It’s been a busy week for Charlie Gasparino of Fox Business Network. Last Wednesday, he re-upped his contract with FBN in a multiyear deal. And this Monday, he broke the story that Gary Kaminsky was leaving his role as CNBC capital markets editor to join the wealth management team at Morgan Stanley (NYSE:MS) — quite a scoop, considering he works for a competing cable news network.
This is probably inside baseball that many investors don’t care about, but I thought I’d ask Gasparino about what’s going on right now at Fox Biz and in his career — as well as get his thoughts on the recent market highs.
The Reader’s Digest version: The mood on the Street is “dismal,” financials remain “opaque,” small investors have missed the rally and index funds are the way to go.
Oh yeah, and he loves “sticking it to CNBC.”
Here’s Charlie Gasparino in his own words:
Q: You came to FBN from CNBC in 2010, and this week you broke the news that CNBC’s Gary Kaminsky was leaving the channel for a gig with Morgan Stanley. How do you deal with covering news about a place you once worked?
A: Well, I disclose that I worked there and then I just do my job. Gary is someone I know and respect, but I work for our viewers. The story isn’t that I worked for CNBC, but that Morgan Stanley was adding to its senior ranks, hiring a talented professional who works at CNBC. That said, I love sticking it to CNBC whenever I can.
Q: The markets have changed a lot since you joined Fox Biz. How do you think the mood on Wall Street is now vs. 2010?
A: Pretty dismal mostly, because so many people on Wall Street are losing their jobs. It’s an odd experience — markets going to Dow 15k and Wall Street layoffs. The reality is that the stock market now no longer reflects business conditions or the economy but the very narrow fact that the Fed is printing money and keeping interest rates at zero, meaning that there’s nowhere else for large investors to park cash. And now after seeing returns fall to next to nothing, small investors are starting to buy stocks. But the first hint that the Fed will be raising rates, and the chances are that the market corrects.
Q: In your book The Sellout, you talk about a culture of greed and mismanagement on Wall Street and Washington. How is the financial sector these days? Troubled? Healthy? Still too risky and opaque to understand completely?
A: Banks are healthier, I think. The reason why — I don’t know for sure and no one really does — is that the accounting is still pretty opaque and the banks are so big and convoluted its difficult to know what they’re doing. That’s the reason why JPMorgan (NYSE:JPM) management had no idea that some guy in London was rolling the dice, and it’s scary since there are fewer banks that control the vast majority of the country’s financial assets.
Q: I have to ask about the Dow’s new record. Is it meaningful or really just a nice headline signifying nothing?
A: It’s meaningful. There’s been a lot of wealth created from Dow 6,000 in 2009 to Dow near 15,000 today. The problem is small investors sat out most of the rally because of the overhang of the financial crisis, and are only getting in now where some say we are at or near the top. Small investors — i.e., middle America — is always the last in and the last out when bubbles burst.
Q: So you just got a big bag of money from a rich uncle. All things being equal, what do you do with it — manage it yourself, buy an index fund or get a rockstar manager to invest it for you?
A: Manage it yourself as you educate yourself. Watching business television is a great crash course — and forget individual stocks. Look at low-cost index funds that mirror a market. If you like tech, buy a tech index; if you are super safe, buy a fund that mimics the S&P 500. Index funds are cheap and you don’t need a broker. Also, money managers rarely beat the indexes year after year. Those who do are usually cheating the system.
Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at email@example.com or follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here but does occasionally appear on Fox Business Network as a guest contributor.