Justin Lahart's AOL Chat

<I>TheStreet.com's</I> senior markets writer answers your questions.
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Sage MikeM:

Please welcome

Justin Lahart

, senior markets writer for

TheStreet.com!

Question:

Is it time to buy bonds?

JLahart4:

There is a real question -- what's going to happen in the bond market after the FOMC meeting tomorrow. Some people believe bonds will sell off if the Fed doesn't do anything.

JLahart4:

If the fed doesn't change to a tightening bias, the thought is that shows the fed reserve isn't being vigilant.

Question:

Do you expect a change in monetary policy soon?

JLahart4:

Most economists don't think the fed will change policy until the August meeting. Lately the thought is we will see a tightening in the latter half of the year.

JLahart4:

But remember these guys thought the fed would be cutting rates just four months ago!

Question:

Do you expect the technology sector to continue to lead the market, or do you expect a shift in leadership?

JLahart4:

The tech sector has an interesting situation because it is a growth sector, but it also benefits from cyclical growth. So while the upturn in the world economy is generally bad for growth stocks, tech could benefit from the improving global outlook.

Question:

Is the boom in IPOs a sign of a great economy or a mania?

JLahart4:

Beats me.

Question:

How much of a threat does AT&T pose to AOL?

JLahart4:

No comment. As a TSC reporter, I cannot comment on individual stocks.

Question:

Do you feel the energy sector is on its way up?

JLahart4:

If the global economy is really improving, it seems likely that energy demand would be going up. Also remember that while oil prices were going down, energy companies were investing in technology to improve productivity and improve margins. I suppose things could be brightening for the sector.

Question:

Are most investors better off picking individual stocks or investing in mutual funds?

JLahart4:

Recently most investors have been better off picking individual stocks. This is probably because name brand stocks out performed the market substantially.

JLahart4:

Now that the market may be seeing some rotation into other sectors, mutual funds could start outperforming the indices. But investors who do their homework should be able to do just as well or better than the fund managers.

Question:

Which do you think we will see first - Dow 10,000 or Dow 12,000?

JLahart4:

Maybe the question should be which will we see DOW 10000 or DOW 11000 again. Many strategists that I respect have begun calling for a correction followed by another bull run.

JLahart4:

Of course this market seems to always defy predictions of a fall.

Question:

Even with an interest rate hike do you feel that financial companies will still fair well over mid to long term?

JLahart4:

I suppose that depends on the long term interest rate outlook. If the Federal Reserve and other central bankers can keep the global economy on track, financial companies should be able to do well, especially with increasingly open global markets.

Question:

In speaking to analysts, do you ever hear them talk about dividend yields and p/e ratios, or has the focus of evaluating stocks changed completely?

JLahart4:

I talk to many analysts who do work with dividend yields and P/E ratios. They all seem to be saying that the stock market is 30% overvalued relative to current bond yields.

JLahart4:

They point out that this has not happened since 1987, but they also say that they don't think any correction would be nearly as severe as the one we had then.

Question:

Is there a future for Web auction houses? Do you expect them to be extremely successful within the next year or so?

JLahart4:

It seems like a good idea. Here in the offices of

TheStreet.com

we recently auctioned off a lava lamp.

JLahart4:

The editor-in-chief had the highest bid. Drinks for everybody in the office. Now there's a mania.

Question:

Would it be wise to diversify into international stocks?

JLahart4:

People always say that its a good idea to diversify but Salomon Smith Barney, Equity Strategist

John Manley

pointed out to me that people were saying this in 1996 investing overseas then was a real mistake.

JLahart4:

But if the economy in Asia is really coming off its bottom, those markets could be very interesting.

Sage MikeM:

Thank you, Justin Lahart, senior markets writer for

TheStreet.com

!

SagePSU:

Thanks Justin, please join us again.