Justin Lahart Chats on AOL

Senior Markets Writer Lahart talks about Y2K, the Fed, the dollar and more.
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Justin Lahart chatted on AOL MarketTalk on Monday, Sept. 13. AOL's MarketTalk is hosted by Sage Online (Keyword: PF Live). As with all chats, this transcript is unedited.

SageCrystl:

Welcome to MarketTalk Justin!

JLahart:

Thanks. Great to be here.

Question:

Do you foresee choppy trading until we get past Y2K?

JLahart:

I think the real question is the Fed. Will they go or not before the end of the year. Until that's resolved, we chop.

Question:

It looks like Treasuries and the dollar are suffering today - can you elaborate?

JLahart:

First, the dollar is only really suffering against the yen. It's the same story as we've had for a while. Investors are worried that a strengthening Japanese economy will draw money away from the U.S.

Question:

Is this a time to sell portfolio and hold cash or bonds?

JLahart:

It's a difficult point in the market -- stock valuations are very stretched. On the other hand, it doesn't look like we're going to have the big bad events that have hurt us the past couple of falls.

Question:

Do you see a growth in small caps?

JLahart:

Boy, every time you think small caps are going to come back, they disappoint. I sort of doubt that these stocks can do real well until people get excited about them.

JLahart:

But I think it's more likely that people get excited about sectors, not size. So investors might be better off finding the sectors they think will work, and then pick the appropriate companies, regardless of size.

Question:

Has the NASDAQ replaced the Dow as the bellwether index for the US?

JLahart:

It sure seems like the Comp is the thing people watch these days but I don't think you can call it a bellwether. It's incredibly weighted toward just a handful of stocks.

JLahart:

Most people I know watch the S&P, but that's weighted weirdly as well. MSFT makes up somehting like 4% of it.

Question:

Pleeeeese...tell me if I'm in real trouble with my AOL stocks. Will they drop another 50%? Help!

JLahart:

I don't know that much about what AOL's prospects are, but I don't put much stock in anything

Alan Abelson

says about stocks. I'm sure the things he brought up about AOL have been known about for a while.

Question:

Do you see any foreign situations that could develop to derail our bull market?

JLahart:

The big worry right now is less about foreign economies doing badly, but them doing well.

JLahart:

The U.S. has a large current account deficit, and if investors start to put money in foreign markets, there could be heavy dollar selling.

JLahart:

This would prompt fears of inflation in the U.S. -- the Fed might have to tighten. It's sort of a repeat of the "hard landing" scenario that was popular in the 80's.

JLahart:

The current account numbers come out tomorrow, and they'll be watched more closely than usual.

SageCrystl:

Thank you for joining us today Justin! We appreciate your insights! We have been speaking with Justin Lahart, senior markets writer at

TheStreet.com.

JLahart:

Great. Thanks for having me!