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Saturday Morning News

Finding the Best Investments for the New Year

Aired January 15, 2000 - 8:38 a.m. ET

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

KYRA PHILLIPS, CNN ANCHOR: So far this year we've had a bullish stock market. Just yesterday the Dow closed at its third record high for the week. Joining us from New York with some advice on the best investments for the new year is Jersey Gilbert, the financial editor of "Smart Money" magazine.

Good morning.

JERSEY GILBERT, "SMART MONEY" MAGAZINE: How are you?

PHILLIPS: All right. Well, we were just chatting. We actually have a graphic, we don't have all 12. -- people can go out and buy the magazine, of course -- but we've got six of your favorites here and we were mentioning two of them. Why don't you just mention those two and why and how you picked them.

GILBERT: Well, our energy sector focus for this issue was maybe a little controversial because it had a pretty good rally at the beginning of last year and we're very slow coming into this year. But as you see from the announcement of OPEC yesterday, they're going to tighten up production a little bit more even and that's going to drive oil prices even higher. We're beginning to have the cold winter that we thought we might have here in the east. I think that makes for a very good outlook in the energy sector.

Core Labs is a great play on that because what they do is they help fields already in production produce more oil out of the ground.

PHILLIPS: How did you make these picks? What was the process to determine?

GILBERT: Well, we do this every year. We go through and we look at all of the sectors in the economy that are represented in the stock market and we do various different valuation metrics, looking for either the sectors that seem to have the most potential from a growth at the reasonable price standpoint or just from a straight value standpoint.

PHILLIPS: OK, now on another note, Bill Gates' resignation, do you think the legal actions against Microsoft that are pending right now has anything to do with his resignation?

GILBERT: Perhaps. I mean I know I wouldn't want to have to deal with them. It would be much nicer to sit back and sort of say let's go back to those interesting problems of programming and sort of figuring out how to make the Internet and our new computer digital world work better and leave all of that legal hassle to somebody else.

PHILLIPS: What do you think it'll mean for Microsoft stock owners? Anything?

GILBERT: Well, I think there's been a lot of things going on with Microsoft. In some ways perhaps the threat to their monopoly from Linux is more important than attempt of the government to start to undermine it. I think the Linux situation extremely interesting and could be one of the biggest stories of the new year.

PHILLIPS: AOL/Time Warner basically opened up the floodgates for mergers of this kind. Do you think now this puts the pressure for other companies to compete with them coming together like Seagram's or Disney?

GILBERT: I think it's very interesting to sort of compare and contrast the, one of the most successful mergers from last year, you know, CDS Fitel (ph) and Uniphase. This was a merger that took two companies that were involved in related businesses, jammed them together to make a really kind of a super photonics component maker so they even got more concentrated in their business to become a big gorilla.

The AOL/Time Warner thing is really sort of going in the opposite direction. We've created almost an ITT, if you like, of media companies. It's involved in so many different areas. I think it's going to be very difficult for the management, I mean a challenge, let's put it that way, for management to really make all of these separate entities work together.

PHILLIPS: Real quickly, more corporate profits are going to be out next week. What should we look forward to, maybe avoid?

GILBERT: This is turning into a very good quarter for corporate profits reports. You know, not a lot of bad news, not a lot of things to make people upset. It looks pretty good.

PHILLIPS: Jersey Gilbert, financial editor of "Smart Money" magazine. Thanks for the insight. Good advice.

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