Nasdaq---Anthony (slow)
More money waiting to get into this market
Interview: Wachovia Securities--- Sandler, Doug--- Equity Strategist
>> the nasdaq rallied to close at its highest point on the day. for more on technology shares and cisco, we talk with anthony massucci at the nasdaq.
>> with the nasdaq closing higher, networking stocks were up all day long and helped close the nasdaq higher. cisco making a small purchase, $80 million for cisco to buy latitude communications, holding meetings with employees in distant locations. cisco closed higher, close to a three-year high. latitude was up 27%, six cents below the offer of $395 in cash coming from cisco. john chambers at cisco said they’re looking to buy smaller players to add revenue to the company. other networking stocks like tellabs up 7%, adtran up more than 2 and internet stocks going higher, yahoo! leading the way, microsoft and apple giving boosts to the software and hardware gains. cisco did drag networking stocks and the nasdaq. sycamore fell 5% and has been down three straight days. companies are saying revenue was less than forecast and so the stock fell. pixar interested weighted new underweight in new coverage by j.p. morgan although the company’s “finding nemo” d.v.d. and video sales may beat out “the lion king.” the rally has been strong especially the last two hours of trading. back to you in the studio.
>> folks, year to date, the dow jones industrial average is up 18% while the s&p 500 has climbed 20%, the nasdaq composite up over 47%. while stocks have made substantial gains this year, our next guest says stocks will move higher. doug sandler, chief equity strategist at wachovia securities, is the man behind that proclamation. he joins us from virginia. you told my producers the reason is there’s more money waiting to get into this market. why do you think that?
>> i think all portfolio managers are facing the same decision or two decision, one, they’re in the market and are looking for an opportunity to get out, or, two, they’re kicking themselves they got out too early. and that’s the danger. there are an awful lot of people sitting on the sidelines right now saying i sure hope we get a pullback so i can get back in. i imagine you’re hearing that an awful lot and the sidelines are getting crowded.
>> but we did fall―prior to today we had fallen 5-6 days in the dow and s&p, but percentage terms we’re talking about 100 points on an index like the dow, so the pullbacks are not all that enticing, are they?
>> you’re preaching to the choir. bingo. shallow pull banks, that’s saying a lot of people are waiting to get in. if you’re looking for a perfect opportunity, you’re not going to get it. we’re in cyclical stocks and that’s the way you want to be.
>> what are you not in?
>> we’ve been underweight in healthcare, staples, utilities, energy. our formal underweight is really in consumer staples but i would argue at this point a lot of those names have already suffered enough and i’m not sure there’s a big call to go underweight in the less cyclical groups. i think right now you want your portfolio seizing cyclicality, tech, industrial, consumer discretionary and materials, and i don’t know if i would get more aggressive but i’d stick with what i got.
>> talk about risk tolerance. you were asked to put together a graph, a comparison of the nasdaq and the dow, basically year to date.
>> right.
>> what are we looking at here, doug? why does this matter? what is this showing me about risk?
>> well, it’s great because everybody―all your viewers can look at the corner of your screen every morning and see that. if the nasdaq is outperforming the dow, that’s a sign people are willing to step up and risk. nasdaq has newer companies, some with less earnings history. when the dow outperforms, people are scaling back their risk. as long as people are willing to up their risk tolerances like today, you want to be in stocks . when that starts to change, and it really hasn’t for the last year, you want to be moving back towards bonds or the more conservative names.
>> clearly, technology shares have got to be a little expensive, though, huh?
>> i can’t tell you a time when valuations are called to turn on the market. they’re not obscenely expensive. we’re looking at nokia, two, 2 1/2 times sales. that’s far from expensive here.
>> the problem with nokia, though, a lot of people would say is holding on to a market share, like a budweiser story in terms of they have 40% of the market. to grow from there, how do they grow higher?
>> well, they’ve been successful doing it. they’re introducing themselves to new carries that they haven’t in the past and are seeing market expansion. the catalyst for this november is wireless portability month. when you switch carriers, what are you going to do first? you’ll change your cell phone. i feel pretty confident every wireless service provider out there is going to say, hey, come to us, get a free phone. is that good for nokia? yeah.
>> no question about it. doug sandler, chief equity strategist, wachovia, pleasure to have you on.
>> thank you.
>> folks, only the beginning. we have stocks to watch overseas. ever heard of nintendo? the world’s biggest maker of hand-held names reporting earnings. the full story next.
