John J. Edwards III chatted on AOL MarketTalk on Monday, July 17. AOL's MarketTalk is hosted by Sage Online (Keyword: PF Live).

OnlineHost:

Live from New York, N.Y., please welcome John Edwards, assistant managing editor,

TheStreet.com

. John can answer questions about the latest market-moving news.

OnlineHost:

John does

not

offer individual stock commentaries or recommendations.

SageMoola:

Good afternoon and welcome to MarketTalk, Mr. Edwards!

Jedwards:

Thanks for having me. As always, great to be here!

Question:

What is your opinion of the tobacco sector in light of Friday's punitive damages award in the Florida class-action case?

Jedwards:

The big award doesn't change my opinion much. The case will certainly drag on for ages on appeal, and that multibillion-dollar figure will come way down -- if there are any punitive damages at all.

Jedwards:

But even though the tobacco companies won't be bankrupted, and might be good for a little pop when there's some significant court victory on their side, it seems to me there are plenty of other places to invest that would cause you less grief and bring you better returns.

Question:

Do you like

Pfizer

at this price?

Jedwards:

I can't give stock-specific targets or anything, but the drug group overall has been doing well lately and looks to have some legs, despite a very recent dip.

Question:

I'm thinking about buying stocks but am I underage?

Jedwards:

Well, I would suggest that you let your parents know what stocks you're interested in and see if they share your enthusiasm. You and your family might research some stocks together, checking news and background data that can help you make a better investment decision.

Jedwards:

You shouldn't just invest capriciously on your own; for investors of any age, careful research is essential. Good luck!

Question:

You have stated that you think the

Fed

will not raise rates on Aug. 22. What do you see in the economy that makes you believe this?

Jedwards:

There are definite signs of slowing in the rate of economic growth, by a variety of measures. However, it is indeed possible that the slowing is not as pronounced as the Fed would like. The retail sales numbers were a bit muddy but could be read as fairly hot.

Jedwards:

The

CPI

tomorrow will be important, obviously. I still think the Fed will hold off, but I'm less certain than I was. Another rate hike wouldn't damage the economy or seriously threaten to cause a recession, and I think the Fed knows that.

Question:

What would be the possible ramifications if a company that knew they were going to miss earnings expectations didn't come out with a warning beforehand?

Jedwards:

Well, it depends on the extent of the miss, but generally, companies find it's better to get the bad news out quickly and start the rebuilding process that much sooner.

Jedwards:

If a company could be shown to have had material information that it failed to disclose in a timely manner, that could well be a matter for the

SEC

and/or the exchanges to look into.

Question:

Why is P/E ratio such an important factor in assessing a company for investment?

Jedwards:

When you're investing (as opposed to speculating), you're buying a stake in a company's earnings stream. So, the ratio of the stock price to either trailing (past) or forward (future) earnings is a very important measure of just what you're getting for your investment dollars. Other metrics are important as well, but P/E is one of the purest and easiest to understand.

SageMoola:

Thank you very much for joining us today, Mr. Edwards. It's always a pleasure!

Jedwards:

Always a pleasure to join you! Thanks for chatting, and I'll see you at

TheStreet.com

!