"Street Critique"-Hilary Kramer, Chief Market Analyst at Greentech Research
Wednesday, October 22, 2008PAUL KANGAS: Tonight's "Street Critique" guest says cash is still king, especially on days like these. She's Hilary Kramer, chief market analyst at Greentech Research and author of "Ahead of the Curve" and Hilary, great to see you again.
HILARY KRAMER, CHIEF MARKET STRATEGIST, GREENTECH RESEARCH: Nice to see you, Paul.
KANGAS: What an ugly day, down another 500 points on the Dow and it's starting to feel like this selling will never end. Are we nearing a bottom here?
KRAMER: We're close to a bottom. We may have another 10 or 15 percent to go. Remember we're in the middle of earnings season and every CEO is coming out and explaining that guidance for the next year may be lower and to expect some bumps along the road with their own companies.
KANGAS: The Treasury and the Federal Reserve appear to be doing all they possibly can. What will turn this market around?
KRAMER: The market will turn around when trillions of dollars just sitting on the sidelines comes back into the market. Now when it turns around, it will turn around big. It's just that for right now cash really is still king.
KANGAS: Is Ford selling by hedge funds and mutual funds playing a major role in these dramatic final-hour sell offs?
KRAMER: Yes they are but it's also individual investors in terms of the mutual fund that are fearful, panicking, disappointed, and it doesn't necessarily mean it's wrong to be selling because you have to sell if you're in such pain and distress about what your returns are looking like.
KANGAS: What should our viewers look for before stepping back into this market themselves?
KRAMER: Everyone should know it's OK to miss the first 10 percent in up side. It's OK. Stay on the side lines until you're really sure that it's OK to come out. That's been part of the problem the last few weeks Paul. There's so many investors, institutional big sales (ph) money managers and individual investors that said, OK, we had an 11 percent day in the S&P. Let me jump in because what happens is you have fear and then suddenly greed takes over. Oh, no, I'm going to miss the big jump up. Don't worry about missing it.
KANGAS: Some observers are saying the market is discounting an Obama victory in the White House. What do you say?
KRAMER: I say that whichever candidate wins, it's going to be a very, very tough four years because we are in a very serious recessionary environment. But hopefully we'll have programs in place that will get employment going and people making money so they can spend money again because that is what is bringing the market down today are concerns that the consumer doesn't have any money in their wallets.
KANGAS: Now when investors are putting their shopping list together, what do they need to look at before buying a stock?
KRAMER: Never touch a company that has leverage, that has debt because what's going on is that the banks only want to give money to people that don't need it, that don't need to borrow, that don't need refinancing. You have major big companies out there that have a lot of debt on their books. They have to refinance because they have shorter terms than individuals do with a mortgage, for example and the banks don't want to lend to them. They might have started to lend to each other and the credit markets are thawing but, Paul, it's very, very very treacherous right now.
KANGAS: OK. Hilary, I want to thank you very much for sharing your insights with our viewers once again.
KRAMER: Thank you. It's a pleasure to be here.
KANGAS: My guest, Hilary Kramer, author of "Ahead of the Curve."
