Participants on March 11 included host Brenda Buttner, Herb Greenberg, Dave Kansas, Adam Lashinsky, Jonathan Hoenig, Dagen McDowell, Tracy Byrnes, and guests Philip Dow and Michael Witz. The transcript is unedited, and phonetic spellings are indicated with (ph).

BRENDA BUTTNER, HOST:

Hi, everyone. I'm Brenda Buttner, and you are connected to "TheStreet.com." We're here to help level the playing field on Wall Street so you can become a more independent investor.

The

Dow

below 10,000, the

Nasdaq

above 5000, what happens next? Let's get the Word on TheStreet.

With us from

TheStreet.com

financial Web site, Senior Columnist Herb Greenberg, Editor-in-Chief Dave Kansas. In San Francisco, our Silicon Valley columnist, Adam Lashinsky, and in Los Angeles, contributing editor Jonathan Hoenig, who calls himself the Capitalistpig -- just so you know, we didn't nickname him that. Jonathan runs Capitalistpig Asset Management. And also here in New York, Philip Dow. Philip is the managing director at investment banking and brokerage firm

Dain Rauscher Wessels

.

First topic, are there no safe stocks? Even though the market finished strong last week, a huge drop in a core blue-chip still had some on Wall Street very rattled. On Tuesday,

Procter & Gamble

, a stock that should be as steady as they come, warned about disappointing earnings and fell a staggering 31% in one day. To put that in perspective, P&G didn't fall that far during the crash of 1987.

So if P&G can fall so far so fast, are there any safe investments in this market? I mean, it's supposed to be basic and boring blue-chips, isn't it?

HERB GREENBERG, SENIOR COLUMNIST, THESTREET.COM:

Hey, man, I say, how about money-market fund?

BUTTNER:

Oh, boy, you're living on the edge, Herb.

GREENBERG:

That's right. Let me tell you something. This is a market full of a lot of gains, a theme I've been using. And, you know, I was talking to an analyst, and he said this Procter & Gamble problem, hey, it's not going to affect

Colgate-Palmolive

, it's not going to affect

Kimberly-Clark

, companies that he thinks are going to do phenomenally well going forward.

But you know what I said to him? I said, "Will anybody care?" Even if these companies don't disappoint at this point, I don't know if there's any safe place unless you're willing to trade.

BUTTNER:

Adam, aren't you in the only safe place? That's the defensive stocks now, tech stocks, right?

ADAM LASHINSKY, SILICON VALLEY COLUMNIST, THESTREET.COM:

No, nobody ever said that tech was defensive. But Herb, you're not suggesting, are you, that people are trying to gain Procter & Gamble stock, are you, just so I'm clear?

GREENBERG:

No, not Procter & Gamble. But if, you know, if a good company in that segment comes out and is good, it won't really matter.

JONATHAN HOENIG, CAPITALISTPIG ASSET MANAGEMENT:

But P&G's still expensive.

LASHINSKY:

OK, but what I'd like your take on, I think that the rotation out of a stock like Procter & Gamble and into tech really is just ridiculous. You know, the fact that people say we can't be in this, and it should be down 31%, don't you think, Herb, that's a short-term thing? I mean, long term...

BUTTNER:

Well...

HOENIG:

But why should -- why should...

BUTTNER:

Jonathan, is the problem that we're just not washing enough? Are we just not using enough soap? What's the deal here?

HOENIG:

Listen, there's no risk premium left in the stock market at all. And I'm not surprised to see names selling off. I mean, whatever happened to asset allocation? People are either in the stock market or not. There is no place for bonds or cash any more in anyone's portfolio, and I think that's something people ought to consider, you know, as we go along.

In terms of where I'd put my money, maybe the REITs? Is there anything else? You know, it's got all the, you know, the you-know-what beaten the hell out of it, but so what?

BUTTNER:

Dave, does it make sense to have anything besides tech in your portfolio?

DAVE KANSAS, EDITOR IN CHIEF, THESTREET.COM:

Oh, well, absolutely. I think that everyone loves tech right now, and people don't like boring stocks like Procter & Gamble, but you have to look at other areas to have some diversity in your portfolio.

KANSAS:

I mean, I would think if you're looking for safety, I'd look -- look at the utilities. Those are companies that give some yield. They actually pay dividends -- I'm not sure what those are, Herb. And they -- and they're not facing some of the great labor insanity that some places are facing, in terms of trying to fill in staff, keep prices down. I mean, they've got a regulated environment where they can raise prices in certain ways.

I mean, I -- that's about the only safe place I can think of.

BUTTNER:

Phil, what are you watching for?

PHILIP DOW, MANAGING DIRECTOR, DAIN RAUSCHER WESSELS:

I think looking for safety's a real difficult proposition right now. I mean, people look at -- like in the tech sectors,

Cisco Systems

,

Intel

,

Microsoft

, they fueled this rally.

But if you look at each of those companies, they're reinventing themselves. They're -- the business plans there are risky. If we had this conversation four or five years ago, one of the stocks we'd be talking about is

Digital Equipment

. They bet wrong; you don't hear about them anymore.

GREENBERG:

And you know...

HOENIG:

Look at the bellwethers. Even

GE

is taking a beating the last 12 months. I mean, if GE's down, such an important stock in the major indices, nothing is safe.

GREENBERG:

Well, you know, Jonathan, if you look just back a few months ago,

Home Depot

could do no wrong. And it even takes it on the chin. So the -- and the leaders are starting to hit all the way around.

KANSAS:

Doesn't it reflect an unbelievable amount of impatience in this market right now?

DOW:

Everybody's a trader, everybody's a trader.

LASHINSKY:

Let me play on that for a second...

GREENBERG:

And therein lies the problem.

BUTTNER:

What's wrong with that, though?

DOW:

Let me -- get -- I don't want you -- because...

BUTTNER:

What's wrong with that? They're making money.

DOW:

I watch -- because you have serious people, serious money in this market. And I don't know many individual investors that do a good job of trading, all right? Our trading desk, if we break even on a year, we feel pretty good, OK?

BUTTNER:

Well, but it -- Adam, haven't the little guys actually been doing a pretty good job? They've been buying on the dips when all the pros said, Uh-oh, bear market.

LASHINSKY:

Well, but the little guys are big momentum players. I want to try to inject just a little bit of reality here. I try to figure out where the tech stock market is going and why tech is exciting, and it's very exciting. But we're talking about two months of performance here. That does not change the entire nature of the stock market -- the stock market. You know, prudent investors, of course, will have their investments in the stocks that represent the broader economy...

GREENBERG:

Yes, but right now, Adam, that type of mentality isn't going to make the kind of 30, 40, 50, 60, 70% gains that Jim Cramer's talking about. This is a market...

LASHINSKY:

Even Jim Cramer wouldn't suggest that you go 100% into the things that are working right now.

GREENBERG:

No, but guys like that, but guys like that...

BUTTNER:

(OFF-MIKE)

GREENBERG:

... guys like that are talking about playing the game. They have to play the game. And I'm concerned that individuals want to now try to play this game, because then they're going to be left behind.

LASHINSKY:

I share your concern.

BUTTNER:

They're being left behind, aren't they, Herb, if they don't jump on?

GREENBERG:

They're go -- they could be left behind if they're the last ones off also before it hits the wall, for goodness' sakes.

HOENIG:

But people are buying tech stocks because they keep going up. They're selling the consumer stocks because they keep going down. There's value in drugs, value in real estate...

GREENBERG:

But which tech stocks, Jonathan? Which tech stocks should they be buying? That's the question.

HOENIG:

Well, I certainly think now's not the time to be overweight, is it, Herb? I mean, after so many years of outstanding gains, people say they want growth. But is it growth in the companies or just growth in stock prices? When we see these stocks, these -- announce a stock split, it's up 30, 40% in one day on the split news alone. What's rational about that? It's insane.

BUTTNER:

All right, Jonathan, that's got to be the last word for Word on TheStreet.

Philip Dow from Dain Rauscher Wessels, thanks so much for being here.

Up next, how'd you like to be a mutual fund manager? You've basically got your chance with one fund that takes its investing ideas from people like you and me. It's up, and big time, but will it stay that way? Right after this.

BUTTNER:

Welcome back.

So you've got investing ideas, right? And these days, lots of them may be doing a lot better than the ones your mutual fund manager has. Complain no more. You now have the chance to invest in a fund that takes its ideas from you.

The

Community Intelligence

fund is literally communal. Its stocks are bought and sold on the suggestions of investors who log onto the firm's Web site. Does this kind of democratic investing make sense?

Well, no question it's making money. The Community Intelligence fund is up a whopping 70% since it launched in November. Compare that to a 1% loss on the

S&P 500

since then.

Michael Witz is head of

StockJungle.com

, which operates the Community Intelligence fund.

Is the fund for you? Here to help you figure that out, Herb Greenberg is back along with

TheStreet.com's

mutual funds reporter, Dagen McDowell.

Michael, thanks for joining us.

So a lot of people think that "community intelligence" is an oxymoron. What's going on here?

MICHAEL WITZ, STOCKJUNGLE.COM:

Yes, there's been a lot of talk about the message boards out there, and people are saying there's hype. There's commercials about, you know, where are you getting this stock tip from?

But we've always believed, as individuals investors ourselves, that there is intelligence, there are great stock-picking ideas, there are great analysts out there. And we're about mining the stock boards to uncover the intelligence.

DAGEN MCDOWELL, MUTUAL FUNDS REPORTER, THESTREET.COM:

Well, Michael, let me ask you this. How do you prevent anonymous visitors from manipulating stock by, like, throwing recommendations at you?

WITZ:

We have a variety of screens that we use, so it's fairly easy to see if somebody's trying to manipulate a stock. You know, we only allow one person to sign up at a time, and we cookie the person so we can see if there's multiple users.

GREENBERG:

Wait, let me, let me, let me get something straight here. So what you have, Michael, is, you have this fund that essentially -- in fact, it's almost like a game, because you give folks, what, $50 if they -- if they're the analyst of the week?

WITZ:

The five hottest hands, which are the best-performing analysts of the community, get $50 each day at market close.

GREENBERG:

This is like a message board, but it is a message board fund.

BUTTNER:

Do you...

WITZ:

It's a message board fund, but -- but...

BUTTNER:

No, but you're the ultimate arbiter, right? You decide what's going in.

WITZ:

We're -- we decide what's going in. But the key difference in our community is that we rate people over time. So even if we don't know who this person is, we get to see their entire history of what stocks they've gone long on and what stocks they've gone -- they've shorted.

BUTTNER:

And in fact, didn't they give you the suggestion of

RFMD

, which is just up amazingly? I mean, that...

WITZ:

Right.

BUTTNER:

... comes straight from a...

WITZ:

Yes, the entire portfolio came from our online community.

MCDOWELL:

Do you require the people who you accept recommendations from to actually own the fund?

WITZ:

No, we do not.

MCDOWELL:

You don't.

WITZ:

It's open to the public. Anyone can participate.

GREENBERG:

Now, trading must be pretty high, so I'd suspect turnover in this fund, and therefore potential tax consequences, could also be kind of high.

WITZ:

I would say that it's probably too early to tell how it's going to turn out. But it probably will lean to the high side.

BUTTNER:

Why don't you think you`ve attracted more money? You've got, what, just, like, a million bucks in assets? That's pretty small still.

WITZ:

Yes, I think it's just because of the fact that we're small, we just started. We've only been upline for about three months. We haven't done any advertising. So everything that we've done -- gotten so far has been through word of mouth.

MCDOWELL:

Well, you told us about your buy discipline. How do you decide to sell? And do you accept sell recommendations from people?

WITZ:

Yes, absolutely. Our analysts go long and short stocks, and without we look at the community as a whole, and we find what we think are the trends in the community, and we look to the community to see where -- what sectors are going to be the next emerging sectors. And, you know, which ones are growing cold. And so we'll move money where we feel the value is going to be.

GREENBERG:

Looks like these people, I suspect, are -- they're giving you recommendations, but they're not buying the fund. They don't have to buy the fund to give you the recommendations, do they?

WITZ:

No, they don't. Anybody -- I think it's a great resource for individual investors to come and get -- find the -- find stock picks as well.

BUTTNER:

All right, Michael Witz, thanks so much for joining us. And if you want to know more about StockJungle`s Community Intelligence fund, head over to

TheStreet.com

Web site right now and get an in-depth analysis of the fund and how it works. But after this short break, how to get a fatter check from the

IRS

. If you invest, chances are that can be yours, when "TheStreet.com" returns.

BUTTNER:

Welcome back.

Did you make a killing in last year's market? You-know-who wants to know, Uncle Sam, so he can get a piece of it. But here's what you may not know. Before you add up your portfolio's profits, you should deduct your investment-related expenses. Here to explain is

TheStreet.com

tax reporter, Tracy Byrnes.

Tracy, thanks for joining us.

So how does this work?

TRACY BYRNES, TAX REPORTER, THESTREET.COM:

Well, to start, anything -- any out-of-pocket costs you incur to learn about your investments, to manage them, it's all deductible.

But I got to tell you, it's limited to 2% of your adjusted gross income. And all that really is, is, if your adjusted gross income is, say, $100,000, 2% is $2,000. Let's say your investment expenses total $3,000. You can only take the $1,000. That's the amount above the 2%.

That's why it's really important to gather as much as you can and get this number up.

BUTTNER:

Right, OK. And some of the expenses we're talking about, subscriptions, all those money magazines that I buy.

BYRNES:

Yes,

TheStreet.com

. If

TheStreet

helps you make investment decisions, deduct it. Newspapers, newsletters, deduct it all.

BUTTNER:

And online trading costs as well?

BYRNES:

If you pay more money to get access to more information, take a deduction for it.

BUTTNER:

OK, what about all those books and tapes and...

BYRNES:

Yes, and they don't have to be, you know, Graham Dodd security analysis, the Idiot Guides work.

BUTTNER:

You have that next to your bed, though.

BYRNES:

I do, yes.

BUTTNER:

All right, and accounting and legal costs. This is really where it can add up.

BYRNES:

Right, especially your tax preparation fees, they're all included.

BUTTNER:

OK. Well, I know those are all pretty straightforward. But there are some that are not as obvious I was surprised by. For example, the automatic investing charges.

BYRNES:

Yes, a lot of banks charge to have your money transferred from your checking to your investment account. Deduct it.

BUTTNER:

OK.

BYRNES:

IRA fees in particular too, if your IRA fees are sent to you at home, take a deduction for them. It's really important to ask your custodian to send them to you at home. If they hit your account, you cannot deduct them. Not to mention, that's less money that grows in your IRA.

BUTTNER:

Right, right, of course.

Now, in my mammoth cell phone bill, you said I can do something about this.

BYRNES:

Yes, your cell phone, your telephone, cable, Internet access, anything that you use for your investments. Of course, but only a portion. So if you're on your cell 50% of the time with your broker, yelling at him, only deduct 50% of your cell phone calls.

BUTTNER:

And you've got to keep pretty good records, then, on that.

BYRNES:

Absolutely, that's the moral of the story here.

BUTTNER:

And also you say travel expenses to your broker, here...

BYRNES:

Yes, to your adviser, to your financial adviser, tax adviser, cab fare, deduct it all.

BUTTNER:

OK, all right. Tracy Byrnes, good advice, thanks so much.

And Tracy has plenty more money-saving tax tips on

TheStreet.com

Web site. Just go to Tracy's Tax Forum column at www.thestreet.com.

After this short break, bet you want to know what's next in this market. A new round of predictions that you won't want to miss.

Plus, we look back at past predictions and find out who was right, and, yes, who was wrong.

Stay tuned.

BUTTNER:

Welcome back.

You know, we hold our stock pickers accountable. We tell you what their stocks do after they pick them. And we do the same here at home. What happened to our panel's predictions? Let's find out, and also give them a rating on how they've done.

Back with us from

TheStreet.com

are Herb Greenberg, Dave Kansas, in San Francisco, Adam Lashinsky, and in Los Angeles, Jonathan Hoenig.

Thanks for being back.

Jonathan, you've only made one prediction on the show so far, back on Feb. 12. You said that by September...

HOENIG:

Did I get one so far?

BUTTNER:

Well, the Dow was going to go to -- was going to dip to 9000. Still -- do you still think it's heading that way, or...?

HOENIG:

Absolutely. I mean, you know, let's forget talking about valuations. The Dow's in a downtrend. We have not yet seen the level of fear and capitulation you want to see in this market. The

VIX

, the volatility index, hasn't been in the 30s. There's more downside pressure to come.

BUTTNER:

OK. Herb, now, you've had a few more predictions than Jonathan, so we're not going to be quite as easy on you. Back on our Jan. 8 show, you said that

Lucent

was heading down into the 30s. Since then, well, that's not the direction that it's taken. In fact, it's up 26%.

GREENBERG:

Well, that's...

BUTTNER:

Now, I got, now I got to be honest. You can't deny that it looks like you blew that one. So your rating, it gets one dollar sign out of five.

GREENBERG:

All right, I...

BUTTNER:

What, what now, Herb? Do you stand by that prediction...

GREENBERG:

The short-sellers I've checked with don't seem to be talking much about Lucent these days. They pulled this rabbit out of the hat by doing a spinoff, and any time a company does something like an acquisition spinoff or something, that can change the story.

BUTTNER:

All right, so Lucent is going to have to split before it gets into the 30s.

All right, here's a better one for you. Herb, on our New Year's show, you predicted that there would be an incredible biotech boom. Man, did you nail that one! Since your prediction, biotech has been the hottest sector around, up 47%. You get five dollar sign ratings on this one. Is there more boom in biotech, then?

GREENBERG:

There's probably going to be a little bust at some point, but yes, long term, great place to be in the right stocks.

KANSAS:

You said 10 years.

BUTTNER:

OK, and Dave, on last week's show, you predicted that the Dow was done moving south and that it wouldn't go under 10,000 again. Well, that prediction...

KANSAS:

I can't imagine...

BUTTNER:

... was quickly proven incorrect when the Dow closed Tuesday below the 10,000 level. It did get back above 10K on Thursday but fell short on Friday to close the week below.

I don't know, guys, what do you say? Two dollar signs here out of five?

GREENBERG:

That's generous, that's pretty generous.

KANSAS:

I can't imagine why the segment's being created this week. I appreciate the new rating structure quite a lot. Well, I mean, even, you know, Ted Williams didn't bat a thousand, OK?

BUTTNER:

All right, OK, all right, you're right up there. But Dave, you also hit a bull's eye when you predicted the Nasdaq would hit 5000 by your birthday, which was March 28. In fact, it closed Thursday above 5000, and finished the week there as well. Clearly a home run, and a five dollar sign rating.

Where to next for the Nasdaq? Where do you think it's going, 6000?

KANSAS:

Six thousand before 4000, definitely.

BUTTNER:

OK, all right.

Adam, your turn for the hot seat. Anyone who listened to you in February liked what they heard. You predicted the

Palm

IPO price would go up, raising half a billion dollars. It raised even more, closer to a billion. You get the big five dollar sign rating on that. But Adam, is this stock now overvalued?

LASHINSKY:

Well, you know, Palm was fairly valued the first time they filed it, around $12 to $14 a share. Sure it is, yes.

BUTTNER:

OK, and now you know we're not going to let you off that easily either.

LASHINSKY:

Yes, I didn't expect you to.

BUTTNER:

Remember your Jan. 15 prediction that Microsoft would settle the government's antitrust suit by mid-February, before Windows 2000 launch? Well, in fact, Windows 2000 is out of the box, and there's been no settlement yet, of course. But, you know, there were rumors of one, so you get a two dollar sign rating for that prediction.

But what gives? When is this finally going to be over?

LASHINSKY:

Well, thanks for the two dollar signs, Brenda. This is like, you know, trying to predict who will be the next pope when the College of Cardinals is meeting. We don't know what's going on behind those closed doors.

BUTTNER:

You don't? Really?

LASHINSKY:

I thought I saw the smoke coming, Brenda. I was wrong.

BUTTNER:

Oh, all right, OK, guys.

Now, you know how closely we keep track if you hit or miss, so what predictions do you have for us this week, Herb?

GREENBERG:

Despite what happened to Procter & Gamble, Kimberly-Clark and Colgate, when they announce, the surprise will be, there will not be a negative surprise.

BUTTNER:

OK, those basic boring blue-chips -- Dave.

KANSAS:

Jonathan's right, we need more fear, more volatility. The market's going to get much scarier, wilder swings, more volatility.

BUTTNER:

Adam?

LASHINSKY:

The next wave of tech stocks that are going to get hit will be the B2B enabling software companies. I'm talking about the group that includes

i2 Technologies

,

Commerce One

,

FreeMarkets

. I'm not saying they're going to get hit, and I'm not saying when it's going to happen, but a very overvalued group.

BUTTNER:

OK, Jonathan?

HOENIG:

Palm, I'm glad we were talking about Palm, I think we see Palm back down in the low 30s if not below sometime before fall. Basically, you know, a stock is like a woman, it's its most attractive when you don't know that much about it. So...

BUTTNER:

Excuse me? Are we booking him again on this show? All right, all right.

Now, if you have something to say -- and we won't hold you as accountable as we just did these guys -- go -- I can't believe you said that. Go to

TheStreet.com

Web site, click on the TV page, and rate the predictions. You can also send us a question or a comment.

He is a capitalist pig.

And while you're on our site, make sure to check out all of the investment information dozens of reporters and columnists write every day to help you make the best decisions you can in the stock market.

We'll see you again next weekend. Until then, we hope you invest wisely. Thanks for joining us.

END

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