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tv   Nightly Business Report  PBS  October 11, 2014 1:00am-1:31am PDT

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this is "nightly business report" with tyler mathisen and susie gharib. brought to you in part by. the, featuring stephanie link who shares her investment strategies, stock picks and market insights with action alerts plus the mul multi-million dollar portfolio she manages with jim cramer, you can learn more at the going, going, gone, the dow turns nev s negative for the ye s&p 500 logs its worst week in two years, what is the best way to protect your portfolio now? searching for stability in the uncertain market. our guest says he has a list of stocks that can help you find it. all that and more on
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"nightly business report" for friday, october 10th. good evening, everyone, another brutal day of selling on wall street. not only did the dow turn negative for the year and suffer its third triple digit loss of this week, the nasdaq also had a rare triple digit decline. the main reason here? semiconductor stocks, microchip technology fell after warnings in the industry, featuring a selloff like intel and texas instruments, stocks sold off into the closing bell after another up and down session, the dow lost 115 points, the nasdaq fell 102 points posting its first back-to-back 2% decline in three years and the s&p down 22 points. so far this month the dow has moved more than 2,000 points just in the last eight trading days. and for the week, the major averages ended for the third low
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in a week, the nasdaq off by 4.5% and the s&p slipped more than 3%. >> so what should investors like you do to protect your portfolio in these volatile markets? sharon epperson has advice from the experts. >> hi, tyler, it has been a rough week for investors but there are defensive moves you can take to protect your portfolio. start by protecting your risk portfolio and taking a longer term view the stock market's recovery over the past five years has seen a 70 to 80% return in many portfolios. this week's 2 to 3% loss is small in comparison and if you're a long-term investor, financial advisers agree it is important not to panic, even if there is a broader correction. that said, it may be a good time to sell your big winners and lock in gains. you can reinvest in the more conservative investments. another option is to use a stop
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loss order to minimize losses, in order to sell a stock that is triggered when the share price reaches a certain level. you may want to consider the asset allocation and be sure it is balanced, not just stocks and bonds and risk profile but also alternative investment such as short funds which can reduce the volatility in the funds. every investor should keep in mind that the stock market experiences at least one pullback per year, but they come to an end. sharon stay with us, let's bring in ron carson who manages portfolios totaling more than $4 billion at his firm where he is the founder and ceo. ron, welcome to the program. let me just pick up on something -- >> thank you for having me. >> great to have you here, sharon just said a moment ago, i believe this is something people lose sight of. over the last five years the s&p turned around 80% after a big correction. is it sometimes better to do
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nothing and just ride it out or should you really be making changes in your portfolio? what are your thoughts and what are you telling your clients? >> well, i think it makes sense most of the time to do nothing. we had a 7% drawdown in january. april we had four, august we had four, i think we're down 5 and a half 6% on this current selloff. most of the time the market does what it needs to do to prove the largest number of people wrong in any given moment. a lot has not changed. i certainly wouldn't panic. the investor behavior is the most important factor of what somebody is going to do, so if you have an appropriate allocation, i would not do anything. >> i gather you're saying more investors hurt themselves more by doing something than by doing nothing, right? >> yes, this is a hated bull market, really, when you think about off the lows of january, because most people have not
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entered it. the retail investments just started to tip toe back. there is still a lot of worry out there. and there are other factors going on. but you know, my friend bob dahl says we're an 8 to 10 year bull market. i don't know if. we have that left. >> but what about sharon's point? i'm sorry to interrupt about taking profits. nobody ever lost money taking profits, ron. >> i agree, you do pay tax on taking profits. and all the studies i have seen and i see it firsthand people that make shorthand reactions, taking profits, typically the positions are higher. now we have trim positions, the dollar was up in the third quarter versus the late year percentage. we believe it will continue so if you're owning multi-big nationals that are getting 40 to 50% of their earnings overseas it will be a big head wind, we definitely trimmed profits in those areas. >> now, i think it is a good time for people to use it as a
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wake-up call. i you are worried about the volatility, just take the time to assess where you are. make sure you can tolerate this kind of correction if there is a broader correction and make sure that what you have all okh -- al okayed, if you're going to be 30, 60, 70 stocks and bonds do what ron said and trim some of the profits. >> let me also ask ron, too, you said don't panic, obviously take the emotion out of it. what is the most common mistake people make in these volatile trading sessions. >> i think it is being too emotional, saying this went down, and saying just get me out of it rather than realizing you're in those positions, whether it is europe, or capi, l you want to stay there if you want to reach your goals. >> ron, do you agree with sharon or do you think there is
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something else? >> i really agree with what she says. a lot of people invest, people spend more time picking out a car than they will a financial adviser for any investment they're going to make. and you really need to understand that the volatility will either be a curse or a gift. if you really understand why you own what you own, how it fits into your long-term objective this is a gift you can add to high-quality companies. if you're guessing you're going to panic and destroy long-term value in the portfolio. >> is it too late to hedge now, ron, and give me a very quick answer, what is the best way to hedge? >> we believe in irreplaceable capital strategies. you hedge with using some of the derivatives. you need to understand how much you can afford to lose and hedge the rest of it out of the market if it is not too late. >> all right, thank you, ron, and sharon both of you, ron carson with carson wells management. and sharon will be back a bit later in the program with a look
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at millennials and their money and why this demographic is actually better off financially than you may think. oil prices stopped the recent slide today but just barely after the news that opec was higher this month. with saudi arabia raising production in september domestic crude closed 5 cents a high today. brent crude, the international variety touched a four-year low before rising in the day and closing above $90 a barrel. >> with oil prices down more than $20 a barrel, since june, what is the impact on the economy and for consumers? steve liesman has more. >> reporter: lower gas prices arriving for consumers just at the right time as americans start to think about holiday spending but gas prices hold down toward the $3 a gallon level. >> i see a big difference. >> the general rule, every ten
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dollars a barrel of decline in the price of oil adds a quarter point to growth. bring that down to the consumer level. and allison paul says the recent trend if it continues could put about $260 in the pocket of the average consumer. >> typically lower gas prices are good for the u.s. economy. when you have a drop in gas prices consumers spend more on their disposable income and can spend things on other things than their car and it usually supports things overall in the level of growth. >> one thing to look at, why are the oil prices falling, if they're down because demand is lower, that could signal weaker growth ahead. and down by 2.2 million barrels mostly because of growth in american production, supply is forecast to rise by 2.5 million barrels. so the price decline is more about extra supply than weak demand. while the vast majority will
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benefit, now that the u.s. has become such a major oil producer there is a potential down side. over the past ten years, the prices have grown twice the rate of the economy. some boom towns have benefitted from the production, experts say the price has to fall further, below $70 a barrel to make the u.s. production unprofitable. so for now it could be the best of both worlds. lower oil prices and considerable economic growth in oil production. for "nightly business report," i'm steve liesman. more trouble today for the struggling euro zone economies, the s&p rating service lowered its outlook for france from stable to negative today. saying a robust recovery in the french economy could prove elusive and that its public finances could deteriorate beyond this year. s&p did affirm france's double a long-term credit rating. leaders of west african nations hit hard by the ebola outbreak have been pleading for
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help in dealing with the crisis. and now the world bank is calling for the creation of an international emergency fund to quickly distribute money to countries affected by the disease outbreak and other health emergencies. and still ahead on the program, combined casual gaining with casual dining and you get the latest offering to hit wall street, dave and buster's, but did it score with investors? the answer coming up.
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there is new trading today on the nasdaq, dave and busters, this is the restaurant and arcade chain which uses the ticker symbol "play." after pricing six million shares at 16 apiece, shares rose 18%, pretty impressive after the nasty day with stocks. morgan brennan has more for the company. >> reporter: it's the company known for ski balls, cocktails and a mountain of nachos, the ceo, steven king, says there is room for more. >> the sales are strong kind of leading the way in casual dining. the margins are better and the pipeline for new store growth is on track. >> dave and busters is across the u.s. and canada breaking this business down into two parts, dining, food and alcohol, and amusement parks, these games
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account for more than 50% of the company's $636 million in revenues and helps to offset the volatile commodity prices associated with the restaurant and is much less expensive to run. although most analysts have not yet officially begin covering the stock, many say it will fall under the casual dining. and the amusement segment will mean access to movie parks and themes as well. >> most of them are serving food, primarily. there is not much entertainment within the restaurant space in terms of dine in and flow of entertainment. so dave and buster's is fairly unique in that standpoint. >> even so they're going through during a rocky time, elpollo loco is doing well, but others are trading below the price
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target. >> we have seen a nice ipo cycle. the ipos that have come out have been a mixed bag. you have some performing extremely well, some disappointing. >> the first day of trading marks the end of an era for dnb, as well. the private equity firm sold none of its shares today, oak hill tried to take dave and buster's public two years ago before pulling the offer last minute citing market conditions. today's opening comes in the middle of a volatile week, but dave and buster's served up something they like. for "nightly business report," i'm morgan brennan, "nightly business report." and look next week for the trading under the symbol fca. this listing is different, not considered an ipo, there will be no new stock initially offered, just shares of the italian stock market, those shares can then be
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traded, bought and sold in new york. some analysts say they could execute a secondary offering sometime down the road. the listing is another step in the five-year growth plan. >> meanwhile, the expected ipo of another company has been delayed for now, they are officially delaying plans to go public until january citing volatile market conditions and a fresh injection of private equity money. active shareholders managed to throw out the entire board at the parent company of olive garden, where we begin our focus, darden restaurants lost a standoff which ended with star board's slate getting elected to the board of directors, shares of darden fell nearly 2% closing the day at $48.37. after a surprise decline in sales in china in september, its
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first monthly dip this year, ford motors predicts a big boost in sales once the ford assembly plants come on line there and the models hit the show rooms in the coming month. ford shares down finishing at 13.79. sticking with automobiles, tesla showing a new version of its model s sedan, including dual engines, they have improved everything about the car including the speed and it has a longer range on one charge. investors did not care, though, hoping to see a new suv or lower priced electric model. shares fell nearly 8% in tesla today. and hedge fund manager david einhorn disclosing. he wants the ceo out and wants to convert the firm to a real estate company.
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cvo provides housing for australian natural resource sector. the company will move its headquarters from dallas to canada, with shares ending 20 cents higher closing at $12.46. the fda has approved a daily pill that can cure the most common form of hepatitis c. the once a day pill is the first treatment that promises to cure most patients without requiring medications. building on the solvalvi drug, the cost 9500 for a 12-week treatment. shares of the gilead fell 2% ending at 103.73. and shares of exact science soared after recommendations for the colon cancer screening test, it comes after they move to commercialize the non-invasive test, shares shot up nearly 6%. and stocks holding up in
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both good times and bad times in the stock market. that sounds like a good recipe tonight. and we have jim awod, i see you're leaning towards large conservative stocks with low investor expectations. trouble is, sometimes these kinds of stocks live down to those expectations. >> well, that is the key. you have to be right on the fundamentals. but i think it is very important in this environment to sort of lower your risk profile, given the fact that we're at a point where the market could go either way. yes, you're right. sometimes they just keep going down, but in these three cases i don't think that is going to be the case. >> well, let's talk about them jim, this is the stock that is very controversial. investors are so frustrated. stock is going up and down all over the place. why are you recommending it now? >> it is viewed as an old-line company that the world has passed by and the bad rap is that the revenues have not been
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growing the last four quarters yet if you really drill down on it the ratio just a little over half of the stock market. it has a dividend yield of 2.5%. the record over the last ten years has been to grow operated earnings at about 12% and increase the dividends at a rate of about 13%. they are buying back stock, increasing margins, and they're quickly transitioning to the cloud and the new business lines. in fact, their cloud business has doubled since 2012. so i think you're in a situation where you will start to see the revenues accelerate along with the earnings. >> so when you see the numbers you describe it has to be misperception there. so if you're growing the dividends and earnings you have to move to another payoff. let's move to general electric. >> now, there is a stock that is down 9% this year versus a 4% increase in the s&p. and i think it is just misunderstood because it is very complicated and they have been going through a series of
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restructurings. people have not taken the time to understand what they're doing, they're moving to the higher part of the business, which is the industrial side. the industry and the consumer financial side. again there is a country growing organic revenues at about 6%, increasing operating margins that are growing at 8%, plus you get a 3.5% dividend and they're buying back the stock. disciplined financial management and so -- and it is selling at a ratio of about 13 times versus 16 times for the market. so it is growing, operating earnings faster than the s&p and the pe ratio is lower and the dividend is higher. >> let's round it out with j.p. morgan. ceo jamie dimon back at work after his cancer diagnosis. tell us what is going on, your outlook for this company. >> okay, so the wrap on this company and the industry is that the government has regulated them so much and constrained
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them so much as a result of the financial crisis there is basically no growth and just utilities. yet if you look at j.p. morgan, obviously among the best managed in the industry, a fortress balance sheet, loans are starting to grow as the economy improves. legal expenses are declining and again you're going to have a situation where margins are going up and they're buying back stock and dividends at the rate of $3 billion a quarter real value. >> jim, it is great to see you as always. jim awod. and still ahead, lazy, entitled and living in their parents' basement, that is how some define them. but the new study of them and their money well, it paints a very dif
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we have word tonight that there was another security breach, this time at retailer k-mart. the company says the breach started in early september and was detected on october 9th. the parent company, sears is working with law enforcement authorities and that the payment systems had been breached by malware. and speaking of malware, another hack. they have gotten debit cards and credit cards from dairy queens, of all places, 4500 locations were infected with malware called backoff. the queen is owned by the king of investing, warren buffet and
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berkshire hathaway. a new study out by fidelity, finding that more millennials worry about their money, seeing their parents bear the brunt of the downturn in housing. but as sharon epperson reports, they refuted common misconceptions about the millennial generation. >> reporter: 23-year-old administrative assistant christina knows all too well about the perils of her generation. >> they think we're lazy and entitled. i definitely don't think you can say our whole generation is lazy, i am sure there are many out there. >> reporter: but they're more than the sum of their stereotypes. >> i do live on my own. i don't feel entitled at all. i pay for my expenses. and i am not lazy, i'm definitely a hard worker. >> reporter: millennials whose numbers now exceed baby boomers
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have become a closely examined group. but a new study by fidelity reveals some discrepancy between their reputation and the realities of how they spend and save. part of the myth of defining the millennials has to do with their age, they can range in age from 19 to 32. from college students to recent graduates, to young moms and dads juggling kids, careers and their own home and retirement. >> reporter: the average age of millennials is 30, and 80% of them don't live at home with mom and dad and they pay all of their expenses, many are serious about saving. many save for retirement, four in ten participate in a 401(k) plan and one in five has an ira. a significant number of millennials could also be called super savers. >> we find there is a segment of the population that are saving 50% or more for retirement.
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while many say they're not interested in retirement, they are, they know it is their responsibility. there is not going to be a safety net for them. >> reporter: money means security, fidelity found that many are working, the average savings is $70,000. >> i think savings is very important. i never want to live paycheck to paycheck. i want to have money in case of emergencies and just for things that i want especially as i'm getting older. >> reporter: like christina audi, more than half the millennials in the study say that accumulating savings is their top financial goal. for "nightly business report," i'm sharon epperson. and finally tonight, advice you may want to pass along to anyone currently in college or plan to attend, a survey found that engineering and engineering technologies top the list of the best college majors to have for securing a job after graduation. business majors were next, followed by marketing, health
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professions, computer and information sciences and science technologies. art history, anyone? >> you better start getting into the math and science. >> math, baby, math. >> that is "nightly business report," i'm susie gharib, thank you for joining us. >> and thank you from me, as well. you have a great weekend. we'll see you back here on monday. >> "nightly business report" has been brought to you in part by. the featuring stephanie link who shares her investment strategies, stock picks and market insights with action alerts plus, the multi-million dollar portfolio she manages with jim cramer. you can learn more at the sla
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gwen: news everywhere you look, from ebola to same-sex marriage. from memoir politics to senate politics. we'll cover it all tonight on "washington week." >> we have to work now so that this is not the world's next -- gwen: the ebola panic, how the u.s. is stepping in to stop its spread. >> we're not going to compromise the health and safety of our armed services, but what's true is we have unique capabilities that nobody else has. gwen: more than 4,000 dead in west africa as the world braces for more. at the supreme court, the day the court stepped out of the same-sex marriage detective, a ying the way for legalization in as many as 30 states. >> it won't be long before


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