Eric Gillin and Chris Edmonds chatted on Yahoo!, Thursday, October 11 at 5 p.m. EDT. For an audio transcript of the event click here.

Eric Gillin:

It's Thursday -- 5 p.m. on the East Coast, 2 p.m. on the West, time once again for TheStreet.com Martini Chat.

I'm your host, Eric Gillin, live from the

TheStreet.com

newsroom on Wall Street. Joining me from

TheStreet.com

Atlanta bureau is my co-host,

TSC

contributing editor, Chris Edmonds. Later in the broadcast, for our Roundtable and your questions, we will be joined by

TheStreet.com's

personal finance editor, Lisa Meyer.

Hey, Chris, nice to be back. And, hey, how about the Braves! Up 2-0 and coming home.

Chris Edmonds:

Hey, Eric, another week and a good one at that, strong markets, and looks like a sweep by the Braves over the disastros, er, I mean Astros. What more could an Atlantan ask for.

Eric Gillin:

Yeah, right. We have a packed show today. Shortly, we'll be joined by two market pundits who will discuss earnings, this impressive market rally, the impact of ongoing military action in Afghanistan and the economy into the holiday season.

Later in the show, as we work back to our own sense of normal, we return to a lighter, yet potentially profitable topic: wagering and the World Series. We'll be joined by long-time amateur gambler and a familiar face and voice to many of you, Barry Lieberman. Barry will help us handicap the series as well as

give some guidance on good wagers and the suckers bets when it comes to sports wagering.

Also, Yi Ping Ho and the latest Wall Street headlines and our weekly Wall Street Roundtable all in this edition of the Martini Chat.

But first, it's time for the toast.

No doubt many investors over the past two years have grown familiar, perhaps too familiar, with the maxim "markets don't like uncertainty." As visibility grew worse across a spectrum of industries, a rising tide of uncertainty helped to wash away the massive gains of 1999 -- and no one liked it.

But in this post-terrorist attack world, more economic uncertainty exists now than ever before. If investors didn't like uncertainty before, how bad can we expect the markets to react now?

In the last few weeks, however, an amazing change has happened. Investors turned that clich¿d phase on its head. When a market is nothing but uncertain, investors can't like or dislike it. Uncertainty becomes another in a series of new truths, like the recession. In just three short weeks, investors have adapted to both harsh realities.

Grab a bottle and pour a big stinkin' glass of something powerful. I'm drinking to rational investors. I'm toasting them for their patience and confidence that terror and those who promise more of it can't rattle our way of conducting an orderly economy. Cheers to their wellspring of faith in our financial institutions.

Sure, the first week back in the stock market was a choppy one. When Wall Street opened on the edges of a war zone after a four-day freeze, immediate problems loomed. Would brokers be able to return to their offices? Would the system crack under the pressure of buyers and sellers expected to flood the market? Would the integrity of the stock market be compromised?

Although stock markets saw some of the steepest losses ever, the first day back was an overwhelming success. A record number of shares -- 2.36 billion -- were traded on the NYSE without a hitch. Brokerages reported that selling wasn't panic-related, but rather an ordered covering of bets made prior to September 11th. And as bad as it seemed, the market was simply correcting for the uncertain times.

It was bad -- but it wasn't a crash. There were reasons to sell, so people sold.

Then, as the weekend approached and rumors swept Wall Street that a second terrorist attack was imminent, either in Europe or here in the States, people wondered where the huge selloff would stop -- could the inconceivable happen? Could the Dow really drop below 7400 -- a technical level cemented in October 1998? It didn't. By the end of the week, the Dow dropped 15% to 8236 and the Nasdaq declined 16% to 1423.

Markets don't like uncertainty, remember?

Enter September 24, a Monday, 13 days after the attack. A critical day for the American stock market. The rumored attacks never materialized, but the day began on a downbeat nonetheless. And then it happened -- the oversold bounce. The Dow soared, closing the day with its fifth-best point gain in history. Over the next few sessions, more gains would follow, starting a trend of steady rallies that were far more moderate than the massive selloff that occurred during the first week back after the attacks.

For the last two weeks, the market -- especially the Dow -- has seemed downright quiet. It made a few days of advances and then sold off a bit. Overall, volume has been pretty thin on both the NYSE and Nasdaq. Barring any sudden volatility, the Dow seems stuck around 9,000 -- well down for the year, but still quite rational considering the recession and outlook for corporate profits.

Investors have every right to be scared. The economic outlook is weak. Anthrax spores have been found in Florida. U.S. started its war on the terrorists and they promised to retaliate, perpetuating fear in the United States. This conflict is so large that even its size makes us scared. But Wall Street investors are not playing into the hands of terror the way terrorists had hoped.

In targeting Wall Street first, Al Qaeda and its sympathizers wanted to topple the strength of the American economy. But investors will not be stopped by such catastrophes. If one thing has become clear in the past three weeks, it is that the American economy is far more resilient than many imagined.

The lesson -- investors still don't like uncertainty, but they're willing to put up with it. In fact, they will need to grow use to it since many experts predict that the end to the war on terrorism might not be for a while. Despite this uncertainty, investors have conducted their business in a rational fashion during the past three weeks -- indeed, a type of retaliation to the terrorists.

So, here's to the steel-stomached investor. Here's to not panicking when things look bad. Here's to America and its economy.

You gotta love these investors, Chris. You gotta love this market! What do you make of it?

Chris Edmonds:

Very strong rally this week and nice follow-through today, which I wasn't sure would happen. I think there are a couple of reasons for the rally: First, we were oversold. Been lots of talk about that, but it began to become very clear last week that players were becoming eager to put cash to work. You saw that happen in a big way this week, especially Wednesday.

I tend to agree with Jim Cramer that yesterday looked like a big move by a small number of players. The Goldman rumors seemed to feel right. Those deals don't last forever and there was a lot of talk that we could've given some of that back today. But, looks like buying prompted more buying. That said, at some point it makes sense that we take a breath.

My guess is, that begins to happen next week as earnings begin to flow more quickly. GE's number today was good, but we are going to get days that are bad, probably really bad. That will create some chop.

The other reason for this rally is pride. As trite as this may sound, the signs of victory -- pictures on the front page of the

Times

showing destroyed terrorist bunkers give us all a lift. If you haven't done so, check out one of our new columnists, psychologist Steve Hendlin, who penned a great piece this week about "hope" investing.

But, overall, a good week. As we say, nice to see green on the screen.

Eric Gillin:

And it's nice to see those American flags everywhere and the Taliban regime teetering after five days of some serious bombing runs. Which brings us to today's guests. Chris, your thoughts on the military response?

Chris Edmonds:

As the U.S. military response to September's terror began this week, investors once again face a geo-political event with uncertain outcomes. Combined with an economy teetering on the brink of a significant recession and the advent of a quarterly earnings season that will bring something less than good cheer, investors are struggling to make sense of a tidal wave of news and information that, in many cases, sends very conflicting signals.

With us to make sense of it all are two seasoned Wall Street pros. Christopher Marinac is managing director of financial services research at SunTrust Robinson Humphrey. Chris has covered regional banks and financial institutions for over a decade. While his firm is focused on regional banks in the South and along the Atlantic Coast, he also follows a number of the super-regional banks as well as asset management companies.

He joins us from Atlanta. Chris, welcome to

TheStreet.com

Martini Chat.

Christopher Marinac:

Nice to be with you.

Chris Edmonds:

Also with us is Jeanie Wyatt, founder and chief executive officer of South Texas Money Management, Ltd., a San Antonio-based asset management firm.

Prior to starting her firm, she was the executive vice president of Frost Investment Services, the asset management division of Texas-based Cullen-Frost Bankers, responsible for $13 billion in assets. She also managed Frost's largest equity fund for 15 years.

Jeanie, welcome.

Jeanie Wyatt:

Chris, thanks for having me.

Chris Edmonds:

Jeanie, let me begin with you. In 1991 you were at Frost when the Gulf War began. How do this week's events compare to Desert Storm and how do you size up and compare the market reaction?

Jeanie Wyatt:

I think the near-term market reaction, as in any similar historical event, will be similar.

Markets do not like surprises and uncertainty. Anytime we've had a surprise that shook the nation -- the Gulf War, the assassination of John F. Kennedy, to name two -- the initial reaction was a sharp correction. That was no different here.

However, the Gulf War was quick, compact and decisive. I'm not sure anyone, months later, considered it a big event. And, if anything, it provided a real confidence boost.

So, the immediate reaction here was classic and very similar to the reaction a decade ago. Yet, the long-term reaction will likely be different. It will be a long, sustained, sometimes difficult and uncertain process. If the administration is correct in that assessment, it is likely to have an impact on the markets, likely very different from the reaction during the Gulf War.

Chris Edmonds:

Have you made any portfolio adjustments exclusively as a result of the September 11 terror or anticipation of the U.S. response?

Jeanie Wyatt:

A few but nothing that has required a fruit salad turnover. Our philosophy has been that things won't change that much but there will be some differences over time. For example, we were beginning to move out of consumer cyclicals and high-end retailers. We have accelerated that process.

We think names like Harley Davidson (HDI:NYSE), Tiffany & Co. (TIF:NYSE), and Jones Apparel Group (JNY:NYSE) will struggle as the unsettled consumer dampens consumer spending, particularly for high-end consumer good.

We are shifting some of that money in to select technology names, especially software, which we think has seen the worst and, again, selectively represents good value. A couple of names that have sparked our interest are Autodesk (ADSK:Nasdaq) and MSC.Software (MNS:NYSE).

Chris Edmonds:

Chris, you've looked back at the performance of banks and financial stocks during the Gulf War. What did you find?

Christopher Marinac:

Banks struggled in the fall of 1990 as major credit issues were revealed in the industry. While the stock market did very well once the fighting began in 1991, banks continued to lag because of credit quality and earnings issues that lasted through 1992.

Remember, however, interest rates were materially higher than today, mortgage rates were nearly 9% and long Treasuries were nearly 8%.

Chris Edmonds:

While there is plenty left to play out, what differences do you see in the reaction of the financials in the current military campaign compared to the 1991 action against Iraq?

Christopher Marinac:

Well, as indicated, the interest rate environment is very different. And, so far we have a repeat of credit quality issues. However, that was not apparent in the last several days of the third quarter as portfolio managers wanted to own financials at the end of the quarter.

In the last several days, that has changed as uncertainty about earnings and continued erosion of credit quality have returned to the forefront. We are still cautious about the banks near-term as we think more bad news is likely in both third-quarter numbers and fourth-quarter guidance.

For example, national loan demand tracked by the Federal Reserve has been waning in recent weeks and is just barely positive year-to-date. Combine that with the credit quality issue and the outlook, at least short-term, isn't terribly pretty.

Chris Edmonds:

Jeanie, with your trust background, your firm clearly has a value bent. Does it become easier or more difficult in the recessionary phase of the economic cycle to identify real value plays in the equity markets?

Jeanie Wyatt:

In the value criteria we use, it becomes more difficult. The real trick in value investing is to make sure you aren't in a company with problems, a name that is cheap for a good reason.

We require companies to be cheap for fundamental reasons, but also show improvements in both cash flow and operating margins. In a recession, fewer companies exhibit those traits. There are lots of cheap companies, but not a lot of good, cheap companies.

Chris Edmonds:

Chris, banks really face conflicting challenges and opportunities in an economic slowdown. Which is pulling at banks more this time -- the challenges of managing deteriorating credit quality or the opportunities and benefits presented by lower interest rates?

Christopher Marinac:

Clearly credit quality is a much greater anchor right now. And, interestingly, low interest rates are becoming a nuisance for many banks.

What's happening is that a 2.5% fed funds rate has pushed asset yields closer to liability costs, compressing margins. In fact, liability costs, the cost of attracting funding and deposits, are not falling nearly as rapidly as the rates associated with loans.

Credit quality is the issue du jour. We think banks are not out of the woods regarding credit quality. In fact, we think the fourth quarter could be a "kitchen sink" quarter, where banks do substantial cleanup. The hope is that sets the stage for improving credit trends in 2002. Yet, the economy will largely dictate whatever improvement occurs at this point.

Chris Edmonds:

A lot of eyes will be on third-quarter bank earnings, focusing on credit quality, asset strength and real returns on assets. The first group is in SunTrust, BB&T and National Commerce come to mind. We also saw brutal pre-announcements from U.S. Bancorp and Cullen-Frost. Any trends and thoughts on what we've seen so far and what is in store from the super regional and money center banks?

Christopher Marinac:

What we have noticed so far is that margin compression is an issue either in third-quarter results or in fourth-quarter business which is already under way. Loan demand is decreasing, and the only saving grace has been deposit growth and deposit fees which have improved as money has flowed out of the equity market into traditional savings products.

We suspect that the money center banks have been ahead of the curve in recognizing loan problems. That doesn't mean they'll stop having problems, it just means they likely have greater earnings leverage whenever that is.

The regionals probably have the greatest risk to earnings because their credit issues are just now becoming clear. Part of the issue is higher cost of credit, meaning that earnings are negatively impacted as higher losses flow through the income statement.

Eric Gillin:

Chris, what about the brokerage business? It seems almost certain that the number of lucrative investment banking deals will dwindle as the economy stumbles. What's the outlook on the brokerage front?

Christopher Marinac:

I would expect a weak fourth-quarter for the brokerage firms. There is large leverage in the business, however.

The brokerage firms that have had the largest cuts stand to see the quickest inflection in earnings in 2002 if and when the market recover occurs.

Eric Gillin:

Along those lines, and Jeanie may have some thoughts along these lines as well, there has never been a more pressing need for solid market research. How can the brokerages address that challenge? Could it create opportunities for any of the brokerage firms?

Christopher Marinac:

I think regulation FD is already forcing analysts to do their homework and to do real research. The days of sloppy research just to push an IPO are behind us.

I've noticed a much more bearish mood among analysts, a higher degree of sell ratings. The key for analysts isn't just to have sell ratings but to have justification of the rating. The challenge is finding ways to add value. Investors will, over time, likely to be willing to pay for that.

Chris Edmonds:

Jeanie, as a portfolio manager, you're looking at earnings across sectors. What are you focused on as third-quarter earnings ramp into full swing next week?

Jeanie Wyatt:

At times like this you are not expecting many positive surprises, so the guidance is very important. It is amazing how much importance the Street has put on guidance and that is likely to continue.

Even though I am a manager who buys based largely on fundamentals, technical indicators become very important in a market like this. Support and resistance levels become more important, particularly in technology since we want to put some money to work there. I may pay more attention to technicals than I might normally because earnings wont give us support.

Chris Edmonds:

One concern among pundits is some companies may use the third quarter and recent tragedies to pad their losses, trying to lump in losses and special items and blame them on the tragedy. Is that a concern to you and, if so, how to you use third-quarter numbers as a baseline when they may actually inflate growth rates going forward?

Jeanie Wyatt:

In some ways, it makes sense for companies to do just that. There is general consensus that investors will look past this quarter. We are already prepared for the worst.

You have to take the approach that this won't be any different than any other quarter; it may just mean more numbers and a need for deeper analysis.

I would hope that this is going to be the worst quarter of surprises. That will make the comparisons easier. That's where, again, guidance will be important. Qualitative indicators will be very important during the coming earnings presentations.

One other thing. I do think companies need to be sensitive with what they say and how they treat the events of September 11 for their problems and issues. Credibility is an issue as investors and analysts see through that.

Chris Edmonds:

Given that, how are you positioning your portfolio today. What are some of your favorite ideas?

Jeanie Wyatt:

We talked about technology earlier. One more name in that area, another software company, is Amdocs (DOX:NYSE). The stock has really sold off. Trading around $28, it was trading near $60 just months ago. They provide billing and information systems software to the telecom sector. They have a dominant, competitive advantage in their space.

We also are looking at manufactured housing stocks. Companies like Champion Enterprises (CHB:NYSE) and Clayton Homes (CMH:NYSE). Mortgage rates area

is as low as the lows in the 1960s, which will help first time home buyers and renters make the move to ownership. Consumer psychology isn't likely going to help the homebuilders in the current environment, but the manufactured housing companies look relatively inexpensive.

Finally, I think some of the high quality telecom providers are interesting here. I'm not adding new names, but I still like the valuation of a company like Deutsche Telekom (DT:NYSE).

Finally, while we are lightening up on high-end retailers. We like BJ Wholesale (BJS:NYSE), a Sam's or Costco on a smaller scale. Interestingly, they like to build close to existing Sams and seem to do quite well in that environment. Hard to believe, but they may have built the better mousetrap smaller stores, easier to shop, more consumer friendly.

Chris Edmonds:

What sectors and companies are you avoiding?

Jeanie Wyatt:

I am really wrestling with General Electric (GE:NYSE). I really think GE is going to be like Coke (KO:NYSE) has been for the last five years. Coke is not the end-all, be-all it once was but it took people a long time to figure that out. It hurt performance for both individuals and portfolio managers. GE is a financial company. I'm staying away from the financials right now.

I think GE is in that place right now. I don't think it will outperform. But portfolio managers don't want to sell it because of its big weighting in the S&P. I am trying to avoid it but it's hard.

And, I talked earlier about both consumer cyclicals and high-end retailers.

Eric Gillin:

What about GE's purchase of Telemundo today?

Jeanie Wyatt:

I think it's a wise acquisition, especially being down here in San Antonio. Great growth potential. I'm glad to see there is something in the media companies. GE is still a big predominantly financial company.

Chris Edmonds:

Chris, same question for the financial services sector. Where do you play and what do you avoid.

Christopher Marinac:

We think that the trust managers are interesting ideas here. We may be early; we think most of the stocks reflect the bad news. We think 2002 can be a better year.

Relationship managers that can attract assets through handholding should do quite well in the more uncertain environment. Two examples are Northern Trust in the large-cap arena and Boston Private in the small-caps. We think both stocks should do well 12 months. Northern is highly liquid with a Home Depot-like franchise.

I would avoid the high-multiple, mid-cap banks where we think the credit quality issues will hit even the better banks. So, those who haven't announced any credit quality issues here. Cullen-Frost is a good example of that -- we will see more examples of that down the road. Names like National Commerce (NCF:NYSE), First Tennessee (FTN:NYSE) and BB&T (BBT:NYSE) come to mind in this group.

In the large-caps I would keep an eye on Bank One (ONE:NYSE) and Wachovia (WB:NYSE). In addition, Bank of America (BAC:NYSE) looks reasonably priced here, although it is not a name I follow closely.

Eric Gillin:

Our thanks to Chris Marinac, managing director of financial research at Robinson Humphrey, and Jeanie Wyatt, chief executive officer at South Texas Money Management, for being our guests on

TheStreet.com

Martini Chat.

It was a busy day on Wall Street, and with a summary of the trading day and a look at the top news stories, here, live from our Wall Street newsroom is Martini Chat news editor Yi Ping Ho. Yi Ping?

Yi Ping Ho:

A month after terrorists toppled the World Trade Center, the major U.S. averages have returned to preattack levels. Stocks rallied for the second day in a row as Wall Street continued to cheer the reported military successes in Afghanistan.

Tech stocks and blue-chips had a big day, with the Nasdaq and the S&P 500 closing above their Sept.11 levels. The Dow Jones Industrial Average closed up 169.59 points, or 1.8%, to 9410.45. The Nasdaq gained 75.21 points, or 4.6%, to 1701.47, and the S&P added 16.44 points, or 1.5%, to 1097.43.

This morning, buyers rushed out of the gates as rumors spread that terrorist mastermind Osama bin Laden had been captured. The Pentagon quickly quashed the rumors, and equities had a minor retreat. But within minutes, the buying continued.

And earnings season has so far been benign. Many companies reported losses or met lowered earnings, but still results weren't as bad as many had expected.

Internet giant Yahoo! surged 14% on the Nasdaq today. The company posted a third-quarter net loss and a 44% drop in revenue after Wednesday's bell, but the results weren't hit as hard by the sharp downturn in online advertising as some had feared.

Dow industrial component General Electric gained 2.7% after it reported a 3.2% rise in third-quarter income. But GE said the gains were dampened by $400 million in insurance losses related to the terrorist attacks.

Juniper Networks was the leading volume mover on the after-hours trading platforms tonight after the company posted third-quarter numbers that beat analysts' estimates. Shares of Juniper climbed 21.8% to $20.26 on Instinet and rose 23% on Island.

Pretty good news for investors.

Meanwhile, the dollar strengthened against all major currencies. A wave of Swiss-franc selling by Middle Eastern banks pushed the euro to its weakest level since the Sept. 11 attacks.

U.S. Treasuries fell as money flowed into stocks. On the economic front, the Labor Department said Thursday that initial unemployment claims fell by 67,000 in the latest week. But the decline reflected a reporting quirk, and the four-week moving average continued to show claims rising.

The European Central Bank left rates unchanged at a meeting today, putting initial pressure on Europe's bourses. But the major overseas markets closed in positive territory.

Eric Gillin:

Yi Ping, next week looks to be a very busy week for earnings. What major earnings reports start off the week?

Yi Ping Ho:

On Tuesday, we have CAT, Enron, Washington Mutual, IBM. Wednesday we have AOL Time Warner.

Chris Edmonds:

I think I'll take next week off!

We're going to face something like Motorola next week. You're going to see a lot of stuff that is lumped into the next 2 Q's.

Eric Gillin:

Yi Ping, thanks. Chris, earnings season really hits full stride next week. What should we expect?

Chris Edmonds:

I think we need to realize that companies like GE and Pepsi provided reports this week that are about as good as it's going to get. Think we are more likely to face a conference call tenor more like what came from Motorola and SunTrust going forward -- the world isn't coming to an end, but the quarter was bad and the uncertainty into the fourth quarter is pretty significant.

I think both Jeanie and Chris made good points about comparisons. You are going to see companies take an opportunity in the next two quarters to lump a lot of "extras" into the mix. I have mixed feelings about that. I think it is good to get those items out on the table, but I

think using the "excuse" of September 11 will get old real quick.

Take the warning that came last week from AES, the independent power producer. Just about every facet of their business seemed to be out of control but they tried to spin it off on the terror. You don't know how many investors and even analysts that have been raging bulls on the stock were very put off by that.

The problem has been the economy and most of that was pre-September 11. Sure, it became worse, but you'll see that in Q4 numbers, not as much in Q3. Analysts are going to have to be on top of their games to follow these reports and, even more so, fourth-quarter reports.

Eric Gillin:

I think that people will get really keen really quick to those companies who are going to use the September 11 excuse. I personally think it's reprehensible. Not that much was directly affected by the attacks. Can every retailer say that terrorist attacks hurt business? Maybe a day's worth of business -- but please!

Companies need to be more responsible than that. Take responsibility for the economic downturn and try to work with it to succeed. Making excuses come earnings time does nothing -- and using the all-too-convenient terrorism excuse is just like blaming fuel costs or currency effects. At some point, it's the company and not the climate. At some point, a CEO needs to simply say -- we did not execute.

Honestly, when they do that -- I'm in. I'd buy in right there. In many ways, it's like gambling. You can whine all you want about it when you lose and come up with a million reasons. But a loss is a loss. And that's all I care about. The bottom line is the bottom line and it never lies.

Enough about the markets, let's have a little fun. And, better yet, this kind of fun, many think, is very closely aligned with the markets. So, we'll take a gamble that you'll like it, so to speak. Chris, an old friend of yours is ready to talk baseball and betting pools, right?

Chris Edmonds:

Eric, that's correct. Americans need a diversion and it seems appropriate that America's game stands ready to provide it. While the terror of September 11th may well push the baseball season into shivering fall nights, the story lines leading up to this year's Fall Classic are anything but cold.

Can Seattle's dominance carry the Mariners into the World Series or will the Yankees repeat for the American League.

On the senior circuit, it looks like it may come down to Atlanta and either the Cards of D-backs fighting for the right to play major league baseball into November.

One thing is for certain, baseball is once again the focus of talk around the water cooler and small-time office bookies are covertly preparing pools and square-boards to add a little more excitement to the fall classic. Nothing like a friendly wager to keep your interest.

To give you an edge in your World Series strategy we welcome Barry Lieberman to the Martini Chat. Barry is the general counsel of Coast Resorts, a Las Vegas hotel and casino operator and an avid and profitable amateur gambler. Many of you also know Barry as

TheStreet.com's

Vegas Vice columnist.

Barry, welcome to

TheStreet.com's

"Martini Chat."

Barry Lieberman:

Thanks for inviting me.

Chris Edmonds:

Eric's ready to roll the dice with Barry. Eric?

Eric Gillin:

Let's dive right in. How does the field of eight stack up? Who does Vegas favor to win the championship? Is there a dark horse?

Barry Lieberman:

Well, Seattle was the clear favorite until earlier this week. But, from an odds standpoint, it's very fluid as the games unfold. That said, at the current prices, I like Oakland. The odds on the Athletics are attractive.

Eric Gillin:

When it comes time for the World Series, the oft-used adage is that all teams come in with a clean slate. That the regular season does not matter. But is that true? How intimidating are the Seattle Mariners, who come in with the best winning percentage in baseball history? What about the Braves, who are going into the playoffs for the ninth time in a decade or the New York Yankees, who are the defending champs -- again? Do these guys have an advantage -- or is this really anyone's to win?

Barry Lieberman:

I do think the teams that have played in the series have an advantage, at least an intangible one. They have been there, know the pressures and, more importantly, know they can win it all. That theory would favor the Braves and the Yankees.

That said, Seattle is the best team in baseball. You can't ignore a record like that and they have been pretty consistent all season long. It's hard to know if that creates an advantage when it comes to the playoffs.

Eric Gillin:

What's the best bet you can place on the World Series? Is it the straight up "I think these guys will win" sort of wager, or is it the "over-under" wager? What about sucker bets people can avoid?

Barry Lieberman:

Actually, the sucker bet is the straight-up wager regarding who is going to win the series. Generally, the odds are such that the casino is trying to protect itself and the casino gets 30-40% by not offering true odds.

The way to bet is to parlay your team winning each particular series. That's because the money lines are fair on each series.

Take, for example, Cleveland. If you were to bet $100 on Cleveland to beat Seattle and they are successful, you would win $320, because they were plus-220.

Then you take the $320 and bet it in the next series in which Cleveland would also

be an underdog. Then you take the winnings and put them on Cleveland in the series. That is a much smarter bet than taking the Indians simply straight up in the series.

Over-under bets are ok but they are single game bets. In the playoffs, as a rule, you always bet the unders.

Chris Edmonds:

Barry, there's always a controversy surrounding hitting versus pitching come playoff time. Historically, what wins the series, offense or defense and what team does that favor?

Barry Lieberman:

Always pitching. Arizona has the best pitching -- you can get five games out of two dominant pitchers.

You can't always generalize, but pitching will almost always have an edge over hitting, all else being equal.

Chris Edmonds:

I'd be remiss if I didn't fire off a couple of non-baseball wagering questions. So, let's do these quickly. Has M.J.'s return to professional basketball changed the Vegas action on the NBA?

Barry Lieberman:

No doubt, having Jordan back has created much more wagering interest on the NBA. While I don't think it is enough to push the Wizards in a meaningful way, the futures odds on Washington have narrowed. The Lakers are still the clear favorite, but remember the season hasn't started yet.

Chris Edmonds:

What teams does Vegas think are headed to the Super Bowl? Where's the smart money?

Barry Lieberman:

Clearly the Rams have emerged as the favorite to win the Super Bowl and the Ravens are starting to play well again. The Ravens victory over Denver stamps them as the team to beat in the AFC.

Remember, in all of these cases, the futures odds don't offer you a whole lot of value. They are set to protect the casinos from losses. You are much better off following a parlay strategy and wait until the season progresses.

Chris Edmonds:

What about the college football championship. Who's headed to the BCS and where is your money?

Barry Lieberman:

The two favorites are Miami and Florida. Oklahoma doesn't figure into the race, at least yet. We'll know a lot about Miami after this week.

The BCS really hasn't had a big impact on college football wagering, but the formula change this year has had a bit of a change. In the past, the margin of victory has mattered; today it's impact is lessened in the formula. So, covering the spread isn't as important for a lot of coaches.

On the other had, coaches like Steve Spurrier at Florida still want to kick the crud out of you if he can.

Chris Edmonds:

I can't let you go without asking you about the current environment in Vegas and the impact of the September terror on business. Coast focuses on local Vegas traffic market but you get a sense of the pulse of the town. Is business as bad as it was in the immediate aftermath of September 11th?

Barry Lieberman:

Not even close. In the aftermath of the September 11th business was terrible. But Vegas has quickly recovered. Here's a good statistic -- cab business from the airport was running about 40% of normal the week following the WTC explosions. Today, we are back to about 90%.

Las Vegas could actually be a beneficiary here. Families and couples that were thinking of overseas or more exotic vacations appear to be looking at Vegas as an alternative. After all, where can you go to see Paris, New York and Rio all in one place. Vegas allows you to get away without going away.

Eric Gillin:

What about the direct impact on gambling? How has the terrorism and subsequent war effort affected wagering?

Barry Lieberman:

No question there has been an impact. High rollers haven't wanted to travel after the attacks, so the daily take is down somewhat. That will change over time, but a lot of it will depend on events in the next several weeks. It's something we all are watching carefully.

Chris Edmonds:

Barry, let's go to some questions from our listeners and readers lined up by our producer, Laura Poynter. Laura, what do we have for Barry?

Laura Poynter:

What about golf -- is Tiger still a wide favorite everywhere he plays or has that changed?

Barry Lieberman:

Tiger is always the favorite. Money comes in on Tiger. He was even money. In the tournament now he is creeping up 2 to 1.

Chris Edmonds:

I was amazed at the Tiger in the last couple of years.

Barry Lieberman:

You are looking for value, just like stocks.

Chris Edmonds:

Laura, one more for Barry?

Laura Poynter:

Can you wager on Nascar? Who are the favorite racers?

Barry Lieberman:

Jeff Gordon is the favorite.

Eric Gillin:

Nascar, is that popular?

Barry Lieberman:

The growth of Nascar is spectacular.They get 100,000 folks when they come to Vegas.

Chris Edmonds:

Fantastic.

Barry Lieberman:

Increase of the population that likes racing.

Chris Edmonds:

Barry, it's great to hear your voice.

Eric Gillin:

Our thanks to Barry Lieberman, general counsel of Coast Resorts, for joining us today. So, Chris, do you really think the Braves have a prayer?

Barry Lieberman:

All right, Chris.

Thanks for having me.

Chris Edmonds:

Come Super Bowl time, Final Four ... you'll be back with us!

Eric Gillin:

What happens to the market if we get attacked?

Lisa Meyer:

Well, I think it depends on the type of attack. If it's as big as before, we will see dips, but if it's isolated -- the American people are proving, they are becoming accustomed to uncertainty.

Chris Edmonds:

I think Lisa makes a good point. Tomorrow may have as much of a reaction as we have. I think people are selling tomorrow.

Not panic, not big, not too much volume, but I think there are more people who are shorter-term players.

That said, I can envision a scenario ... I wonder if the warnings are simply a way to minimize an impact if there is a minor domestic skirmish.

Eric Gillin:

You know what, the American gov't has done a good p.r. job. The people know that this will be a long war. We've been warned They are putting out the worst-case scenarios. Letting the American public know what can happen.

Chris Edmonds:

And also, maybe a message to the people who may do it that the people of America are prepared and watching out as best as they can. You've made a good point.

I think the gov't has done an exceptional job, the president all the way down, of managing expectations. I think it's good, and that ultimately if something does happen, it does have some impact at minimizing the effects. We're all expecting at least something.

Lisa Meyer:

I agree. The element of psychology is part of the market. Today's reaction shows confidence that the economy can be revived, but is it too optimistic?

Chris Edmonds:

Right, right. I couldn't agree more.

Lisa Meyer:

If you look at Yahoo!, for example, they guided that they would be in line for the fourth quarter but their earnings will be down.

Eric Gillin:

We've had a run-up in the last few weeks. Make the bullish case-- Why should we still be up there? Why do you buy these guys?

Chris Edmonds:

I can't make a bullish case for Yahoo! I'm not sure I can make an articulate bearish case either. It's just a company. It's a hold. I think more and more that type of tech co will be viewed that way. It's a good thing. People are looking at real companies with real aspects and real numbers. It's the engines of the economy that are rallying now.That said, I think Lisa's right. These earnings aren't going to be like GE or Pepsi.

Eric Gillin:

I'm going to say one thing.

The last time I made this call I wasn't far off. I see more downside now. The possibility of more terrorist acts. Low volume, nice rallies, but some folks are going to get squished.

Chris Edmonds:

3rd and 4th Q #s are already perceived to be bad. I think it's the extracurricular events that will cause a selloff if there is one.

Lisa Meyer:

Even if it does go down more, it's still a good buy.

Chris Edmonds:

People thought it was going to be worse.

Eric Gillin:

Our time is up.

Chris Edmonds:

There isn't a whole lot of downside risk from the bottom we saw the beginning of this week and last week.

Eric Gillin:

Well, another week of

TheStreet.com's

Martini Chat comes to an end. I'd like to thank our guests: Chris Marinac of Robinson Humphrey, Jeanie Wyatt of South Texas Money Management, and especially Barry Lieberman of Coast Casinos and Resorts for being with

us.

Chris Edmonds:

If there is light, they have experience and pitching.

Atlanta and the Yankees ... that sounds like a good Series for me!

Eric Gillin:

Next week, we'll have Wine, Women and song. We'll be back with earnings also. And, as always, thanks to Lisa Meyer and my co-host Chris Edmonds. We'll be back next week where we'll tackle the week in the markets, a flood of earnings and, most important, we'll delve into an intoxicating topic -- wine and how to pick a good Red to go with that nice Porterhouse I'm about to sit down with.

Until then, we'll see you on

TheStreet.com

.

Cheers.