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Morning News

Savage: Market 'a Place Where People Agree to Disagree'

Aired April 18, 2000 - 9:30 a.m. ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

DARYN KAGAN, CNN ANCHOR: The market action is what we are talking about, it is one of our top stories. Investors are hoping for another good day on Wall Street, and if overseas markets are any indication, they just might get it. Asian markets today regained some of their losses after yesterday's comeback on Wall Street. Europe's top markets are moderately lower.

Yesterday, the Dow closed up 276 points, leaving it at 10582. The Nasdaq gained more than 217, that is a one-day record for that index, to end at 3539.

Joining us from our Chicago bureau with advice for small investors is Terry Savage, she is adviser to "The Chicago Sun-Times" and author of "Another Savage Truth on Money."

Terry, good morning, once again, thanks for joining us again.

TERRY SAVAGE, "CHICAGO SUN-TIMES": Good morning, Daryn.

KAGAN: Good morning. Things felt a little bit better for investors yesterday with both the Dow and the Nasdaq up so well. But is this crisis over, do you think?

SAVAGE: What a difference a day makes. Of course, this morning we are coming off gains in the major stocks, the indexes, not across the board in those technology stocks, but enough of a bounce to give people confidence, and of course that brings up the issues -- and of course, nobody can sit here, this is a "Savage truth" -- no one can sit here and tell you what is going to happen next. So it is more important that you know what you want to do, depending on what happens.

KAGAN: If you could tell us exactly what was going to happen next, you wouldn't be sitting with us. You would be out there making just billions of dollars.

SAVAGE: I think that is important to keep in mind. The most critical thing is, you had a wonderful report on the day traders who are sitting there in and out, in and out. They know who they are and they know they have risk capital. But most of the people we talk to sitting here in the morning are tuning in to say: Well, wait a minute. I am a long-term investor. is the world going to go on? And the is of course. And technology will go on and change our lives. So it's very important that you know who you are, and if you are a long-term investors, but you suddenly get scared and become a short- term trader, or the market scares you out, that is when you get into trouble.

KAGAN: Let's talk about some of those technology stocks, some of them did start to bounce back yesterday. Yet, if you look at them, they are still trading over 100 times what their earnings are.

SAVAGE: Well, all of a sudden, the world is starting to care about earnings. About a month ago, everyone said, well, this is the new economy, it only matters about revenues. And in fact, it may still only matter about the opportunity. It is just market is a place where people agree to disagree. Remember, for every share that was bought yesterday, someone said: Enough is enough, I want to get out.

So it depends on what people decide they are willing to pay for stocks. It's astounding to hear the media talk about earnings, when a month ago everyone was willing to poo-poo that as a basis fro valuing stocks.

KAGAN: Poo-poo, that technical word when it comes to the market. Terry Savage, thanks for joining us this morning.

SAVAGE: Thank you, Daryn.

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