John Edwards Chat on AOL

John Edwards chats about oil service companies, the cable sector, Y2K and more.
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Sage Lion:

Sage is proud to introduce Mr. John Edwards, markets editor of

TheStreet.com!

JEdwards:

Thanks. Great to be here.

Question:

Why is the

Dow

starting to dip back from its highs earlier in the day?

JEdwards:

Well, it seems that a lot of what's been going on in the market, especially with an index like the Dow, is tied to the action we are seeing in the bond market today. Not having seen the long bond extend on its earlier gains investors are seeing less support for further buying in the Dow.

Question:

Do you think oil service companies will start to pick up in value over the next 2 to 3 years?

JEdwards:

Over the next 2-3 years it seems likely that we will see some appreciation in that sector although worldwide oil supply remains very high, and that suggests that further gains in oil and oil service might be constrained by that lack of scarcity, if you will.

Question:

What's your opinion on

MediaOne Group

? Buy, sell, hold?

JEdwards:

I can't offer opinions on individual stocks, but it's fair to say that the cable sector in general is getting a great deal of attention as media and technology companies try to position themselves for broadband information delivery.

Question:

What economic and market conditions would have to be in place for small-caps to begin to outperform large-caps?

JEdwards:

While it's difficult to see a condition in which small-caps overall outperform large-caps, the distinction that we are seeing more of is between value-oriented stocks and growth stocks. And small-caps do fit more into the value category and we are seeing an ongoing broadening of the market, which suggests that one of the things that's likely to help small caps is simply a waning of investors' patience with the huge multiples they have to pay for large stocks.

Question:

Will the release of April's PPI (Producer Price Index) potentially impact the market?

JEdwards:

Yes, it's definitely possible that it will. The market overall is watching economic data more carefully in recent weeks given the concerns about whether the

Fed

might raise interest rates, so the PPI as well as the CPI and the retail sales reports will be closely watched on Wall street.

Question:

What is your opinion of

NBC

's merging its Internet assets with

Xoom.com

?

JEdwards:

It's a really interesting deal as it's really the first merger we've seen of a traditional media company with an internet company. In the case of

USA Networks

and

Lycos

the market frowned on the deal because it was seen as tying Lycos too closely to more old-fashioned assets that are more easily valued in the here-and-now than Internet assets.

Question:

Is the drug sector appealing at this time?

JEdwards:

I think it's best to proceed with some caution in the drug area. While these are in many cases companies with very solid products and strong management, many drug companies will have some trouble coming up with patents on major drugs expiring.

Question:

Any thoughts on why T is down?

JEdwards:

Not really sure what's weighing on

AT&T

today other than just positions squaring by investors satisfied with the appreciation that the stock is seeing in recent weeks.

Question:

My stock is at its highest, should I sell or wait?

JEdwards:

Well, that definitely depends on what the stock is. However, if you personally are comfortable with the gain that you've realized so far and are less comfortable with the prospects for the stock going forward, it certainly prudent to sell at least some of it to lock in those gains.

Question:

The Internet stocks seem to be bouncing back; do you think the worst of the prior week's selloff is behind us?

JEdwards:

That's possible, but it's important to note that it's a very volatile sector. And it's very hard to say how long investors will remain comfortable with companies that are trading almost entirely on their prospects far out into the future as opposed to current revenue and earnings.

Question:

When will we see more weakness in the tech sector based on irrational Y2K fears?

JEdwards:

I think if Y2K is going to hurt the market at all, we would probably start to see that in the 3rd and 4th quarters as we start to get more reports of major system failures.

JEdwards:

But I would note that we have not had even the volume of reported failures that we would have expected to see by now.

Question:

Do all these Internet stocks have no real earnings?

JEdwards:

It's not fair to say that all Internet stocks are lacking earnings. Companies such as

AOL

,

Yahoo!

, and

eBay

are showing some results on the bottom line so the thing to consider is how comfortable you are with the level of those earnings and the quality of those earnings.

Question:

Did the merger between

Chevron

and

Texaco

take analysts by surprise?

JEdwards:

I believe it did to some extent, but I doubt any analysts are completely shocked by it given the clear trend toward consolidation in the industry.

Sage Lion:

Thank you for visiting with us today Mr. Edwards!

SagePSU:

Thanks John, good to hear from you today!

JEdwards:

I'd like to invite folks to check out

TheStreet.com Countdown of the top 100 business events of the century. It started today and it's running through Friday.