Pat Fitzgibbons chatted on AOL MarketTalk Thursday, Feb. 22, at 10 a.m. EST.

Comment:

Live from New York City, New York, please welcome Pat Fitzgibbons, Markets Editor at

TheStreet.com.

Pat can answer questions about the markets and investing. Pat does NOT offer individual stock commentaries or recommendations.

PFitzgibbo:

Morning everyone! Hope everyone is surviving this pretty tough market!

Sagecalc:

If the market continues to weaken, do you feel the Fed will step in with an inter-meeting rate cut?

PFitzgibbo:

I think the Fed could possibly jump in at anytime.

PFitzgibbo:

However, the Fed will be watching any potentially inflationary numbers before they decide what they're going to do.

PFitzgibbo:

The Fed watches the markets, to be sure, but it more closely watches inflation.

Sagecalc:

Was yesterday's CPI number somewhat inflationary?

PFitzgibbo:

Yes, it was.

PFitzgibbo:

But, it remains to be seen whether the number was a real read on the economy or just a comment on the rising oil and gas prices in California.

Sagecalc:

Much has recently been said of the potential for stagflation. What are your feelings on that?

PFitzgibbo:

I think that the Fed is going to have to keep an eye on stagflation, and it will.

PFitzgibbo:

However, I just don't think there are enough signs out there right now that stagflation is happening or is going to happen in the very near future.

Comment:

Is it OK to buy QQQ after it gets below $40?

PFitzgibbo:

You've got to be careful here.

PFitzgibbo:

While I don't recommend buying or selling anything, I think now is a time to tread very, very carefully in the world of tech investing.

PFitzgibbo:

I'm not saying to be totally in cash right now, but I'd sure watch out. This is a messy market right now.

Sagecalc:

What would you suggest to the individual investor that feels "trapped" in a tech-heavy portfolio with sharp unrealized losses?

PFitzgibbo:

Hmm, I'd say it's a tough call right now.

PFitzgibbo:

Selling into this market is going to be a pretty tough proposition. On the other hand, if you can stand the pain, there are a lot of pretty smart people who still believe that the second half of this year is going to be markedly better than the first.

PFitzgibbo:

But, there does come a time when you have to cut bait and move on. You sure don't want to be holding a lot of stocks on their way to zero.

Sagecalc:

Surely you don't see companies like

Nortel Networks

(NT) and

Cisco Systems

(CSCO) heading to zero?

PFitzgibbo:

I don't, no. I think there is a lot of very strong tech companies out there.

PFitzgibbo:

My recommendation was based solely on my belief that tech is a very risky place to be right now and individual investors need to be paying very close attention to the stocks they are buying/holding.

PFitzgibbo:

Now could those two stocks move lower? They sure could.

Sagecalc:

At what point should we expect the correction in technology stocks to reverse course?

PFitzgibbo:

I think it's too soon in this cycle to identify a time period when things are going to get a lot brighter.

PFitzgibbo:

I think that we are going to have another tough earnings season for the March quarter and stocks are going to react accordingly.

PFitzgibbo:

I wouldn't be surprised, however, to see things improve after the summer.

PFitzgibbo:

The market usually takes August (basically) off and after that I think we'll see some improvements.

Question:

Why do investors tend to be bold when stocks are expensive and chickens when stocks are cheap?

PFitzgibbo:

It's amazing how bold people were early last year when stocks that they bought at $15 were trading for about $115!

PFitzgibbo:

Losses make people a lot more reluctant to risk additional capital. The idea about this whole thing is to MAKE money.

Question:

Are energy and drug stocks a sensible place to look right now for predictable earnings and stock performance?

PFitzgibbo:

They certainly seem like a lot safer bet at this juncture. However, if energy prices start to slip, you can bet that those stocks will become a lot more volatile.

PFitzgibbo:

The trick with drug stocks is to always keep an eye on their pipeline of new products and see how successful they are at getting those products through a lot of the mandatory testing that needs to be done before the

FDA

approves new treatments for diseases.

Question:

Why do most commentators do such a soft shoe around the Fed and their complicity in the

Nasdaq

disaster? They TOTALLY misread inflation and destroyed one of the vibrant economies in history.

PFitzgibbo:

I think that mo0st commentators have been a little too soft on Greenspan and his gang.

PFitzgibbo:

However, there is are a lot of commentators who are waiting to see what effect this round of easings will have on the market before coming right out and condemning the job the Fed has done. I think on our site we have held Greenspan, Fed officials and analysts all equally responsible for the mess that the Nasdaq is in now.

Question:

Would you agree that most of the sideline money is held by institutions and that most individuals have followed the buy-and-hold theory and have been decimated?

PFitzgibbo:

I really haven't seen a lot of evidence pointing to that. But I'm also not sure that I disagree with you.

PFitzgibbo:

One of the things that the big institutions have is a much better ability to hedge their losses. So, yes, I'd say that the retail investor has been more cruelly treated by this market than the big shops.

Question:

How can we fire Alan Greenspan?

PFitzgibbo:

Hmm, perhaps if you told him there was a big

Ayn Rand

conference going on in some far away land, he could be tempted into spending a lot of time abroad looking for it. :)

Question:

Can you give me any encouragement for the market? Every day we seem to get more depressed when we see the money we are losing. Should we get out or stay the course? Thanks.

PFitzgibbo:

Sure, I think there are some encouraging signs to this market and there are some sectors that are always worth looking at in markets such as these.

PFitzgibbo:

As we mentioned earlier, drugs and energy are looking like good bets right now ... but make no mistake, this is a stock-picking market and requires a good deal of work.

Question:

If an investor feels the economy may worsen, what are some ways to profit from a declining market?

PFitzgibbo:

You may want to investigate investing in securities that typically perform better when the economy is weaker.

PFitzgibbo:

Tech investors might not want to admit it, but the time might be nigh to start looking at municipal bonds or treasury bonds.

PFitzgibbo:

The returns are a lot lower, but they are at least returns, as opposed to what you might get in the rest of the investing world.

Question:

Would you agree that the retail investor has a much better buy strategy than a sell strategy?

PFitzgibbo:

I think that the real problem for retail investors is that they NEVER came up with an effective sell strategy.

PFitzgibbo:

During the big run-up of the end of 1999 and early 2000, there were a lot of investors who had never mapped out a workable strategy for when to get out of this market.

PFitzgibbo:

A shakeout like this might force investors to come up with realistic expectations about the market. I guess a one-word answer to your question, though, is "yes."

Question:

Do you feel retail investors get too attached to the stocks that they own, refusing to sell even when valuations are obviously extended?

PFitzgibbo:

Yeah, absolutely and that what makes a market like this so difficult. Sometimes, you've just got to take those losses and move on.

Comment:

Thank you for joining us today Pat! We have been speaking with Pat Fitzgibbons, Markets Editor,

TheStreet.com

.

PFitzgibbo:

Thanks so much for the great questions and I'll see you at

TheStreet.com

!