John Edwards' Chat on AOL

Among the topics discussed are the Kosovo situation and Tuesday's FOMC meeting.
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John J. Edwards III chatted on AOL MarketTalk on March 29. AOL's MarketTalk is hosted by Sage Online (Keyword: Live).

Sage MikeM:

Please join Sage Online in welcoming John Edwards, markets editor for

TheStreet.com

!

J Edwards:

Thanks, it's great to be back!

Sage MikeM:

John, can we sustain 10,000 this time?

J Edwards:

It's starting to look with this late surge we're seeing like we very well may be able to hold on and close above 10,000 today. I had been somewhat skeptical when the market was bouncing along on the plus or minus side of 10,000 for a while, but it does look like investors do want to see it happen today.

Question:

Do you expect the

Fed

to take any action tomorrow that would damper today's upward trend?

J Edwards:

No, I don't expect any action at all by the Fed tomorrow. It's unlikely that the Fed would even change its bias and what we're likely to see is simply continued vigilance on the part of the Fed, but no immediate action.

Question:

Could anything happen involving Kosovo that would frighten the market, or any segment of the market?

J Edwards:

For something in Kosovo to shake the market would probably require an escalation of the fighting outside the borders of the former Yugoslavia, although an involvement of Macedonia in the conflict could be a negative factor. More important is what could happen with Russia's involvement in the Kosovo conflict. The Russian prime minister is scheduled to meet soon with the Serbian leader,

Milosevic

. And the results of that meeting will be watched carefully for clues to the further course of the conflict.

Question:

Do you expect computer manufacturers to have a good year? Do you expect a shakeout, at some point, that will result in our having two or three major makers?

J Edwards:

It looks like PC demand is holding up fairly well. Although with the very fast pace of growth we've seen in recent years, it's likely to slow somewhat just because that kind of pace is difficult to sustain. I do think that we'll see continued consolidation in that area as we're seeing in other parts of the market.

Question:

With

Amazon

(AMZN) - Get Report

entering the Web auction sector, do you see this as an additional signal e-commerce will take significant business from brick-and-mortar retailers in the near future?

J Edwards:

The Amazon move into auctions says less about the effect on brick-and-mortar retailers than it does about the intensifying competition among retailers and auction sites online.

Question:

What is your general view of investor involvement in initial public offerings (IPOs)?

J Edwards:

My general view is that it is often dangerous for individual investors to get involved in IPOs when they don't fully understand what can happen in the very volatile early days of trading. Often investors will place market orders for IPOs, meaning their orders are filled at the best available price which could be much higher than the price the investor is planning to pay. We see over and over again hot IPOs coming to the market, shooting to extraordinary heights and then never trading at those heights again. The investors who get in at the first day's top sometimes will never see a return. So it's important to proceed carefully in investing in IPOs and it's best to place limit orders rather than market orders so you know there's a certain price beyond which you simply won't buy the stock.

Question:

How do you see the remainder of 1999 treating investors in the oil sector?

J Edwards:

The talks between

BP Amoco

(BPA)

and

Arco

(ARC) - Get Report

make things particularly interesting in the oil sector now. I think there had been some thought that we might see large-scale consolidation slow down a bit after the BP/Amoco and

Exxon

(XON) - Get Report

/

Mobil

(MOB)

mergers, but it looks like oil producers are sufficiently concerned about their ability to remain strongly profitable in this difficult commodity environment that we can expect to see consolidation continue. That's certainly boosting the stocks today and the prospect of further consolidation might present something of a floor for the sector going forward.

Question:

How can an investor tell if a stock is overbought?

J Edwards:

It's almost impossible to use any one rule for stocks in general. So it's important simply to have a set of criteria that you examine in deciding whether a stock continues to be worth the prices demanded for it. If you see a stock getting far beyond the value parameters of price-to-earnings multiple or price-to-revenue multiple that you are comfortable with, it could be a signal that for your investment goals that stock is overbought.

Question:

What is your opinion of Dogs of the

Dow

? Are dividends important in choosing sectors?

J Edwards:

I think dividends can be important for a certain kind of investor who's interested in that kind of guaranteed return. As far as the Dogs of the Dow, I haven't examined them closely enough to speak with a lot of authority on them.

Question:

Are there countries or international regions you feel have bottomed out and ready for a return?

J Edwards:

I think we're seeing some signs of a turn in Japan where the

Nikkei

seems to be pretty comfortably above 15,000. I think things remain skittish in Europe where there's some controversy over whether the

European Union

will cut interest rates to boost growth.

Question:

Are we seeing a movement toward Dow stocks from

Nasdaq

stocks, since the Dow is powering ahead?

J Edwards:

The Dow has been outperforming the Nasdaq over the very short term, but it's important to note that the Nasdaq has come on very strongly from its recent lows and Nasdaq stocks are in many cases even more richly valued than their Dow counterparts.

Sage MikeM:

Thank you, John Edwards, markets editor for

TheStreet.com

!

J Edwards:

Thank you very much!