RealMoney Radio: Backdating Blues

Aaron Task says every day is bringing more stocks that offer a risk of scandal.
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The first caller to

"RealMoney" radio on Friday asked guest host Aaron Task and


contributor Cody Willard about

Conexant Systems

(CNXT) - Get Report


"This stock has had a very serious fall," said Task. "Now's the time in the economic cycle you don't want to be in these kind of stocks, unless you can afford to lose the money. Just because it's low-priced doesn't mean it can't go lower."

Willard agreed that Conexant might make a suitable speculative investment, but commented that he hadn't owned it in a long time.

The next caller asked about



which has been implicated in the option backdating scandal.

"I still believe there is more upside than downside," said Willard, but he reminded listeners that backdating was "essentially stealing from shareholders."

Willard said the scandal was likely to have a dampening effect on the market and keep price/earnings multiples lower than they would be otherwise.

"This weighs on investor sentiment," added Task. "It may be the next scandal like Enron or WorldCom. Every day we go by without another name that's good for the market."

The next caller asked about

Apple Computer

(AAPL) - Get Report


"The stock is currently trading right at its 200-day moving average, which is good from a technical analysis viewpoint," said Task.

Willard believes that the downside risk is likely limited to $5, whereas the upside is huge. He sees a triple-digit stock price for Apple by year-end.

The next caller wanted to know whether


(GOOG) - Get Report

recent slide was over. "Why is it holding here?" he asked.

Willard said, "I don't think it is necessarily holding here," he said. And he observed that the softness in the stock price is likely to continue before it turns around. "I expect to get bullish, just not yet," he said.

Task continued, "I like Google here in the $380 range because a lot of the froth is out of the market. People now understand that there are risks."

"I'm in the house of pain with


(AMTD) - Get Report

," said the next caller. "Could you give me some advice?"

The caller's losses provided a useful lesson for other listeners, according to Task. He said when buying a stock, investors should place a stop-loss order at a level below the purchase price to stem possible large losses. "That way you automatically get out when the price hits that level," he said

The next caller wanted to know the host's thoughts on


(HPQ) - Get Report


"H-P has done a lot and has had a huge run-up since the previous CEO, Carly Fiorina, was forced out," said Task. "Now they are eating


(DELL) - Get Report

lunch." He also advised the caller to take some profits now and possibly reinvest in the stock on a pullback.

The last caller asked about

Allegheny Technologies

(ATI) - Get Report

. She said, "I bought it at $80."

The stock traded at $66 during Friday's show.

"I don't think you don't want to buy more," said Task. "You want to put a stop-loss below its current level."

To see the most recent edition of The RealMoney Radio Recap in its entirety, please click here. This recap is published every day around 3 p.m. ET.

Aaron L. Task is the co-executive editor of In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in He also doesn't invest in hedge funds or other private investment partnerships.

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