it's time for the stocks you need to watch this afternoon. >> we're watching as gold broke through the thousand dollar mark. some minors are moving in tandem with gold. basically, a sign of the broad-based rally. it's turned lower on this as gold is back down. next up is gold fields, earlier today trading at a 52-week high.

canada's gold earlier at a 52-week high. it's come off those levels and has announced an agreement with silver wheaton. b barrick is going to be receiving a deal for -- one nasdaq stock up 134, it's opexa therapeutic. this compared to a placebo. back to you. that is it for this edition of "the call." >> thank you, it was a great pleasure. >> and a pleasure to be with you. >> i'll see you tonight on the kudlow report and "power lunch" is up next. oq

welcome to "power lunch" for tuesday. stocks higher generally today. we're well off the highs of is is session though after this holiday weekend. energy among the leaders. exxon and chevron leading the dow. the dow's best gain since 2003, but is there still time to get in on this? diversification long been one of the corner stones of investing. does diversifying still work for your portfolio? we have a bull and bear facing off. hip-hop mogul 50 cent and

david kelly pairing up on "power lunch." if that is not a marriage made in heaven, i don't know what is. here's what else is on the menu. i'm jim goldman. apple will host a major event tomorrow, unveiling a refresh to the i-pod line. steve jobs, his return to the stage after a year away from the public eye, which is the news apple investors might be looking forward to the most. tired of hearing about cash for clunkers and struggles of gm and chrysler? how about the ultra luxury car market. we'll talk about the new models for the wealthy that are rolling out soon. summer vacation's really over now and if president obama and his party are going to deliver a health care reform plan, the time to do it is now. tomorrow night before the whole country, he's going to try to

persuade the rank and file. major averages are higher. matt nesto kicks it off at the new york stock exchange. >> we're higher here for a third day. just 25 points for the dow, about 6 on the s&p. you look at the leadership here. it's the energy, the materials and industrials. you put it into the dow, look at names like ge and then alcoa, those two stocks have the second and smallest in the dow. exxon and chevron, they they can get the job done and that's keeping this positive. you back out of there, the dow slips negative. the other end, the weakest we're seeing in shares of kraft. then the get back in gold, that's what's got us going here today, this euphoria and

commodities and gold. some of the steel makers and coal companies are doing very well today. aig having a tough day. cuts are underway. let's get to scott wapner at nasdaq. >> nasdaq's holding up fairly well. large cap tech doing all right. off you have gains from oracle, intel and kcisco. the catalyst for today's trade, they upgraded hardware space today. names like altera. they also raised the price target on apple to better than 200 bucks. they're holding a big event tomorrow. apple shares are among the best performers. dell shares getting a lift as

well. cosco got an upgrade today. let's go to sharon epperson at the nymex. >> we still have another hour or so to go in the trading day for gold. we're looking at oil though. it's really on a tear. the traders behind me, not trading too much paper. a lot of electronic trades these days. they're saying they're very bullish right now. a lot of new money that had been sitting on the sidelines over the holiday is back in this market and it's being fueled by this dollar play. crude oil or gold, it is the dollar at work today with the doll dollar index falling to the lowest levels since september of last year. gold has come off of its highs of the session.

the gold is valued right now at about $34 billion. the biggest out there. that is where a lot of investors are going to play this gold play. they are looking at these etfs, rick santelli. >> absolutely. we can't look at these charts enough because this is a rather historic move in the dollar. intraday chart, one-year chart. the last time close to 77. it trades nine bucks above 1,000. exactly where do you think you'd put your stop to get out of loss order? many would have guessed slightly above 1,000. you can see by the chart there, it's already slipping back a bit. last chart, we just did 29 million six-month bills. the three-month chart will tell you that maybe there's a lot of

good feelings in the ek quity markets, but those yields are low in bills, in the treasury complex. the credit markets still aren't necessarily buying into the good will story. >> $94 billion of treasury securities this day. we'll have those notes next hour. thank you. stocks have been rising today although we're well off the highs of the session. gold did pass above 1,000. oil's over 70, was $71 a barrel. and we got the three-year note auction. how should we play this? j.j., at this point, we're getting deeper into september, the month that everybody fears. what do you do here? >> we're not putting more money in stocks. the play we've been seeing the

last three months has been a tad more into high yield. purchasing more of your insurance for tips although we think that inflation is a ways away. and then the third leg in there is going to be investment grade corpus. if you take a quick look at the history of lqd, you can start making some plays and seeing where things are going. high yield is starting to peter out where as investment grade is way out performed by nearly 500 basis points. >> theodore what do you think of what j.j. is saying and what is that telling us about inflation? >> you're seeing the u.s. dollar come under a lot of pressure. we've taken out major levels, so the dollar looks week suddenly against a lot of currencies, but you wonder why our interest

rates are incredibly low, this explains why our dollar is in poor demand. >> let's get back to gold. gold around $1,000. people predict it's going higher. wouldn't that do the opposite to treasuries? >> the weakness in the dollar should put a bid into gold and i think gold at $1,000 -- >> who's right? gold or treasuries? >> i think they're both right. i think you buy the gold now as inflation hedge. i think you're supposed to buy both because if your purchase of treasuries is incorrect, then perhaps the inflation protection from gold will off set it. >> j.j., what do you think about gold? >> gold and oil is the international currency and right now, the dollar continues to be in a really downward, seriously

bearish trend. in our investors we manage, we look for unhedged, overseas funds. everything that we can get our hands out of dollars. we can't do it perfectly, but we don't want to be in too many dollars. the country we're in right now doesn't support an atmosphere for the high network investor. >> would you, because of the rally in gold and oil, by the minors and oil companies? >> i wouldn't be buying so much in the oil. we tend to keep our assets very short term. as you know, last time i was here, we're making nearly 80 to 85% of what we're getting on the s&p by being an investment grade corporation. it's 7% appreciation. >> good to see you. stocks rising today despite gold passing 1,000. oil over $70 a barrel. how should we be playing this

market? we'll get to that. and we've got a lot more coming up. $17 billion is apparently not sweet enough to cadbury. david faber will have the late es. in the power grid, obama care. will it lower the standard of living? [ engine revving ]

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dow jones higher by 24 points. nasdaq by 9. we're 45 minutes away from yet another auction. citigroup, bank of america, ge and the bottom of your screen, some headlines about the plan for dealing with health care reform. he wants to impose a 35% tax on health insurers for plans abo aboabove $8,000 for singles. also, a fee on medical device makers and an annual fee on health insurers based on their

market shares. taxing industry as a way to pay for reform and also taxing health care above a certain level. >> let's do that. the president and congress are getting back to work today after the long august recess. the fight over health care is going to heat up. the president's speech to joint session of congress, that puts pressure on max baucus and finance committee to come up with a plan, which now we're getting details on. john harwood has more on that. >> bill, as with any big fight in washington, there's an inside game and outside game. the president previewed yesterday in ohio, the speech he's going to give to congress on wednesday night when his message is, after all the talk, it's decision time. >> the debate's been good and that's important because we've got to get this right.

but every debate at some point comes to an end. at some point, it's time to decide. at some point, it's time to act. ohio, it's time to act. and get this thing done. >> and that is why the president is meeting at the white house today with house speaker pelosi and harry reid. here are the decision points they've got to work on. one is the question of the public option. the second is where do you get the financing. max baucus wants to tax high-value insurance plans. the house has different ideas. they want to tax million dollar incomes. finally, the level of subsidies you provide for people without insurance, that determines the overall cost of the bill. some conservatives want to go lower. all of that is on the table and will be worked out in the next few weeks. >> do you have a sense yet of

how specific the president will be with the plan? it's clear the strategy before when he set up a framework of objectives without a way to get to them hasn't worked to this point. do you sense something more specific tomorrow night? >> i do. i wouldn't expect to see a lot of numbers. to match baucus's plan and that kind of detail, but i think he's going to go beyond the principles and talk about his bottom line. it's important for him to set the final in-stage parameters of the debate. if they can do that, things are more fluid when you get to a conference with the house. >> but the huge sticking point between senate and house has been the public option. robert gibbs told you last week, again, emphasizing that is not the most important part in this, but doesn't the president have

to come out and say how he expects congress to promote competition for insurance companies if it's not a public option? >> administration officials have been saying their goal is competition and lower prices. public option is one means of achieving that goal, but not the only one. what olympia snowe has talked about is a triggers option where you set out benchmarks. that's could be the sweet spot. >> that sounds kind of wishy washy. >> it is. >> how do you decide or measure the progress that insurance companies are making? who sets that standard that would then trigger a public option? >> the congress would set it and if that's the way they go, bill, there would be a debate over whether it's an easy trigger or tough trigger. >> how long will that take? >> they've got ways of doing it.

it's a compromise, but i'm sorry -- >> how do you decide? the number of americans still uninsured? the rising costs? >> i think it would be more along the lines of what happens to premiums and how the major insurance companies compete on price with a goal of bending that cost curve. if you have an individual mandate. >> when you set all these rules, when congress wants to say, you can't do this or that, it's basically price clol controls and cost controls, it's government running health insurance. >> there's no question that washington is aiming through this democratic administration to take a much stronger role in the health care marketplace than they have so far. there's no question that you're right about that. the question is what's the level of degree, where does it go too

far. >> thanks. >> i guess that question is now what happens to some of these stocks. all this stuff's down. health care is a worst performing sector, but has been all day long. >> we're going to bring up a board here. can we bring up an intraday? >> mdt. let's see what mid tronic has done. it was known max baucus was going to impose a fee on device makers. >> the big question has to be that will affect real industries and companies, how does that play out on the stock market day by day. >> i remember when president obama made the speech that he convinced the pharmaceutical industry to give back billions and they didn't react that much.

>> that speech, tomorrow night. >> 8:00 eastern time and of course, cnbc has special coverage with larry kudlow with that presidential address to congress. up next, those tasty cadbury eggs and velveta. perfect combination. why kraft is getting the stiff arm from the british candy giant. and yes, it's true. 50 cent -- >> that's him right there. ♪ plus, david kelly, they'll be pairing up next hour here on "power lunch." find out how they plan to get rich or die trying. >> he made $100 million with that transaction with coca-cola. he's a legitimate business guy. you're watching "power lunch" on cnbc. the dow's up 30 points.

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this guy's potentially a critical development in the health care reform. steny hoyer has just said that he could support a health care bill that does not include the public option. as you well know, to this point, house speaker nancy pelosi has said the house will not pass a health care reform package without the public option, but now, her number two, the democratic leader in the house is saying he could support a health care reform package without the public option. >> the public option would be a government-offered health insurance plan to compete with private industries. >> and to this point, the senate has resisted. this could be a breakthrough. >> you wonder if there are strings attached. five years down the road, ten years, it has to be brought back

in. >> like what senator snowe is proposing. you know kraft going public with its over to cadbury after the giant rejected the bid. now, some other candy makers may want to get in on the action. david faber joins us with more. i heard you talking to joe this morning saying at this point, cadbury's days at a single entity may be numbered. >> for them, the profits they need to go through, cadbury is convincing shareholders they are better off as a stand alone entity. on the uk rules, it's different than here in the u.s. they've made a possible offer. they would need to follow that up and it would be put to shareholders. that's what cadbury's facing.

i think it's tough. based on at least spoken to a number of people around, you can never rule anything out. nestle certainly has the where with all to do it, but certainly they might take a look. trust for nestle would be tough. it's just unclear whether they want to play here for what would be the chewing gum franchise. >> chocolate has a lot of people saying why didn't hershey and nestle get together. >> you're right, it is a possibility. doing something on its own seems to be a nonstarter. does it try to go to private equity? hershey would probably want to play if it could figure out a way to do so. >> their corporate structure is a mess. they have a board of directors that doesn't answer to the

shareholders. they answer to a charity. it's a mess. i don't know why anybody would ever own them. >> one has to wonder if they don't try to play, what are the signals they're sending? we'll see. the franchise they own on kit-kat could be of value. it's hard to see right now where the real possible other bidders are going to come from. these things take time. kraft of course is saying that this is the full, unfair bid, but if they want to own cadbury, they'll have to pay a bit more. the stock trading well above the implied over from kraft. >> and i'm going to state the

obvious here. look at us. we're talking deals again. >> exciting, isn't it? last week, too. did we think a year ago? >> this deal in part happening now or potentially happening because of the availability of financing. even six months ago, doing an $8 billion financing as they will need for this deal -- >> but lower levels of fear, right? >> absolutely. and one that's at higher level. we'll see if a lot more deals follow. that may not be, but certainly a better environment. >> only tuesday. coming up, president obama getting ready to defend health care. will obama care lower the standard of living for middle class america? plus, 50 cent will join us in the house.

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we are almost halfway through the trading day. general electric upgraded to neutral. david einhorn says he is shorting mcgraw-hill after the federal court judge handed over a ruling. details on how health care reform might be financed. roiters is reporting that chairman max baucus, his plan would tax insurers above a certain value and impose fees.

>> we've just gotten a fresh headline as well. that health care plan from senator baucus also to offer tax credits on a sliding scale for individuals and families starting in 2013 in order to off set costs of private plan presu premiums. i wonder if that means they would mandate people having to buy some type of coverage. >> it's clear we're getting progress on this now. the president's speech tomorrow night. >> out of the most important committee -- >> finance. >> they were the ones. president obama as you know, making a big push for health care reform tomorrow night, but in an op-ed in today's "wall street journal," martin fieldstein says it will low er

the standard of living. is he right? guys, you know, you both get 20 seconds to make your case. greg, you get to start. you agree? >> absolutely. when you look at the spending and deficits and debt and high inflation sure to come, it has no choice but to hurt our standard of living. that money can't be used to start new businesses, create new jobs. you've got this health care bill, this threat of new regulation and taxation, who wants to invest in a market like that. >> max. i mean mark. sorry. >> he's wrong in two ways. the cbo estimates have always been low on the saving side in medical change. number two, he implied that the high-end tax increases for the rich will not be gathered. lastly, productivity. how about productivity being hurt by people losing their jobs

and coverage. >> greg, he's saying the cbo is wrong and these fears about the cost. >> that's interesting because the government always underestimates plans. if you want to talk ant costs, everybody says private insurance makes too much money. we lost 60 billion in medicare fraud. five times as much we lost than they made in profit. last thing about inflation, you see gold at the 18-month high. china, russia, the u.n. asking for new currency. inflation fears are here already. >> i love the fact they're concerned about inflation. number two, the productivity issue is important. the deficit number is not the point to be paying attention to. the number of personal bankrupt says reflected is a huge

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while the cash for clunkers and bankruptcies of gm and chrysler have been the focus of the auto industry, the ultra luxury model market -- new cars among the wealthy in america. >> the appetite has been dampened a bit lately, but there's a slew of new vehicles coming out or have been introduced. a couple that are getting attention, the jaguar xj. this is the 2010 model. it's going to start at $72,500.

also, when you look at bentley, goes on sale next year. estimated price tag, $300,000. is there still a demand? bentley says yes. you see it at certain events like the one at pebble beach. there's new models coming and some ultra luxury customers are becoming more discreet about buying, but they're still buys. >> maybe there will be a little bit of that, maybe i shouldn't do that because the economy is suffering as a whole. on the flip side, if they've worked hard their whole life and that's the car they want to get, they're going to buy that car. >> sales down 51%. for more on the superluxury market, check out the blog, behind the wheel at cnbc.com. the market, sales down 50%, but

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welcome to the fast money halftime report. the markets attempting a comeback, but being overshadowed by gold. will this be the trade for the fall? the crew today -- petey, we were on the conference call this morning and tauging about the

good things in the premarket. the deal activity and s&p raising its forecast by 2010. is gold killing this rally? >> well, i don't know if it's killing it, but it's muting it. we knew gold was going to be higher. volatility last week was absolutely crushed. probably some due to the fact that we are above 1,000 back again now in the s&p 500. i still look at gold as a bit of a hesitation move. i think it's a smaller percentage. on the other side, if you want a positive, look at copper. it's pushing $3. >> we had goldman sachs raising its copper. if we are to believe speculators are behind this climb, should we not be concerned too much about what gold is saying? >> i'm sorry, i'm lost on the

double negative there. >> can we take the move higher in gold as historically it's been. no negative. >> the three letter acronyms. i believe it's a tertiary factor to the market. i don't think gold the leading the market. the fact is, as you see, economic recovery percolating throughout the globe, there are going to be investors to pile into gold. it's what other things are doing and doing quite well. i don't want to make too much of this story. i'm not a big fan of gold. an investment in a rising economic climate. >> eugene, you are a longer term investment guy. how much is gold a percentage of your portfolio? >> i don't know gold. all large cap equity primarily. but i agree with everything that's been said. it is the currency hedge.

with it being at 1,000, i think maybe it's going to go down a little from here.ñ it probably creates a little drag on the market. >> yes. >> eugene has the best last name for a rising economic environment. >> he was born to be an investor. patty, when you look at gold and the dollar, is that a good thing in terms of your view of multinational companies out there. >> anyone who's going to be repateuating profits it's absolutely going to help them. the other side of the equation is, if you have goods coming into u.s. retailers that are going to be more expensive, it really is a downer for folks like walmart unless they can get pricing power. proctor and gamble, clorox, colgate, all those folks.

>> you have to come on and talk about walmart. the dxy this morning hitting a 2009 low. at what point do you get concerned about walmart and think twice about putting more money into that name? >> it can be helped if they're able to get the pricing power on it. also, remember that 25% of what they do right mow is overseai o. >> also, another commodity breaking out to important levels today. oil now above $71 a barrel. this of course ahead of opec. opec output levels not expecting to change and we're seeing nice increases of stock prices. we've been in pretty much a range for a long time. >> and i think we may continue to be in this 60-80 day range.

the saudis brought on more supplies and you're going to have speculation that people are going to make larger bets on smaller inkrementes. until you have major recovery globally and significant incremo i think it's hard to really break out from this band. >> let's bring in the expert here. the liquidator, joe joins us now on the fast line. joe, above 71 bucks. how much higher can we go? >> you know, i think today is all about asset allocation in the market and clearly energy is the space that everyone right now wants to be in. look back upon august. you know, you heard a lot of chatter about china itself. yes, china was the contributor in the first quarter to stabilizing oil prices, but let's point out inventories in august historically of all run about flat. however, this august, melissa, you lost 20 million barrels of oil collectively between oil,

reformulated gas, and diesel. the fundamentals are clearly shifting somewhat. >> let's say you're an average investor out there and you're not able or you did didn't have the wherewithal to trade crude oil futures. would you recommend investors get exposed to oil? >> the oah will stand clear of the cftc regulations. it's really the uso that would be impacted by it. but i would look at a sun car, alberta sands up north. that's a great way to play it. even a hess, and don't forget the smaller oil service names globally geared. those are great places for investors. i do believe through the remainder of this year oil prices will rise. >> you're absolutely right on the uso. but let's rephrase that question. would you recommend investors commit fresh capital to that etf? >> right now i think there are

other investment vehicles in the energy space that you would use before you'd use uso. >> thank you so much. see you tonight. next trade apple's price target gets raised a few hundred bucks. ibm reiterating its 2009 to 2010 profit outlook. pete, we were discussing earlier today that interesting callout of morgan stanley. downgrading the likes of dell, ibm, as well as texas instruments. are you seeing options activity either way here? because it's sort of a mixed message here. >> not really right now, but i think the most interesting part of that call for morgan stanley was with ibm they raised the price target to 145 from 116. it was a significant raise in the target despite the fact that they were looking for more of a market perform rather than an outperform type of performance coming from ibm as well as dell. i think when you're looking at the space right now, it's the gadget space. it's been the gadget space. you look at who is performing

right now. it's the chipmakers that provide to the phones as well as the rest of the smart phones. it's palm, research in motion, apple. they are presently dominating the space. >> let's talk about apple. zeke, you have been a fan in the past, would you recommend buying apple ahead of the meeting tomorrow? what can apple possibly do at this point to be a catalyst for the stock? >> i wouldn't recommend buying it ahead of the meeting tomorrow per se. i would recommend buying it because of what they're doing and the fact they're going to unveil some new product, whether it's a tablet, we don't really know, or the new iphone. their market share and their dominance in the space, as well as all the applications. the upgrade on apple represents a smaller percentage than the sort of pseudodowngrade on ibm for morgan stanley. it's like a 28% over its current price of $116. apple is at about $166. i think the point is you've got a lot of good tail winds on these kind of names. dell is going to be squeezed on

margins. >> in tonight's "fast money," we have your best trades ahead of president obama's big health care address tomorrow night. coming up next, 50 cent is in the house. how to get rich or die trying. the "fast money" halftime report continues right after this. gold busting through $1,000. stocks still going higher. something has got to give says the big sir. and ipods, tablet devices. what will happen at apple's big event tomorrow? we've got the answer. plus a year ago this month it brought down the market. the pit boss gives you his lesson from lehman he still uses to trade to this day. on america's post market show tonight.

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welcome back to the "fast money" halftime report. time for your "power lunch" trade to go. pit boss, you're watching

alternative energy names. seeing some bullish activity in the pitts. >> i am. i'm looking at ener, energy conversion devices. this is in that space that we've seen a lot of pullback in the solar area right now. this stock was just on its 52-week lows just last week. today getting a little bit of a pop. there's about a 30% short interest in this stock, so that's part of probably what's moving this stock, but you take a look at the september options. september 11, september 12, even the september other upside calls all very active. one of the most active days in the last 52 weeks in the stock as far as the options are concerned. >> let's call the close right now. time to go around the horn. patty, what do you say? >> i don't think the bulls have as much strength as they would like and i'm selling. >> zeke? >> i'd like to see a little bit what the direction is going to be post labor day. i'm holding tight. >> eugene? >> i'm selling today, but i'm starting to buy large cap

overall pharma. >> and pit boss? >> i like the stock market right now. i think it's pulled back a little. i'm looking at gold breaking underneath a $1,000. that could be a bullish sentiment. >> that does it for us. on "fast money" tonight we'll tell you about apple's big meeting tomorrow. and the three-year note auction, and, michelle, i'm dying to know from mr. 50 cent if he's just considering changing his name to maybe 50 euro cent because the dollar -- >> it's not what it used to be. >> if eve horrendous inflation will he change his name to 2 dollars or something? >> we'll ask him, melissa. also jpmorgan funds $400 billion man david kelly, plus 50 cent is in the house taking care of business. we'll talk to him about his new business ventures. and empty calories. oliver stone starts shooting "wall street two," are you going

to be an extra? new health care reform proposals would impose fees on insurers and medical devicemakers based on market share. max baucus' plan would also tax insurers for plans above a certain value. that according to reuters. the transportation department says so far this year airlines have had their best on time performance in six years. and shares of smithfield foods falling after the pork producer reported a larger than expected loss. that's cnbc.com news now, first in business worldwide. i'm bertha coombs. e you can feel the energy, can't you? he's coming. must be in the house. 50 cent coming. welcome to "power lunch" second hour. i'm bill griffeth. stocks have been higher for the most part. exxon, chevron, general electric have been leading the way higher.

harley-davidson has been a leader among the s&p 500 stocks today. also, moments away from the results of the latest treasury auction. $38 billion in three-year notes. we'll get that from rick santelli momentarily. >> i'm michelle caruso-cabrera. diversify, diversify, diversify. it is a mantra of investment strategists for years. so we are one year from the depth of the financial crisis. is it still true? does diversifying your portfolio still work? we have a bull and bear facing off. >> i'm becky quick. 50 cent will join us in a minute. we'll find out how he plans to get rich or die trying. that's the name of one of his albums. >> that's why we keep saying it that way. but he has a new book out. >> yes, "the 50th law." it's a motivational book. >> he's a very smart businessman. >> he made a huge bundle of money when he sold his part of vitamin water to coca-cola.

>> and also joined by david kelly of jpmorgan funds. how are you? welcome back. >> thanks. >> what do you make of where we are in the economy at the moment? >> the whole global economy is moving from recession to recovery. i mean -- >> that's pretty clear. >> we believe that this quarter, u.s. gdp growth will be between 2% to 4%. that's growth. the whole world economy is moving into recovery at the same time. >> but what -- let's get to rick santelli. he has the rul of the $38 billion three-year note auction. >> 148.7 on the yield. it was trading around 149, 150 on the wi. a little lower field, higher price. bid to cover, 3.02. that's terrific for any auction, even though the three-year did have one very similar to that maybe about a couple months ago, it's still strong. way better than the 10 auction average. if you look at the percent of indirect, it was strong, over

50. i think i'm going to have to give this one an "a" in the auction. it was solid, $38 billion. it's a short maturity. so maybe we should assume but we have to be careful, but this paper moved out the door no problem. >> when you consider also you had some t-bills out this morning as well, a total of $96 billion went out the door today. >> yes and the bill auction was very solid. both three-six-month bill auctions had close to 3 1/2 bid to cover. so also very good demand. right now investors are still gobbling up short maturity paper, coupon paper. is that making a statement about the longevity of equities? that's for you guys to decide. >> we were just going to ask david kelly. look, government able to once again borrow money at very low interest rates despite the mounting deficits we're looking at. >> investors seem very hungry for treasury debt still. >> why? >> well, i think frankly it's an anomaly. obviously, they are auctioning a

lot of paper. there seems to be a lot of money which is ready to be invested, but if you look over the next ten years, $9.1 trillion in accumulated deficits. it's not just here in the united states. in the euro area, in the uk, in japan. in the end, i don't think the world is going to swallow it at rates anything like this. >> because the risk appetite is where it is around the world, investors are more willing to buy treasuries and that money mes at the expense of going into the stock market is that what we're saying? >> to some ebs textent, yes. >> in theory, but it hasn't happened yet. >> the point is there's a lot of money to be invested. a lot of it sitting in cash. people are gradually moving it a little bit out of cash into treasuries, into corporates. they're still to some ebs tent shunning stocks, even after a 50% move in the stock market. in the end i think the odd man out is erb tri yieldtreasury yi.

>> you said you're looking for very strong growth for this quarter. what happens next year? now you're talking abouttorie inventories being restocked? >> i think the world economy is coming out right now, but this is a deep recession. you would expect to see more than 4% growth, 5%, 6%, 7%. it still looks like a slower than average recovery. i think it's probably sustainable because there -- this inventory thing will take a long time. >> no double dip? >> there are risks, but at the moment we don't see the short of shock that would cause that double dip. >> treasuries versus the stock market. who is right here? i mean, the treasury market is telling us that we could have a double dip, that things are going to be very bad, and yet the stock market keeps rallying. >> it's not just the stock market, we've also seen credit spreads. i think what this is is a lot of scared investors who are willing to put money in treasuries but

nowhere else. i don't think that's going to last. i think ultimately the treasury market will be proven wrong by this. >> early today we spoke with terry mcgraw. we've been looking all month at what went wrong, what happened a year ago, can we do things better this time around. a big question has been with both s&p which is the mcgraw property and moody's. did those rating agencies, what went wrong, what was the problem? there are some people who accuse fraud. listen to what terry mcgraw had to say earlier today when we asked him what went wrong. >> from our standpoint on the regs dengs mortgage-backed securities and the commercial mortgage-backed, we had the housing recession wrong. now, the fact that a lot of other people had it wrong doesn't help, but we don't like that, and those -- that's where our problems began. >> there's a lawsuit that's been moving through district court in new york where they've thrown out 10 of 11 counts. the one that's still sticking around with fraud.

terry mcgraw said fraud is not happen in our house. >> i don't know what the details are from a legal perspective, but i think the big picture here is a lot of people rested their case on the idea that we've had 30 years of data with no systematic decline in home prices across the united states, and they just thought that could not happen. i think what last year proved to us is, yes, that can happen. if prices get sufficiently out of whack, then they will come back into whack. unfortunately, getting back into whack meant much more than a 15% decline in prices. >> i was always told -- i'm just thinking back to studying economics, that wages are inflexible as well. they always go up and never down. that's a function of a lack of data showing that could happen, right? >> yeah. it's a failure of imagination to some extent. we've got to recognize that as the economy evolves, that all these models we hang our hats on become less valid because it's just a different structure.

>> we've been through a year we thought could not happen statistically. >> absolutely. and that just proves that using a statistical model, a normal distribution around markets, is a very dangerous thing. >> obama going to address congress about health care reform. how much of a threat do you think health care reform is or higher taxes as a result of health care reform is to the economy in the long run? >> i think the problem is that you've got two goals here. you have universal health care and you have cost control. >> how do you do both? >> well, that's the problem. i think actually you could do both, but you can't do both and keep everybody happy and the problem is in order to keep all the constituencies happy enough to get to universal care, you may end up throwing the cost control out the window and that only reinforces my point -- >> you can't have both right away, but eventually you could achieve that as the business model for the insurance industry changes, right? as the incentives become different for the insurance company -- >> but ultimately congress sets the rules. is congress going to set the rules in such a way that the insurance companies or doctors

or whomever get beating here? we're trying to pretend that nobody pays for that. ultimately somebody will pay for it. if they don't pay for, it we will pay for it through higher interest rates. >> all fluctuate on what is going on with the debate. do you touch those right now? >> we know in the long run health care demand is going to go up worldwide, but i sure wouldn't want to be trying to trade it as various bills go through congress because it is -- every bill has a different implication. >> are there areas that are safer than others when you look across the board or is it just too difficult to tell? >> within health care? we really don't know. every week comes, there's a new proposal, a new question of how do you get your 60th senator? lots of people could pay for this. we just don't know who is going to. >> david, stick around. you'll be with us for the half hour.

we look forward to your pairing with 50 cent. >> that should be interesting. >> did you ever think? >> no, i didn't. >> when we come back here, a trip around the markets. plus, a man who grew up in queens, new york, selling crack now selling albums, video games and more by the millions. very curtis jackson, known to the worlds a 50 cent, will join us live in just a few minutes. and then back to the future. the beatles are back. rock bands release is tomorrow. any chance you're also going to be on apple's menu tomorrow, jim? >> you know, rock band might be it when it comes to the digital beatles. again i'm jim goldman in the silicon valley bureau. apple getting ready to refresh its ipod line maybe with new cameras, but the likelihood of a beatles day on itunes seems to be fizzling. this is all about steve jobs' rush to center stage. more "power lunch" is coming up. i've been growing algae for 35 years.

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p gap, symbol gps got upgraded to outperform by credit suisse today and dr. pepper at a two-week high. when you look at this cadbury deal do you look for consolidation within the entire segment. >> that's a 52-week -- >> of course. let's get to our market r reporters. the dow up by 20 points. we'll start out with matt nesto.

i can say 50 cent. i can't say el nesto. >> whatever works, right? if i look at this marketplace, we're not getting anything going here today. got plenty of fire, but can't get any lift. the dow is up 20 points right now. it's the same three leadership groups in the marketplace. the en, the materials, and the industrials. if you look at the sectors, there's only three that are up or down more than 1% and those are the three. so the energy story keeping moving along with the rising price of oil today. we're seeing names like exxon and chevron driving the dow higher here today. of course, ge on a percentage basis is the big gainer in the dow with about a 4.5% move. the fact is a $14 stock does not move the dow, unfortunately. the same can be said for alcoa. you back out those names and really it's the energy stocks driving here today. quickly point out and finally, the reit index getting a bid today. some positive comments today

about reits. they're not issuing new building permits because people aren't getting loans. lets gate to scott wapner. >> on to positive territory but we're certainly off the best levels. we're up about seven points, 0.3%. oracle is now down, google is also in negative territory, along with ebay. all stocks were positive when this trading day began. intel's barelying onto a fraction ideal gain. morgan stanley upgraded the enterprise hardware business. apple, the price target taken up to 200 bucks at morgan stanley. jim goldman, as he mentioned, is going to have more on that. that's the story with the nasdaq. >> the folks around me with 15 minutes to put in the final trade. we're looking at gold prices we

did hit an 18-month high, but gold has fallen below that $1,000 mark. a couple factors though that had gold prices at the highest levels that we've seen since february. number one, we pushed through those key resistance levels last week. 965, 980. that set the tone to have gold go above $1,000. we're looking at the dollar index at its lowest level in the year. and the sideline money coming into the market after the holiday weekend. that's fueled not only gold prices but oil as well. oil near $72 ahead of tomorrow's opec meeting. >> thank you, sharon. opec will be meeting tomorrow in vienna. melissa francis is there speaking with the power players already. she'll be co-hosting "the call" live tomorrow from vienna tomorrow right here on cnbc. we still have david kelly of jpmorgan funds with us. what is gold telling us right now? what do you make of that?

>> it may be some of this fear about all the fiscal expansion from governments around the world. if you don't -- in the end if everybody prints too much money to try to monetize this debt, then obviously that's positive for gold. >> are you worried about inflation? >> no. i don't think inflation is the problem. i think debt is the problem. in fact, we've got -- >> by implication the rise in debt leads to an inflationary because of the expansion of the money supply. >> not for a number of years anyway. you'd have to get back down to full employment and it's going to take us years to get to full employment. i don't think there's a reinflation threat here. i also think on balance uncertainty isn't rising, it's coming down. i'm not strong on gold right now as an asset class. >> and you've also made the assumption that the federal reserve would aid and abet the congress, right? i mean in theory they could work against each other if -- >> that's right. in fact, it would be reneging on their responsibility if the federal reserve was actually to monetize this debt and to allow an inflation -- >> but they have to this point though. >> well, they've been taking

some emergency measures to get the economy going. the real question is when unemployment begins to come down and things begin to tighten up again, and then you do have an inflation threat, at that point how disciplined will this central bank be and central banks around the world this trying to restrain the money supply. >> what happens when the fed starts to raise interest rates and what happens to everything we have with fannie and freddie right now? as interest rates start to tick higher, where does this catch us on the other side? >> i think that the fed has time to work with, first of all, because you don't have an inflation problem for a number of years. home prices have stabilized and are beginning to move up. hopefully over the next few years home prices go up a bit. that will fix some of the balance sheet problems. >> all right. let's take a break, shall we? >> yes. >> it's time. >> it's time for something a little different. >> just a bit. >> a little different for us, too, and we mean really different. we're talking about superstar rapper and entrepreneur 50 cent. he is in the house, and he's ready to talk business. we're going to be talking about music, video games, your money.

it's all coming up. >>. plus oliver stone is back at it again. "wall street" the sequel. greed is back. a look at why the academy award winning director is going back to remake his classic on wall street. coming up.do literally sweat... it's just not our thing... gecko vo: ...but i do work hard, mind you. gecko vo: first rule of "hard work equals success." gecko vo: that's why geico is consistently rated excellent or better in terms of financial strength. gecko vo: second rule: "don't steal a coworker's egg salad, 'specially if it's marked "the gecko." come on people. i've still got room for the internet. with my new netbook from at&t. with its built-in 3g network, it's fast and small, so it goes places other laptops can't. anything before takeoff mr. kurtis? prime rib, medium rare.

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waterboarding back

welcome back to "power lunch." hip-hop empress sar yo, 50 cent, he's also a noted businessman, entrepreneur, author in his own right, forbes ranks his net worth at $150 million and growing. mr. cent joins us in the studio along with the $400 billion man himself, david kelly, and co-author of 50 cent's new book is robert green, because the new book is called "the 50th law." thanks for coming in. it is really exciting to have you here. >> we're all very excited at various levels to have you here. very impressed at your business acumen. >> it's going great for me. >> so far so good. you have like the mid yas touch. >> i'm trying to be like david. >> we're going to get to your book here in a second because that's why we've got you on. but within wall street legendary

is the deal you did with vitamin water. you were an original investor, coca-cola bought it and it's reported you made after taxes $100 million. >> it's an exciting deal. the opportunity to get in in the infant stages of that company was amazing for me. probably -- it is the biggest deal. >> any more on the horizon? how did you make that decision and do investors still come to you or potential entrepreneurs come to you and ask you to invest and how do you decide? it was a simple process. i was actually in the no frill section in the supermarket and i got a chance to see how they were selling a gallon of watt fore2 for $2.69. >> you can always be a portfolio manager. >> just such an extreme difference. >> here is the question we have. the music business is in disarray. the whole business model is changing daily. >> absolutely. >> how do you not as a business man but as a performer, how do

you make money in this business then? >> the technology is absolutely shifting things. this is taboo. this is almost like selling out. five years ago, you know, what is great business from an artist perspective now would be you absolutely are going in the opposite direction of what they think is cool. >> it's about branding. >> yeah. it's complete brand extension. >> at least it's your brand, not their brand. >> absolutely. unless you did 360 deal because the major record companies are changing their business model where they have having artists sign over portions of their merchandising. >> how do you deal with piracy? does it make you angry? >> i see it as part of the marketing. for people to purchase the material from the pirating perspective, they end up at the concert.

they can't help but fall in love whether they downloaded or went and purchased the material. >> so you're willing to have that be a loss leader. >> we can't stop it. >> what else are you going to do? >> how did you guys hooked up? we talked years ago -- >> you were my very first interview and i will never forget it. >> you told me he scared you. >> no, no, it was very reassuring. >> you read that book and you were impressed and said let's do a book together. >> absolutely. "art of seduction." >> a lot of people really like that 48 laws of power. they found the advice very helpful. 50, he contacted me, and we thought it would be really interesting to do a book together because we come from such different backgrounds, but we have sort of a similar way of thinking. so this is the monster that we created together. >> i love the 50th law, fear

nothing. >> good pronunciation. >> what was the message you wanted to get out you felt robert green could help you with? >> just his laws in the 48 laws of power, the short of the law was translating completely different. people who didn't actually see the significance and the research just read the short and said, okay, i understand how this applies to the actual environment, and they took that on. like a lot of people that would make reference to robert's first book would just make reference to the small portion of the actual law. it was exciting to see -- like i thought like some of these great people to. get a chance to collaborate with him and tell him my other thoughts and some of my experiences and have him write it from those perspectives after researching these other people i thought would be great. >> who is going to read this book? people who listen to your music or people who read your books? >> hopefully both. >> both. >> we want both. >> and the people who haven't

had an opportunity to read his books. >> we're living through times where people are very frightened. they're very squared. and the message of the book is you need to move past that fear because in a couple years or maybe less this recession is going to be over. >> right. >> and are you in a position to seize the moment and i think it's going to be a new entrepreneurial era or are you just waiting on some job. >> i think the majority of the companies on the fortune 500 were actually established during a recession. >> that's right. that's when opportunity presents itself, right? >> that's almost a definition of recession when people are scared. to me a recession is when people want to wait and see because they're too scared. and definition of recovery is when people want to do it now because they fear nothing. >> and recession is predominantly for middle class. where i come from the majority of those people have always lived in a recession. >> that's part of the point you make in the book. fear nothing. your mother was murdered when

you were so young. your story is so, so sad on one level as a child and yet here you are. one of your points is don't let fear get in your way because you can make it. >> i have had situations like you just pointed out that were so extreme to me in the earlier point that it makes me go into these situations without fear. because i have already -- >> you have been there. >> experienced the worst possible. >> what else could you lose? >> yeah. >> a lot of people think his lack of fear is just the aggression, all that, but you were talking about the video piracy and all that, he's really open to change in anything that's going on in the world. he just sort of embraces it and moves with it, which to me is sort of the epitome of being fearless. >> you know what i'm also struck by, we talked about this in our production meeting, back in the day when the rolling stones to use them as an example, were coming up, they were the rebels. they were the mavericks. that would be your brand as well. but they really shunned business per se.

that would be selling out to be involved in business. your generation of music performers really embraced business. >> absolutely. there's a significance to having the ability to be a part of these projects. the interest you generate through the popularity in music will allow you opportunities to face actual companies, major corporations -- i have done my own shoe with reebok. this is something that was completely reserved for professional athletes, you know, prior to myself and sean carter, you know. >> you watch cnbc i assume because you're a big stock market investor. how has the stock market been treating you? still trying to sell that big property in connecticut? >> yeah, trying to get rid of the elephant, the big white one. real estate wouldn't be the satis safest place to put your money. >> so they told you. >> so they told me.

i need advice. >> you still got the $100 million from the water deal. did you put it in the stock market? >> i live pretty moderate. i'm not extreme. >> he put it into some new venture. he's always reinvesting. he's always got some new hustle up his sleeve. >> i ain't scared. that's what the book is about. >> but you also live below your means? it's an important aspect, right? >> i don't want to be over -- i have a great opportunity, i have great examples in front of me presented to me without anyone speaking to me. every morning i wake up in a home where mike tyson previously laid in bed and earned over $500 million in his career. so it makes me conscious. >> there you go. you're a great guy. we enjoyed having you. it was a thrill meeting you. we wish you well with the book and all the other ventures you have coming out. >> thank you. >> 50 cent with us with robert greene, co-author of the book q the 50th law" and that was a lot of fun. >> it was terrific. >> david, always enjoy having

you as well. >> glad to be here. >> we'll see you again. >> david kelly, ou power player this half hour. we'll head down to the floor of the new york stock exchange. get the latest from a true market all-star. art cashin. >> plus diversification, it has been the mantra of investment advisers for years. does it still work. we have a bull and bear squaring off. and the movie that defined the excesses of traders in the '80s. "wall street two" is back but this time set against the backdrop of the financial p crisis. is greed still good? was it ever good? >> was greed ever good, 50? >> i think greed fuels most business engagements. >> there you go. something we'll talk about in empty calories coming up. the dow is up 28 points. tdd#: 1-800-345-2550

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welcome back, everybody. you see up 22 points for the dow. for more on today's market

moves. let's head back to the floor of the new york stock exchange where art cashin is standing by. >> art cashin. >> hello, sir. it's great to see you. we heard from rick a little earlier today. he gave the treasury auction an "a" for how it went off today. what's the thought on the floor of the stock exchange? >> the floor of the stock exchange is kind of range bound right here. we rallied, took the s&p into the early resistance up around 1023, 1027, the intraday high was 1026 and then pulled back to about 1018 and we've been zigzagging in that range ever since. the run rate at ten was for 1.8 billion share day. right now it's 1.1. maybe we'll be lucky to make a billion. >> we watched gold push above $1,000? do you think there's something behind this run to gold? >> it's all the dollar. i mean, you look at oil is up 3 bucks. gold is up. i think there's a variety of

things, but it's primarily the weakness in the dollar. the dollar made a new low for the year against a basket of currencies. it's all put the money somewhere else. i just pointed out to some friends, people talk about the weak dollar being a sign of people more ready to take on risk. some of the other safe havens aren't weakening with the dollar. this is really about the dollar. >> you know, arthur, this being the ninth month on the calendar, people start to worry about the stock market. we're waiting for that shoe to drop. it hasn't so far. are we just going to wait the whole month for this to happen or what's going on here? >> well, there is a general nervousness, bill, and i think you nailed it. we've had a lovely run. some of us started taking money off the table about a week and a half ago, others a little earlier. and maybe it's just having done this for over 45 years, you remember all those septembers. you remember all those october bottoms. and even though history doesn't repeat itself exactly, sometimes it's good to buy sweaters for the winter. >> yeah. just to be careful, right?

>> right. >> just to be safe. gooed to see you, art. >> my pleasure. thank you. >> speaking of september, it was last september most people thought lehman was too strong to fail. now fallen ceo dick "the gorril rilla" fuld is looking for work. >> charlie gasparino will join us with some insight. i want to know, want to start with jimmy cane and his alleged pot smoking. >> you go right for the jugular vein. >> you wrote that into the intro. come on. >> because i knew you'd like it. >> why is that? >> it was kind of interesting. remember when that story came out in "the wall street journal" in 2007 we were on squawk box playing around. >> you were standing there. >> i was imitating. what jimmy cayne is saying now,

one of the reasons he smoked pot was because he has a pre-existing medical condition. that is no joke. he's telling people that he had some sort of a condition where the pot smoking alleviates the conditions. that's what he's saying. i haven't -- >> you saw the entire audience collectively roll their eyes. >> it's kind of a change from what he said in the past. but exactly what that condition is will be in my book. >> stress, stress. >> a tease, no the a segment. what about dick fuld? he was confronted by reuters reporter over the weekend at his summer home in idaho. >> it's interesting because i did a segment on him a couple weeks ago about how he's trying to resurrect the business because he feels like he has to make money. he's still rich but obviously not as rich as he was. he's a pariah.

he has just a few close friends, one of those friends is joe grahno who was on the air last week and defended him. i knew the old dick fuld. and the old dick fuld wouldn't have cared to say thank you. but he did call up joe and thank him. it just shows you that just how -- you know, it's a degree of humility that comes when their star has fallen so much. >> john thain is another one. >> john thain is an interesting story because, you know, as you know, he was kind of a rock star. evers at goalman, number two guy at goldman. ran the new york stock exchange. it was thought for a time that the b of a deal with merrill before the big losses was a huge deal and made him a hero. as it turned out, he wasn't so much of a hero. he essentially tries to get a bonus for that year, and i think his star has fallen as well. he's hired a pr firm. >> you didn't mention the

commode. >> thank you for reminding me. spends $1.2 million on the office with the commode and all. his stock has fallen big time. he has hired an image remaking firm which does leonardo and dicaprio. when you talk to the people at goldman sachs, they think that's making a bad situation worse. >> speaking of goldman sachs, how about hank paulson? >> he's starting to come out and talk. >> a little bit. he's littered in my book. he's throughout the book because of the policymaking role at the treasury. he's not saying much. what he's saying is privately from what i understand is that he really thinks letting lehman go was a mistake. he's willing to fess up -- >> i think they realized that on september 16th. >> right. but he's not willing to fess up it was strategically a huge mistake. we will see some of that in his book. he's not giving much guidance until the book has come out. that book will be pretty interesting. i believe it comes out after my

book so just remember that. >> that's important. >> is it called "the sellout"? >> yes, that's it. >> it's a handsome cover. >> it's either burn, baby burn, disco inferno or the 2002 space odyssey? what was it? >> you saw it first on "power lunch." it won't be the last time you see it on "power lunch." big day for investors for apple. >> how about an ipod with a camera? our insiders are ready to take a bite out of this one. >> and apple is trading. >> apple shares are trading up by about 1.3%, $172.53. so far the shares have doubled. >> it's a two-week high. >> 52-week. >> this is "power lunch" right here on cnbc where we are first in business worldwide.

and we can confirm, yes, indeed, apple is at a 52-week high. except today it's a 52-week high. 50 cent was just on "power lunch." >> hope you saw it. >> $172 per share. >> i really like him. >> i liked him a lot. >> not that i didn't expect to, but he really is a very smart businessman. >> yes. >> you know? and i hope you get to see it. go to our website when you see the interviews later when they put them on video. great stuff. apple set to hold a major event tomorrow. word is the company will reveal a new ipod. let's bring in gene muenster, who is senior research analyst.

tony is a senior research analyst and we have jim goldman joining us as well. jim, give us the hits, runs, and errors. what are we expecting from this meeting tomorrow? >> it's an ipod event centered around music. likely see an upgrade to itunes as well. you mentioned thei pod wi ipod camera. no mac tablet. none of that. the beatles deal seems to be fizzling. maybe something with the rolling stones with digitally remastered library from that band. all of this aside, i think it comes down to the fact that we're going to see steve jobs on stage again for the first time since that october event last year when they refreshed their mac books. that is going to be significant. his appearance will steal the show. >> gene, do you think we will see steve jobs tomorrow? >> yeah, we do, and at the end of the day he's been back since the end of june. he's been reengaged. this is the stuff he loves to do. he probably won't do the whole

keynote. we think steve jobs will be there. >> tony, dung heo you think he'g to be there? >> i don't think he's going to be there. i don't think there's a strong incentive for apple to bring him out. >> if he doesn't show up, does the stock fall? >> probably. if it's only an ipod-based event and steve jobs doesn't show given that the stock has been strong recently, we probably have it trade off a little bit. >> gene, jim is suggesting the beatles on itunes, that deal may be fizzling. what are you hearing about that? >> every september we're hoping for the beatles. this is no different, and at the end of the day there's nothing really substantial to make us think it's going to happen. it would be nice to have the beatles, but it doesn't change anything. >> tony and gene, you both have target price of like $185, $186. we're getting awfully close here. what do you do if it hits that target price? just raise the target price or show some discipline and downgrade it? >> i think it depends on the market environment. what we've seen is a robust

market overall. we've seen a particularly robust market for tech stocks. or valuation is set in the context of the market. if the market keeps going up, our price target will adjust in accordance with the market. currently apple has had a terrific run. we think it's fairly valued at $185. still another $10 to $15 of upside. >> so, jim, tomorrow we're -- this is an incremental kind of meeting? this is not a game changer? >> you know, i don't think it's going to be a game changer. the fact is ipod does need a refresh. the product line has not been robust sales. they've been strong but we have seen them trailing off as iphone continues to gain traction. last quarter ipod fell to third as far as the top three revenue generateders at apple. that's very telling. i think we'll see just in time for holiday shopping, we will see some new ipods. i might disagree with tony. i would be very surprised if steve jobs didn't make an

appearance tomorrow. >> that would make some market. >> always so much drama in these apple meetings. how do this he manage it every time? >> thank you, gene and tony. jim, we will see you later. for years it's all we've heard, make sure you are diversified. don't put all your eggs in one basket. but has the financial crisis blown that strategy to bits or reinforced the need for it? you have a bull/bear debate. plus gordon gekko is back. we'll take a look at why legender director oliver stone is bringing the symbol of greed in the '80s back to the silver screen. this is "power lunch" right here on cnbc, first in business worldwide. bull market or bear, traders are always hungry for ideas. trading is all about strategy. and strategy... is all about information. heat mapping shows me where the money's moving. twenty five hundred stocks... one quick look. that's where the action is. plus, this amazing gadget...

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a lot of investors took a major, major hit in the past year. perhaps casting doubt on all the standard advice. asset allocation and

diversification, a lot of people did it, and their portfolio was still blown to bits. is does that mean their strategies are outdated? guys, good to see you. is diversification dead? is it no longer a decent strategy, especially with what we saw in the last year? >> let me say it's tough to follow 50. anything i say is not going to have much meaning after that. but having said, that diversification, although a lot of people will argue with this because their portfolios were decimated, it really worked find. the bond portion of your portfolio didn't lose any money. if you had a globally diversified portfolio of stocks, you probably lost less money than you would have lost if you didn't. so it didn't work perfectly. it doesn't protect you from overall market decline, but it works better than the alternative. >> that seems to be a pretty

compelling case. what do you think? >> i tend to agree diversification can help investors achieve long-term goals. the bigger issue is how you achieve that diversification, whether it's an active strategy using active managers or using etfs and index funds. that's probably where we kind of disagree. i tend to think that what clients tend to and investors tend to miss out on is that discipline to diversify and maintain that plan. >> so your point is if you go with an active manager, that person is going to keep you di palestinianed to the ee ee eed the diversification? >> i think so. if you take the morningstar universe which is the broadest and deepest mutual fund. the average has a 25 star ranking. the average active fund 2.95. i think it shows you active management can add value. >> dan, for those people who are watching, does that make you

convinced about whether or not they should be getting an active manager instead of going into an index fund? >> i couldn't disagree more actually because all of the real data that compares active management to passive management demonstrates that passive management, meaning people who have a globally diversified portfolio of stocks and bonds, actually in the last 20 years have achieved 400% greater returns than people who have followed an active management strategy. >> but his point is a lot of people won't do it on their own. when they have somebody actively managing it will force them to do it. >> that's exactly it. >> there are fortunately passive managers who will give guide he thin thinks. active management has them chasing returns, doing all kinds of things that all the studies show don't work. the best study out looks at

1,500 active managers. >> and the results were? >> no evidence it was anything more than luck. what wall street does is package luck and sells it as skill. >> i think -- >> ten seconds. >> i think it's unfortunate you say that. in reality there are identifiable high quality active managers. active management has shown it can work. >> all right, thank you, guys. let you get that last word in rebuttal, doug. good to see you. doug and dan, both of them agree the diversification is still a worthy thing to do. >> depends what you diversify into. we would have had more time but 50 cent took it all. >> empty calories on the other side of the break. >> gordon gekko is back. details next when "power lunch" continues. carol, when you replaced casual friday with nordic tuesday,

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