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Saturday Morning News

How to Protect Tour Investments in a Volatile Market

Aired May 20, 2000 - 9:18 a.m. ET

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

MILES O'BRIEN, CNN ANCHOR: After the Federal Reserve announced a half-point hike in interest rates, the U.S. stock market Friday closed out the week with little direction. Stocks were mixed in quiet trading. The Dow rose a slim 7 1/2 points, the Nasdaq lost 106. The S&P 500 lost 10 1/2 points.

So what's a Wall Street player to do, you ask? Pablo Galarza, a senior writer for "Money" magazine, joining us with some answers about investing your money and protecting your investments.

Pablo, how are you, sir?

PABLO GALARZA, "MONEY" MAGAZINE: I'm fine, Miles, how are you doing?

O'BRIEN: Very well, thanks. Good to have you with us.

What's a market trader to do at this moment? Are you bullish still?

GALARZA: Oh, I'm very bullish. I think I'm more bullish today than I was two months ago, when the market was going insane and we were over 5,000 on the Nasdaq, and the Dow was up high and so was the S&P.

I was at a conference last week in San Francisco listening to all these tech company executives, and one after another after another couldn't emphasize more how well business was for them. And I think that's great. I think the economy's doing well. I think Greenspan's raising the rates just to cool off this heated economy. And I think, you know, stocks are still a good place to be.

O'BRIEN: All right, well, we probably shouldn't go through specific names, but if you have one in mind, what the heck. Give me at least sectors that you like.

GALARZA: I like -- I still like technology. You know, you have to be a little more specific in the stocks that you buy. You can't buy indiscriminately. I like health care, I like financials, I like -- well, that's it, those are the three big sectors.

O'BRIEN: Health care, financial -- let's start with technology. Anything dot.com doesn't fly any more, does it? GALARZA: No, I would stay away from the dot.coms. I would look for companies who have real technologies, and they're doing -- they're helping building -- to build out the next generation of telecommunication networks that'll carry voice, video, and data.

O'BRIEN: So people who make switchers and silicon and the...

GALARZA: Switches, routers...

O'BRIEN: ... actual infrastructure.

GALARZA: Yes, right, right. Well, you know, even there, you have to be -- you know, you have to be a long-term player. I think prices are still very, very high in technology for technology stocks across the board. You have to be -- you know, you have to have a very long-term horizon. This isn't going to be the market that we saw six months ago, where you threw your money at anything, at the dart board, and it went up and tripled in three months.

O'BRIEN: Yes, I guess it was inevitable that that would end, I suppose.

GALARZA: Yes, definitely. And I'm happy that ended.

O'BRIEN: I guess some people wished it wouldn't. But, now, I know there are some blue chip stocks that are sort of back in vogue. Anything in the, you know, sort of the traditional Dow representatives that you're high on?

GALARZA: Boy, you know, I think Dow representatives that I'm high on -- I can't think of anything specifically. You know, I'm just high on the economy. I think the economy is sound, and I think that's a good sign for investors. Right now, all you're seeing is that there are people (inaudible) got a little crazy and overextended themselves in the stock market, and they're looking for a place to settle right now, that's all.

O'BRIEN: All right, quick, before you get away, quickly, a quick take on whether people out there thinking about buying a home, it is that kind of season right now, should they wait, should they rent for a while, wait, hope for interest rates to go down? What's the best take on that?

GALARZA: Oh, I think if you need to buy a home and you need a place to live, you go buy yourself a home and not worry about it, right? I mean, you know, you can't live on mutual fund, you can't live in a stock. So if that's what you need, you -- fulfill your needs now. I think we...

O'BRIEN: So you don't see, you don't see interest rates dropping on the near-term horizon in such a way that it would be worth waiting?

GALARZA: No, I don't think so, no, I don't think so, no. No.

O'BRIEN: All right, Pablo Galarza -- did I mispronounce that?

GALARZA: Galarza, Pablo Galarza.

O'BRIEN: Pablo Galarza, I'm so sorry about that.

GALARZA: Don't worry about it.

O'BRIEN: With "Money" magazine. Great to have you on the program.

GALARZA: Yes, thanks.

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