Wall Street Week with Louis Rukeyser; 3142

I mean Ray Brady for Wall Street Week. Tonight we're going to talk with a top fund manager about finding value in the S&P 500. And we'll also talk about inflation fighting bonds. Our special guest tonight is Randall easily president of the Lomax fun. Our panelists are SEAN EADIE Jonathan Mary and Greg Valliere. It's. Often. Just. Me. Fitting evening and welcome to Wall Street Week.

Even as baseball moves into the third week of its new season America's other great game the stock market is well into its season. The earnings season when companies have to fess up and tell investors in the first quarter that they hit home runs or that they strike out. There are some companies who didn't exactly hit home runs the airlines are still flying on a wing and a prayer and those telecom stocks keep bringing up the wrong numbers. There have also been some off the field problems. The plane crashes into a building in Italy and the market sells off. Investors still remember 9/11 the Middle East is still O'Barry and so is foreign oil. Add it all up and the market has been making wider swings the Giant slugger Barry Bonds. That's a sign people are simply darting in and out of the market. Those buy and hold investors the public are not yet back in this market in any big way. You can tell that from the lower earnings that the brokers that serve them outfits like Charles Schwab and Merrill Lynch.

Even so there's still reason for investors to cheer inventories are dropping. And while both Ford and General Motors reported poor first quarters they both see better times ahead. And cars are still a vital part of this American economy. Even better the chief umpire in this game Alan Greenspan of the Fed this week seem to be predicting fewer rainout say ahead. In other words it seems like it will be a few months before we see any rise in today's low rates. Indeed Mr. Greenspan seemed unconcerned by the rising debt of the American people noting that increased mortgage borrowing has been offset by even higher home values. And now a brief moment to salute the end of an era. After 14 years the Wall Street Journal is retiring its star game in which stock market pros were pitted against darts thrown at random at stock market tables but darts put up a good fight but after one hundred forty two contests the humans won

their selection post of a six month rise of ten point two percent versus three and a half percent for the darts that's giving new hope to those thousands of Buss who are still trying to outguess the darts. Let's recap the week on Wall Street. The Dow Jones Industrial Average was up 51 points today as investors bought up shares of Microsoft sending its shares up almost 3 percent. The Dow closed at ten thousand two hundred fifty seven point eleven for the week the blue chips rose 66 points. The NASDAQ lost over five points today but gained almost two and a half percent for the week. Now before we turn to our panel for their thoughts on the markets and the economy I want to let our viewers know about upcoming changes here at Wall Street week mark your calendars for Friday June 28. That's when Wall Street Week With Fortune starts right here at your favorite time on your favorite PBS station. We'll have more to tell you about this new series about your money in the markets. So stay

tuned for updates. Now let's introduce our panelists Jonathan Barry is a senior vice president of investments and wealth management at Legg Mason wood Walker. He personally manages over two hundred million dollars in client assets. Thanks for being here. Jonathan the market wobbled a bit this week. What do you think it will take to see a really solid market upturn. Well I'm constructive on the market at this point because of the companies that have reported thus far. Fifty eight percent have reported earnings that have beat estimates. Now granted those estimates have been lowered from earlier forecasts. But for the first time in quite some time where we're starting to see positive earnings comparison and I think if we continue that the market should edge higher that will be important. Shawn Eddie is the managing partner of Eichelberger greaser Eddy and elms Sean's a certified financial planner. Shawn there's a lot of excitement out there about the 529 plans that help pay for your child's college tuition. What do you think about them 529 zer great plan for people that are saving for

education. We've got. 529 plans in every state in just about the in the country every one of them is a little different so investors need to look at them carefully. But I think that they should really look at you know their state plan that they have available to them to apprise has Maryland's plan here and other states Nebraska is another great state. I think that they should look at the specifics of all the plans in addition to the 529 plans they should look at the Coverdale plans and also individual savings and I typically think the three of those should be used in conjunction with each other and doing that they'll probably have the best effect on saving for education. It's certainly something that's long overdue. Greg Valliere has been covering economic and political developments in Washington for institutional investors for almost 30 years. He's now the chief strategist for Schwab's Washington Research Group. Greg how costly was yesterday's Senate vote banning oil drilling in Alaska's wildlife refuge. How costly that is to the Bush administration's energy policy. I think for the markets right it wasn't a big story but for Bush as you say this was a bitter

defeat. I talked to someone at the White House this week though who gives it a different spin as you might imagine. This fellow said that they now have a scapegoat if the economy should turn south if energy prices should go higher. They'll blame Tom Daschle. Well it's a good point but it certainly it seems like the president lost some political capital. Yes he did and frankly it's not been a very good week for him a lot of questions about the aborted coup in Venezuela. A lot of questions about the Mideast. This is not been his best week. Jonathan you're telling people to invest in inflation bonds yet the latest CPI shows very little inflation what's the point here. Well I tend to be a contrarian Ray and when everybody else is saying one thing I think the smart investor should be at least thinking about something different. Right now everybody is saying that inflation is a non-issue. And yet I see the prices of Steel going up partially as a result of the tariffs. Copper prices are going up. Lumber is going up. Certainly we have question marks with regard to oil with tension in the Middle East and in Venezuela. So I think that the prudent investor looking

forward should be hedging a little bit toward the possibility at least of rising inflation and treasury inflation protected securities. Gives investors the security of a Treasury with an inflation hedge. So you're one of those people to try to look beyond the CPI figures. Yeah I think that the CPI figures in and of themselves can be a little bit misleading and it's often not until three or four months down the road when they redo those figures that we truly see what the inflation picture is like. Shawn we have a lot of younger viewers what do you tell them about stocks and bonds and investing because it seems to be young people always think they're going to live forever and they don't have to worry about their financial planning. So what do you tell them. Most importantly tell them that they need to get involved with investing. So many people seem to think that they can continue to put it off forever and that you know when they're older and not spending as much money having fun that they can start to save So certainly the time value of money is the absolute most important thing. Once they do start investing they need to look at investing and putting

their money into a diversified portfolio and start putting together long range plans. Greg this is the kind of tough one on the one hand we've got the fence spending is soaring on the other hand we're cutting taxes. Can we both afford guns and butter. It's a great question and that was a huge issue for those of us who can remember the LBJ days in the mid 1960s. But the big concern I think that the fixed income market may have going back to some of Jonathan's worries is that spending is out of control right now it's going to rise by at least 8 percent this year and it's not all for the Pentagon or homeland defense it's for everything whether it's a new farm bill or highway spending spending really is starting to become a problem. And at the same time we have tax cuts in place that won't be rescinded. The bottom line I'm afraid is that budget surpluses are gone for the next couple of years maybe longer. On the brighter side if you can call it that I understand you like the fence. What specifically you'd have to say that the defense sector has had a nice run already.

Boeing was hurt this week but I think that involved more of their commercial airliner business. I think that over the next few months defense stocks will stay strong largely because George Bush has a blank check. Very few Democrats will challenge him on defense any specific names they are Raytheon the usual names I'd say Raytheon Raytheon would be very high on our list. Thank you Pat I was for your insights. I do want to remind our viewers that our panel was stock picks of their own and are not endorsed by the management. Now let's take a look at the week's viewer mail. Jonathan Richards. This is what it did. What was. It. But.

A. Lot. Well. Don't. Stop.

It. I'll. Put that question off but. It's. Not. What do you think of

an accomplice. Michael I want to. How long will it stop. It's just a whole

bunch. Of us. The journal. A little bit of it but it's like.

If it's in the market for investors the question of the fixed income. First let's check with the negative and the more quickly. There was so much from him. You could call up a lot of

the things that you want. As a whole the. And that's that. The point here for the if you look at the difference. The second half of 2000 2001. How about the oil companies. That's not what you want.

It's a good job. But. You. Are. Why. Right.

But. Oh.

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