George Mannes, Senior Writer, and Pat Fitzgibbons, Markets Editor, chatted on TheStreet.com Thursday, Nov. 9 at 5 p.m. EST.

TSC_Pat:

Hi everyone! Thanks for coming today. Anybody know who's president yet?

George says hi, too. George is having technical woes, but we'll carry on as if he really exists!

TSC_George:

Hi everybody. Sorry I'm late, crosstown traffic was terrible.

Beffie-guest:

I have stock in the S&P 500, but it doesn't seem to be making me any money right now -- what are some reasons the top 500 companies aren't pulling in profits?

TSC_Pat:

The problem with the S&P 500 is the same as what's going on in the overall markets. There has been a lot of volatility with this past earnings period, and I think that the election has also put a lot of things on hold. If past is prologue, though, the fourth quarter should be a stronger one.

pkschultz-guest:

What is your opinion on the "last mile" problem? What stocks are likely to prevail? Currently, the market likes stocks that address the long haul, but nobody seems to focus on the "last mile" problem. So, recently I have been researching the issue of "fiber to the home" and I am having a hard time with it. What is your view on this issue?

TSC_George:

Hmmm, depends how you define the last mile problem. Seems to me you're focused on technology. I think you should step back and think about the business of that last mile ¿ companies like America Online, the local telcos, not that I can recommend or dis individual stocks. But think about the companies involved in cable modems & DSL.

TSC_Pat:

With all of these newer stocks, it's increasingly important that you go in with the assumption that they may have short-term losses and still be a strong company in the long run.

Bizman-guest:

Does the current debacle in the market put the possibility of an end of the year rally in jeopardy? If there is a rally how will it compare to last year's?

TSC_Pat:

I think that until things are settled with the election, it's very tough to say what is going to happen. However, it's a little too hopeful, in my view, to expect a rally as broad as the one we had at the end of last year.

TSC_George:

I second the motion there. A rerun of last year is probably wishful thinking/nostalgia.

TSC_Pat:

If the election, somehow, ends in the court ... well all bets are off on the market, I think.

Salgal:

What looks good in the Internet right now?

Seymour

touched on Microsoft's NET and XML today. What do you think of that and is there anything else out there?

TSC_George:

I wouldn't want to add to Seymour's comments. I think very little looks good in the Internet market right now, if you're hoping for short-term gains. At an online advertising conference I went to today, no one was even slightly optimistic that things might pick up until mid-2001.

TSC_Pat:

What kind of things, if anything, were they saying did look good? Any reasons for optimism in this sector?

TSC_George:

Well, in the long run, as more people get broadband (high-speed) connections to the Net, that means that advertisers will be able so send more ads to you w/audio and moving video. They like that, but you've got a little while before the high-speed population is big enough.

There's also a lot of emphasis on results-based advertising -- selling ads based not on how many times people see it (that's the usual practice), but on how many times people are driven to a particular action such as going to a site and registering. But those people aren't doing especially well right now either. They're just optimistic that in continuing tough times, advertisers will prefer to pay for ads w/results they can really measure.

mbice-guest:

With the current uncertainty in the elections, how do you see this affecting the stock large caps like CSCO, DELL, ORCL?

TSC_Pat:

The entire stock market is in for a rough ride until this all washes out. But for those large-cap companies, which just forged through an especially difficult earnings season and investors are already feeling a little jumpy, they are far more susceptible to volatility. I'd advise to tread very carefully until we know what's going on.

Bethie-guest:

What are the first steps someone should take when first getting into the market?

TSC_George:

Cautious steps.

TSC_Pat:

First thing I would recommend would be to decide on what you really want your money to do and just how much risk you're willing to assume with your investments.

TSC_George:

Think about delegating the stock picking to a professional through a mutual fund.

TSC_Pat:

If this is your kid's college money for example, you sure would want to invest it differently than if it was "fun money." Read as much as you can, and there are tons of sites on line, not least of which is our own, that have Investing Basics sections that are very helpful.

rest:

Is there a book you can recommend for the novice like me who wants to get into the market?

TSC_George:

Actually, I would start with a Web site or newspaper that you can read on a daily basis. I think following the market's (and individual companies') ups and downs is more accessible than a book written a year or two or three ago. That you can't link to current events.

TSC_Pat:

A very dry, but useful book for me when I started was

Understanding Wall Street

. I can't remember the author

Jeffrey B. Little, Lucien Rhodes, but it gets you used to a lot of the market's sometimes confusing lingo.

Stevie-guest:

We're seeing various Internet businesses from the DoubleClick advertisers to the CMGI incubators taking it on the chin. What's going to change the state of these areas on the Internet?

TSC_George:

Probably an economy on the upswing & lower interest rates, which will make the market more agreeable to delayed profits. Of course, turning profits right now would probably turn a lot of people around.

Curious-guest:

What exactly is happening in the market in relation to the presidential electoral stalemate? When are the current trends? Bush Stock, Gore Stocks?

TSC_Pat:

What is exactly happening, is there's a whole lot of jumpiness. The Dow, for example, fell about 100 points in the span of a couple minutes when Daley was speaking about contesting several Florida counties. Then it rebounded through the rest of the afternoon. That suggests a market that is damned volatile and a little scared. The market does NOT want this election to be decided in the courts.

As far as Bush/Gore stocks: Bush gets defense, health care, tobacco and basic materials; Gore gets tech, I mean, for God's sake the guy did invent that Internet thing.

TSC_George:

No, I did.

Gene-guest:

Why does the market seem to want Bush in office even though tax cuts probably mean higher interest rates?

TSC_George:

With Gore spending a lot of time telling people about how he'll protect them against drug companies and other Big Companies, people think Bush will be more friendly and anti-regulatory to business.

TSC_Pat:

The market likes Republican presidents as a rule. However, what the market really likes is a two-party system.

howde-guest:

Is it a bad idea for a small first-time investor to be doing it himself online?

TSC_George:

Well, nothing wrong with being online per se. You're just filling in the blanks on your buy order onscreen rather than phoning it in to somebody. Anytime you spend your money on stocks, you have to be cautious.

TSC_Pat:

Where you do the investing is a lot less important than knowing what you're investing in. Do a little research. Read a report or two and see how stable management is.

gunderlaw-guest:

What do you think of speech-recognition companies such as Fonix (FONX), Nuance (NUAN), and Speechworks (SPWX), and their near-term prospects.

TSC_Pat:

Is it Halloween again? I'm scared.

TSC_George:

I'm not familiar with those particular stocks, but given the ripping that Lernout & Hauspie has taken in the press including from our very own

Herb Greenberg

, it's possible investors will turn off to the sector for at least a week or two.

okolo-guest:

Have you become a tech bear yet? Or do you think we are near the bottom?

TSC_Pat:

I'm not a bear at all. I think , though, I've become a lot more bearish about companies that have shaky business plans and overvalued stocks! This is not the same business environment as last year and everything is not going to the moon.

ejgolden-guest:

If Bush is the less likely candidate to "regulate" -- wouldn't the Internet benefit from Bush rather than Gore?

TSC_George:

I meant regulation in the consumer protection/health care/environmental issue areas. Other than privacy, I don't think there are as many (and as potentially costly to industry) regulations to be made in tech. I think Gore is seen as more tech-friendly and more willing to invest in shiny new technologies.

TSC_Pat:

Internet stocks need a lot more help than who is sitting in the White House. They need to prove that they have viable businesses first. Too curmudgeonly, George?

TSC_George:

Caution: watch out for falling curmudgeons!

jggervais-guest:

When do you see the companies that are developing hybrid drive trains (electric drive with onboard generation) for buses and cars making an impression on the market?

TSC_George:

Sometime after President W. Bush leaves the White House and President Chelsea Clinton takes office. That doesn't sound like something GWB will be funding tax breaks for.

TSC_Pat:

Or at that moment when President Ed Begley, Jr. takes office.

TSC_George:

Of course, when President Woody Harrelson takes office -- who knows what *that* car will be running on.

TSC_Pat:

Hemp 2012!

TSC_George:

um, I'm not finding that ticker on Yahoo!

TheStreet-guest:

Thanks, George and Pat, for an informative chat! Any final thoughts?

TSC_Pat:

Well, in all seriousness, investors need to be really careful in this market. There are a lot of violent swings every hour, and it might do you well to think like an investor and not as a trader. Don't overreact.

TSC_George:

Tech stocks may bounce back miraculously to levels of earlier this year. Maybe the tooth fairy will be visiting my house, too.

TSC_Pat:

And thanks for all of the good questions!

TSC_George:

Thank you & good night.

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