himself.
What was the funniest response from readers?
We'll be running that on the site tomorrow.
Cisco still hasn't scaled back over-the-top estimates. They are flying in the face of reality. In the postearnings conference all the CEO said, "Only time will tell if our industry grows between 15% to 20%, as many industry pundits believe, or in the 30% to 50% [range] in good economies with good capital spending, which we continue to view as a stretch, but achievable goal for Cisco."
For the sake of argument, that Cisco could achieve growth of 40%, by 2005 the company would have revenue of $85.6 billion. That's nearly $10 billion more than the total estimated market for new equipment in 2001 among the biggest customers -- the nine leading phone companies have said they'll spend around $76 billion this year.
They haven't baked off their forecast from the good old days
Ciena got burned on that one today.
Yeah, same kind of deal.
Same thing. Fell 30%.
Gee ... Didn't see that one coming.
Number three is a productivity call. Last week, Albert Edwards, a global asset allocation strategist at Dresdner Kleinwort Wasserstein, got egg on his face when he wrote in anticipation of the release of productivity numbers that "risks of an equity crash are surely mounting." That sent the firms PR reps into a panic. Dresdner's panicked PR staff zipped off an email to selected journalists, with the qualifying amendment: "We are not predicting a market crash on Tuesday!"
In the end, the numbers were better than expected but the market ignored earlier numbers. In the end, he came out looking like he had a pretty good argument in terms of productivity being overstated.
Number four: Argentine Internet media company
decided on a 1-for-10 reverse share split for its common shares, effective Aug. 22. The company has been hanging on by its fingernails to
membership for months, expecting to receive a delisting notice because its shares have been trading below $1 since April 4. The day the reverse split was announced, El Sitio's shares closed at 26 cents.
They also have lawsuits posted against them.
Several class action lawsuits lodged against El Sitio claim that underwriters including Credit Suisse First Boston, Lehman Brothers and Salomon Smith Barney offered El Sitio's IPO shares in exchange for extra-high commissions from investors.
Number five: A "code red" worm virus infiltrated some of the Web servers that host the company's Hotmail email service this week. The company said customer data wasn't affected. That's an unwelcome twist, given that since July the company has urged users of its Windows software to install a proprietary security patch.
Chris is having tech difficulties, but his username for this event is guest_tsc.
Dresdner productivity guru panics folks with bearish productivity call.
Microsoft's XP is coming out.
I just don't think it's going to be that big of a deal. Chris, your take?
It's gotta have something that really will knock my sox off to get me to rush out and buy any new operating system that will take me hours to install.
I'm not impressed.
Thing about it, every year to 18 months we get an upgrade. The days of interesting gizmos are gone. They're going to have to hook me with something really big to get another one.
Wish I knew can't get very juiced about it.
They have to be competitive with
-- you've seen their ads for the guy who films his wedding and sends the disk to his parents.
I don't think regular people are going to go out and get it.
Your dad can watch the disc, if you send it to him.
earnings came out. They're saying 3Q sales will be even or down 5% from 2Q sales.
That's not a shock.
Jim Seymour was all over this call -- was on Jim Cramer's radio show yesterday and said the stock was probably dead money after the earnings announcement.
I don't want to sound naive, but is it really that bad in tech?
Yeah. It's not great.
I'm not interesting in wasting my time there.
There are plenty of other places to play. Look to the drugs, look at basic industries, heck, look at the banks and the brokers for that matter. You'll have plenty of time to play in tech some other day..
Where would you play if you weren't going to be in tech?
I think that a name that makes sense would be drug stocks. I don't think you'll get hurt there. Look at MO [<b>Philip Morris</b>]. I know a lot of people hate that name, but it will make you money. For the past couple of years during the last week of August they raise their dividend. You look at their balance sheet, you look at the cash they have, I guarantee they'll pop their dividend. Look at CAT [<b>Caterpillar</b>]. They look very attractive.
I think that Morgan Stanley's call today on the oil service stocks and drillers is starting to make some sense -- for those who can hold their stocks for more than five days. You have a really good chance to make some money in those places.
I'm going to play devils advocate. In January I heard folks saying buy drillers and if you had at the start of the year you got killed in June and July.
Remember though, at the start of the year, you made money. We started talking about it in March and early April -- the hype became so intense and it was crowded. There wasn't good news that could surprise to the upside. The economy has had an impact there. With gas back at $3 and oil creeping up I think gas will stay at $3 and creeping up to $4. It's a profitable formula.
OK, we are ready for some questions --
Chris, yesterday's AGA number, how was it so low? Demand increase, or a reduction in supply? Plus MSDW upgrade seemed to include NA OSX stocks, prior was only
, what gives?
Good question. There's a column on
that will give you my longer take. A lot of it was supply-related. You had some marginal interruption from tropical storm Barry. You had a pipeline that could have supplied between 2 and 3 bcf. It's a supply issue. It's also a demand issue. The weather has had an effect. At the margin there is fuel switching. Gas prices have come down and oil prices have stabilized.
Which effect do you think the euro rampage could have on U.S. companies and stocks?
I kinda blame the companies a little bit for not managing the currency stuff better.
So is the euro getting back to where it should be?
OK, so it's merely coming from a depressed state...
I think that currencies play a role in the value of the relative costs of exports vs. imports. A lot of people will say this is the euro coming back to the level where it should be. At the end of the day, currencies exist and you have to deal with it.
Chris, what do you think it will take to put a fire under the oil service stocks?
Two or three more really bullish weeks of inventory data both from the American Petroleum Institute and the American Gas Institute.
Chris, what do you think of land and water oil and gas pipeline builders?
Lots of names in the pipeline-operating business. Look at some of the Master Limited Partnerships --
Kinder Morgan Partners
and then mainstream companies --
are probably the big names there. There are some interesting plays in there.
What about the Xbox?
I want more questions.
Hardcore gamers aren't warming to
They'll wait for the new
I like the Gamecube, myself.
I don't see MSFT warming to the right people to make this thing work.
How much of the lift can be reasonably contributed to expiration?
Hard to tell. Clearly, there was short squeeze after the AGA number yesterday.
Chris, some talk about BR [<b>Burlington Resources</b>] being a takeover target, this morning on
you said they are a buyer. Why the difference?
Chris, What does E&P refer to?
That was an easy one.
A lot of these companies could go either way, I happen to think Burlington is a player longer term.
Chris, what are your thoughts on PTEN?
I've actually never heard of that one.
, what do you know about that one, Chris?
Would buying smaller names be a good way to play the oil service sector?
Exploration and Production --
Lets talk about golf.
Can Phil Mickleson win his first major tournament?
It's hot, it's a good day. 400 is a pretty good score on this course. It could be a good tournament for Mickelson. I don't think Tiger is going to have a three-peat. He looked more uncomfortable today than I've ever seen him. I'm surprised at how tentative he looked today.
What do you think his major malfunction was?
He missed a very short putt for par that he normally wouldn't miss.
He missed a 7-foot putt!
I can hit that.
I'm better than Tiger!
It wasn't an easy putt, but it was a putt Tiger could make.
Can Tiger make a run of it?
I don't think you can get a 900 on this course.
I don't count out David Duvall. He has to be a favorite.
How much of a factor is the heat?
It's a factor, on some more than others. You look at the Europeans, it's a factor more for them than for those who play on the American tour.
Someone like Daly must be dying.
Thanks for joining us this afternoon. A transcript of today's event will be available at www.thestreet.com.