and the nasdaq closed with a decline of 40 points. the nasdaq is still up nearly 12% in 2012. still the winner on the year. that'll do it for us for tonight on "closing bell." thank you for being with me. i hope you follow me on twitter and on google plus. join us tonight for super tuesday coverage at 8:00 p.m. eastern live. ♪ i'm melissa lee. here are tonight's top three trades. dow and s&p have their worst day in three months. we've got low bid trades to boost your portfolio. if you bhaugt apple shares instead of a house, you'll be a multimillionaire right now. dr. jay breaks down the cost of not owning shares. and pandora dropping on weak guidance. we'll follow the story for you. this is "fast money." let's start trading. the dow having its first 200-plus point drop since november today. so should we be concerned or say

you know what? it's a pullback to a level a month ago. >> and it's also the birthing pains you get when you're ahead -- >> and you know about birthing pains. >> we know a thing or two about them. unfortunately tim and i don't know anything about it. perhaps karen finerman who has birthed four young ones might know better than us. but we do have that march 8th event on the boards. that's after apple tomorrow. we've got march 8th which is the deal with greece. and then we've got the employment data on friday. so we've got all that. is it surprising at all the things look like they're coming unglued before that happens? no. that's what usually happens. ask karen, again, what happens against the arbs you do. when you hope to arb it against another. that's when things get a little shaky sometimes. that's what's happening here. >> agree?

>> i do agree. today -- i'm not surprised we had somewhat of a pullback. we've had an enormous run. on a day like today, i actually thought it wasn't panic stricken. didn't seem panic stricken. looking for a few things to buy that didn't quite come to where i wanted. we'll get to it later. but apple calls we sold looking to buy those back. they were not cheap enough at all. either i sold them poorly or they're too expensive now. or both i suppose. but i have money i'd like to put to work that i haven't been able to. i have my buy list out. we did buy a few things today. >> is that your interpretation of the market as well? what happened today shoup happened yesterday. had a delayed reaction. all of a sudden we had this concern about a march 8th deadline. didn't have it yesterday. global growth concern, we didn't have that yesterday when china rationed down its gdp forecast. what happened? >> it feels people have jumped into this market chasing. this is why you be really

careful. this will be a stock pickers market. expensive stocks are missing bad i did. the s&p is down. there's a number of high major beta plays that are off 10% in the last couple days. look across the mcommodities. em which has panic style actually flows out. especially in the etfs which has been the approximaty vehicles. you've seen a lot of macro repositioning. if you look at the currencies, you're seeing global guys moving around. it's not panic. but suddenly people are looking at the macro. so the eu prints negative gdp for the first quarter since june of '09. you've got the china news yesterday. you've got the payroll number on friday becomes a crucial number on friday. we know it's going to be a pretty good number. but suddenly everybody's watching macro. and short, sharp and scary. it's the type of thing that

unnerves people. it gets the weak hands out of the market. it's too early to call this anything else. >> call for correction. >> yeah. 3% to 5% pullback would be normal and expected. >> and healthy. >> absolutely. but in those higher beta stocks that have come back, take some chips off the table going into tomorrow. that's kind of what's going on. >> mike khouw in the options desk, did it feel to yo ru it was an orderly pullback as opposed to a start of some correction. >> i think everybody was anticipating some sort of a pullback. we started to see some weakness in the days leading up to this. i think there was some conversation about slowing growth and that conversation continued. and we watched the market trade off on the news. it's interesting, too, because in some of the high beta stocks, tim was talking about coal for example. that's a space we'll probably talking about a bit. it did sell off. this is the kind of sector that

can move much more than the market has. which suggests relative performance. >> and the coal names, three year lows on a lot of these. trying to get short yesterday through the etf kol but couldn't find a borrower. >> i think it's a little dangerous to be shorting coal 15% into a movedown. mike's right -- >> this was yesterday. yesterday trying to short it. >> and we're not saying wrong on any of his trades ever. but mike's right that actually coal performed okay today because they've been punished. this was the wrong day to run for cover. sounds like the tone on the desk is almost shorting. i think again it's been a range trade. and i don't see gold falling apart for all the reasons people owned it before. there's places -- i think even freeport mack. you have seen great companies get to levels where you wanted to buy them. that's what erverybody's doing.

and let's be ready for this next move. >> and we had an analyst today on the half-time that was saying, in fact, with walter cutting back on production pretty significantly, same sort of thing that natural gas players like audrey mcclendon have done. it's their way of holding prices or get a bounce. i think they'll get it out of coal. it didn't run straight to the upside on nat gas. but you did find an end. >> talking about production cuts, consol energy announced production cuts. mike, you've got options trade on consol. >> this is more of a met coal story. the thermal coal story remains under some significant pressure. there will be some switching for natural gas purposes. tim can probably speak to the fact that seaborn coal, we might be looking at the bottom end of the range for met come prices.

so one of the things i would say is that even though there are some headwinds, you might actually start looking at this citizen an opportunity to get long some of the coal names. specifically i was looking at consol. i'm looking at the july 32 puts. that's about a 9.5% return between now and july expiration. almost 25% analyzed. this is a good way -- if not a bullish bet on consol here. >> let's get the broader view in the markets. doolittle is here to check the charts with us. abigail, obviously on a day like today, everybody wants to know what you think of the s&p 500. what do you see in the chart? >> the s&p 500 i think the big story today is the fact it slipped back into the top of its two-year trading range. if we break it down into the main part of that range between about 1350. this signals the s&p could

decline further. they're confirmed today a bearish pattern, a bearish rising wedge pattern. the first target is around 1159. the second 1075. i think what we want to pay attention to is in the chart of 2000. this is the blueprint for the s&p 500. it started to reverse its down trend last week. what happened today on the russe russe russell 2000, it went down. of what's to come. also showing in the russell 2000 is a rounding top pattern. it confirmed on the close at 787. the target is around 750. that would put below the 200 day moving average. it signals we may see the broader equity indices to decline. i don't know it's going to come in one chunk. the vix spiked up on a gap this morning. that gap's likely to close. i think that we see probably

some stabilization, some consolidation. overall i think that we're starting to see sort of a move -- a reversal of the uptrend in equities. and down toward 50 day moving averages and 200 moving day averages. >> signs of stability for the s&p 500 or turn, would you look to the russell first as sort of a leading indicator? as we saw the russell break down, small caps broke down ahead of large caps giving us a preview of what's to come. >> that's a great question. i think you're absolutely correct. the russell is consolidating all in february. it was trading sideways today. as you mentioned, below the 50 day moving average. if it does trade into the rounding top down toward 750, i think that's a bearish footprint for the s&p 500. even the dow and the comp. and i think we could see that happen again. not in one move, but over the next few weeks spread out. >> on these global growth concerns, we certainly saw pullback in the material sector.

what do you see there? >> that charge is really turning bearish. that started last week. it, too, is trading down below its average in so doing it confirmed a double top pattern. the target is 35. that's below its 200 day moving average. the material sector may actually be ahead of the russell 2000. it may be a better sector to watch over small cap just from the standpoint that it actually never even reversed its down trend from august. so when we put the xlb and the russell 2000 together both below the 50 day moving average, the xlb seeming close to the 200-day moving average. russell 2000 making that move, i think it's telling us there are still some who don't believe this is making the deal. the core companies in that etf suggesting there's more weakness to come both in the equity indices as well. >> everyone wants to know about apple. it did seem resistant to today's

decline. >> apple's market action today was interesting. it's actually reversed its immediate term down trend. that's by a set of bear lines. it's term is up. that's important to remember. unless apple drops below 500 and 510, it's near term trend is up. however, below 500 there's a big gap on close. there's another gap above 430. and island reversal setup is showing in the chart. we actually are seeing that very nicely in the comp. so i think that the trends right now, apple -- the trends are still up. the near-term trends are still up. you want to roughly watch the $500 mark. i think you want to be careful about apple. it, too, could drop below its 50-day. and take a shot at the 200-day. >> thank you.

we appreciate it. dr. jay, give us color on apple. it wanted to move higher. it went to the green early on in the session and struggled to stay above the markets. >> yeah. in fact, apple -- i mean, how many stocks when they're less than 3% from their all-time high, when they're putting on $15 billion in market cap a day for several sessions out of the last two weeks. when you're seeing that out-performance in the markets, how many people when they see a 3% corrections of people running frr the exhibits. those people shouldn't be near this stock quite frankly. because this is an adult ride. so especially at $530 a share as you say. got down to the teens. shook a bunch of people out today. i believe those people that had some fortitude and stuck with the trade were richly rewarded again. that's been the case when they

had the waterfall event that carried it down about $14 in three minutes. >> it seems -- you know, the long-term risk is execution risk. the pipe line is ready for two years. if they deliver the new ipad, iphone, and the itv, the stock's probably still okay. but, you know, it's a buy on dip stocks. if it were to break the moving day average it would be different story. you have to be a little careful around here. it's adult only swim. >> the only thing about apple, it gets back to -- we usually say as apple goes, so the market goes. 12 times earnings, it's not expensive. it's very cheap. >> it's a defensive sort of movement. >> i don't call this defensive stock. sadly even though it's a value stock, it's momentum stock right now. there's a lot of guys that don't own apple and got scared today the same way they got scared a few weeks ago.

>> you can't smoke it, eat it. >> people have tried. >> we talk about the frothiness of it. you've got to be prepared to ride out the volatility. which i am. >> we're talking about this notion of low volatility stocks. that got us thinking on the afternoon conference call. >> reporter: slow money. >> a whole new segment. >> that was such a great piece. >> it was a good one. mike khouw to the screen with stocks of a beta less than one. but also at the same time outperform the s&p 500 year to date. higher returns in the broader markets but lower volatility. less than one. so ron, we're going to start with you in terms of your picks off of this screen. >> i think philip morris international makes sense. if you're going to get defensive, worried about global growth and want to bury money in a place that's safe, this has been delivering. it's the type of stock that it

lets slowing more than suggesting. it's the type of stock that is not recession proof but recession resistant. and it's the typical play you would make if you have the types of concerns that were circulating today. >> i love smoking as an investment, obviously. kids at home, of course it's not going on at my home. the chinese government doesn't seem to care. $95 billion are taxing tobacco products. they love this. philip morris, it's also just about execution. this is a cash flow machine. 10%, 12% a year. this is the 15th, 16th most profitable company in the world. >> and in smoking countries, when people get nervous about the economy, what do people do? >> chain smoke. kicking it on the smoking front in addition to the economic front. and philip morris with a 4% div yield, these are good names. >> we have a lot of low beta, high return stocks. take a look at some of the

others we should note, too, that our other traders will give you their slow money -- not slow money. stocks throughout the show. plus what amazon has at stake if apple impresses tomorrow. we've got an analyst joining us after this. [ male announcer ] the draw of the past is a powerful thing.

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welcome back to "fast money." we are live at the nasdaq market site in new york city's times square. quick warning to viewers here. this segment might cause frustration and tears. dr. jay has been crunching the numbers today and came across interesting findings involving apple. walk us through. >> sure. we've took a look at apple. we said what if we priced things in terms of apple. frequently we'll see things in terms of gold.

or if dennis gartman's here he's talking about the zimbabwean dollar. people look and see what would happen if you priced a house ten years ago. i went to the census bureau and ten years ago t average u.s. new home was trading for $228,000. that would have let you own 18,700 shares of apple. it was $12.19 ten years ago. >> this is not fair. >> i'm angry today. >> that home is maybe worth 280,000. and take a look at what apple is worth under the same time frame. $9.9 million. so that's one of those bits of math that as melissa said could make you get a hair style like mine, pull all your hair out. because you realize -- >> it's been done. >> just put that money into apple, you'd be worth nearly $10 million today rather than having a home that's gone up by

$60,000. >> how about the gas tank? >> let's take a look. in 2002, the average american was buying 600 gallons of gas. it was $1.40 a gallon. that meant you could have bought about 68 shares of apple for that same price. because apple was $12.19. today that gas tank is worth $36,000 for your annual fillup of gas. if you would have taken the bus instead of filled your car and bought apple shares -- >> now you could buy a c-class mercedes. >> that's right. maybe something like college tuition. let's look at apple versus gold. i'm sorry. in 2002 it was $289 a share. look at it now. the gold has appreciated and it's roughly $1600 per ounce. apple is worth over $12,000 that same purchase in 2002 in today's dollars.

lastly, college tuition. if you had been that generous parent that bought your kid a college education, it was about $31,000 a year back in 2002 for a private four-year school. that money would be worth in apple shares $1.35 million. you could stake your son or daughter to a pretty nice business with that. >> and that's four years. multiply that by four. that person might be unemployed today. >> and your kid never needed to go to college. >> borrow the money back from the kid at this time. that's the way the math works. >> we warned everybody they might be angry. if you're interested in many like this, options monster is hosting in california. not a bad venue. let's move on to our next trade. apple's expectsed to announce the new ipad tomorrow. will it be a game changer for

the tablet market? let's bring in mark mehanie for more. great to have you with us. it is interesting because amazon shares did seem to be performing better in today's sessions. is it anticipated that perhaps amazon will do okay in light of the ipad 3? >> i think amazon will survive the launch of the apple 3. i'll stick with that statement. amazon once again lower prices on the aws web product. amazon is maybe one of the top two derivative plays. they're taking this market by storm. i think that's the reason that the stock outperformed. >> so what happens here? what could really hurt amazon when it comes to what apple could announce? >> there's ban lot of overhang because apple's sucking air out of the retail space. those dollars left and went to the apple stores. the other one is you've got a

product war between these two companies. i'm not counting amazon out. they did a phenomenal job with the kindle. multiple versions. i think they'll do much better with this. going after the female tablet market with a lower priced product. i think they've got a good shot. >> did you say the female tablet? >> yes, i did. >> what do you mean? >> you think about the natural buyer of tablets -- >> this sounds like you're getting into hot water. i'm going to stop you right now. kidding. >> smaller form factor devices that fit in purses for 199 bucks as opposed to $499. >> you carry a man bag. >> it's a satchel. >> i've watching "hangover." it's a satchel. >> by the way, i bet you apple comes after this market too. i think they may realize that they made a mistake leaving it to somebody else. >> as a customer, i love amazon. i think it's fantastic. as a value investor, amazon is wildly beyond the scope of

anything we would look at. how do you think they can achieve the long-term margins they need to to trade at the multiple right now? >> the one big advantage amazon has had, it's a huge cash flow machi machine. any company in the internet space and in the company that's dellesque in a positive way. so we look at this stock and the ability to generate decent cash flow. put a 20 multiple on that cash flow next year. and you get 20% upside in the stock. i think you're also in the deep part of the trough of the investment cycle here for amazon. now that you've kind of flattening out the new distribution centers they need to invest in, the number of products they need to invest in, i think you're a quarter away from the trough in margins. you want to buy when you're coming out of the trough. >> quick question about the aws. don't you think at some point there's discussions happening at amazon about having this spun off?

in other words, keeping it within their umbrella, if you will, but perhaps having this be a -- it will be one of the largest cloud plays out there. why wouldn't they want to get that valuation on that side of their business or are they worried about separating it from the retail value? >> the valuation -- amazon doesn't have a valuation gap right now. it's never had a discount. amazon's never spun off a business. i think they view it as a core competency. those kindle books that they're going to keep -- you'll store all your kindle information, it's nice to have that in-house. it's a great ancillary business. amazon web services takes up margins. >> would you be surprised if they bought netflix? >> no. i think that's a plausible play for amazon. i think there's a huge valuation gap between those two companies. for amazon to go further into the video space and the way they've done this before is that they've taken moves to underprice competitors. that was zappos, diapers.com

company. it's the same strategy with netflix. >> another strategy for amazon. their switch since they owned inventory to third party vendors, the fulfillment by amazon. i think from what i'm reading this is going to hurt their cash flow. you seem to be at least feeling this is not necessarily as bad as people think. >> yeah. absolutely. i think we're on the same page. amazon can be one retailer or the retailer for a series of companies. it can be the retail infrastructure play on the internet. the latter is worth a lot more than -- you don't want to be the walmart of the web. you want to be the walmart and ebay of the web. you're worth a lot more. that's what they're doing. >> good to see you. thanks for your time. as we continue our countdown with the picks, we want to go to karen here. you've got three of them here. >> cvs, mattel, and target. of them right now i think mattel

is probably the closest to fairly valued. probably target, i think, is where we have the most upside from right here. >> from here. >> yes. but still own all three. next on "fast," it is super tuesday. we want to know who is better for stocks. romney or obama? we make the call and that is next. [ male announcer ] we know you don't wait until the end of the quarter to think about your money... ♪ ...that right now, you want to know where you are, and where you'd like to be. we know you'd like to see

the same information your advisor does so you can get a deeper understanding of what's going on with your portfolio. we know all this because we asked you, and what we heard helped us create pnc wealth insight, a smarter way to work with your pnc advisor, so you can make better decisions and live achievement. i've been riding since i was 17. flat out my whole life. ran into a pretty serious medical issue. i was prescribed one drug one place, another somewhere else. turns out if i had taken both drugs together,

i'd have been in real trouble. but unitedhealthcare spotted the danger, and warned my pharmacist in time. we only get one shot, and i want to leave this life exhausted. we're more than 78,000 people looking out for 70 million americans. that's health in numbers. unitedhealthcare. i have actually put in over my career. and it's 168,000 hours. so just think, if you had an 8-hour job, i'm like a man of 100 and something years old.

i've worked very hard to support my family. and i finally reached that point where i'm going to retire. ♪ ♪ welcome back to "fast money." want to continue with our low beta, high return picks. dr. j you've got two of them. one of them is warren buffet's as well. >> i like dva. i like it because of my dad, turned me on to the company way back when.

this is dialysis. an awful lot of folks that are in need of a kidney transplant have to rely on things like this. one of the best companies in the s&p 500 -- in the fortune 1,000 i'd say. i think this is a phenomenal play. and a beta of just about .4. so in other words, i love this thing in terms of not being an up and down loser on bad days and winner on the updays. i also like tj max. i've got my dad beating me on one side, and my brother on the other. tj max is a performer. and lastly o'reilly automotive. i like that. autozone, i don't have a problem with them. i just like trading o'reilly better. >> let's move on. talk super tuesday. the polls start closing in about 90 minutes as ten states vote for republican presidential candidate. is the market banking on a big

romney win? getting ready for tonight's special coverage. today was a big day for the president of the united states. he leaned out pretty far over his skis today in his comments on the economy. and it might be that we're at a -- kind of an inflection point in this campaign where the president starts more than he has to come pain on the strength of the economy. something that republicans thought was going to be his biggest weakness going into this year. take a listen to the president earlier today. >> businesses have created about 3.7 million new jobs over the last two years. manufacturers are hiring for the first time since the 1990s. the auto industry is back and hiring more than 200,000 people over the last few years. confidence is up. and the economy's getting stronger. >> now, that's about as bold and aggressive comment on the economy i've heard the president make in recent weekings. look at this intrade chart and

you'll get a chance of where analysts think it's going. trading at about 59.90 today. that's a sign speculators believe obama is more likely to head to re-election than he was last fall. that kind of aggressiveness on the economy might be political jujitsu for the republicans who are campaigning into tonight's super tuesday sa sup super tuesday states. they thought the president's weak spot would be the economy. that's why mitt romney has appeared to center his entire campaign on his ability as an economic reformer. the question for wall street is do they like the certainty of what they have got and seen so far in the obama administration or would they rather here what romney has to say and would they prefer a romney administration even though that comes with uncertain things in a new team. at least with obama, they know

what they've got. >> all right. thanks for that. i want to start off with karen. we had this conversation in the green room what this might mean. and if obama wins, that could be a good news. and if romney actually is in the position of winning, that's bad news for the economy. >> i think it's sort of the other way around in that obama is likely to win if the economy continues to improve. that romney won't have the -- i don't know if it's charm or the what to get it done. i think, however, if the economy does poorly, that will help romney. it won't help the stock market. i think it sort of backed the tail wagging the dog opposed to the market loving obama. >> i agree, karen. and i think that he nailed it as well saying the president is way out over his skis. if you're a republican, you have to love that the president was willing to stick his neck out so far, because i don't think the boots on the ground that the people that are looking for jobs are seeing any part of that economy that the president's describing as so gang busters.

i don't think they're seeing that. i think that's going to be a problem for him. i think $5 gasoline's going to be a reality into the election. i think that's another thing the president's going to have to overcome. >> i think i'm going to disagree with john here. there was a washington post article that said there are more high-tech manufacturing jobs. manufacturing in the u.s. is back. energy has created 600,000 jobs in the last couple of years. my bet is the unemployment rate is below 8% by november which helps the president. if you listen to the folks at net davis research that have tracked this back to 1850, yields the best stock market returns of any possible governmental negotiation. if you look at the presidents with the biggest gains in the 20th and 21st centuries, roosevelt, clinton, barack obama. maybe having nothing to do with them. >> i was going to say. they bought the bottom. the thing about obama is the things i think that are going to be the most detrimental to the

economy don't hit the economy for a couple more years. the health care spending, the whole revamp, and the bigger government that he's basically pushing through. i don't think we get to know for a couple years. by that point it's too late. i think romney at least as a guy who has run a business, he's run a campaign that looks like a very impressive organization. i think people see that. but yes, it's 90% about the economy. that's what will win this thing. i think it's way too premature to pat yourself on the back. underemployment in the country is way higher. people are very disappointed on that. >> that was not a political preference on my part when i made that statement. the thing -- >> you want to express your political preference? >> no. i probably lean towards romney. but the interesting thing is i don't think either president will have much to do with the success or the failure of the economy going forward. i think the u.s. is about to out-perform the rest of the world and it may have less to do with politics. >> special coverage tonight of

super tuesday results beginning at 8:00 p.m. eastern. next on "fast," we're trading samsung's next move into smart interactive tvs. more "fast" ahead. i'm freaking out man. why? i thought jill was your soul mate. no, no it's her dad. . dude what? no, no, no. he's, he's on my back about providing for his little girl. hey don't worry. e-trade's got a totally new investing dashboard. everything is on one page, your investments, quotes, research... it's like the buffet last night. whatever helps you understand man. i'm watching you. oh yeah? well i'm watching you, watching him. [ male announcer ] try the new 360 investing dashboard at e-trade.

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money." we are live at the nasdaq market site. we want to get to after-hours sessions. pandora missed the street's estimates. the guidance was terrible. it did report an increase in revenues and listening hours, but content acquisition costs rose. dr. j, seems like a problem that a lot of companies like this is facing. >> i tell you what. there was unusual speculation in it to the upside. i jumped on with those speculators to the upside. luckily i have a call spread here. i sold an option at a higher strike. so i mitigated my losses. nonetheless, they will be losses. and increase costs, that's not what netflix needs to hear. it's not what pandora needs to hear. >> this is the company that went public back in june. it's a relatively new company. we're at the after-hours sessions lows here. any surprise to you that this company is -- >> no. they shouldn't go to all these new social media type ipos.

i think they're all fad stocks. i think they're too dangerous for individuals to touch. if you know what you're doing and following a company, fine. if you're trying to make a quick buck because this is 1996 all over again, it will end badly. >> all right. meantime, samsung unveiling its smart interaction smart tv as part of its new home entertainment line. a tv battle heats up and speculation increases that apple will release its own tv this year. take a listen to what tim baxter had to say. >> we are in a business that's very competitive. we're very focused on the competition. we do that with the context of what is the consumer looking for? how do we continue to learn, adapt, and be flexible and anticipate new technologies. the l.e.d. tvs, that market will grow from 10 million to 20

million. and 3d will grow from about 3 million to 6 million. those are the areas we're focusing on. and tv is a big part of that market and will grow to over 25% of all televisions sold this year. >> some of the -- some of the cool factor in this tv is voice and motion control. let's say you want to walk into a room, you can say hello, tv. and the tv will turn on. it will just know that you're there and turn on. it's also got a smart touch remote control. it's got motion control. it's got face recognition. will consumers be willing to pay up? we've seen time and time again innovations in tvland where the tvs cost a premium and consumers don't buy and wait until the prices get slashed and these companies like samsung, et cetera, don't make money. >> that could happen. before happen l which as an

apple shareholder does not -- i'm not afraid of that. because we've seen apple come to market after the iphone is a perfect example. and have a better product. maybe they have an advantage by seeing what works and what doesn't work. so i'm not afraid of this samsung product as an apple holder. i hope it creates a new space and there is demand for this tv. >> in addition of wanting one so something in my house will say hello to me. >> it doesn't say hello back to you. >> it's good enough. the interesting thing is going to be the connectivity features here. to transfer the programming from your tv to other devices. apple will probably leapfrog. not as big as it was 15 years ago when it comes to devices. >> look at the sony walkman and the ipod. >> that's just it. samsung and lg has been eating japan's lunch over the past ten years because they've done it better and cheaper. i'm less worried about the price points. i think that's the point here.

samsung will be cheaper. these l.e.d.s, they've been in the market for a long time. they will not only compete, they will stay current. they're the reason why apple doesn't become a trillion dollar company. >> buying foreclosed properties in bulk. can it boost returns and help the housing market? plus we're trading your tweets. more "fast" straight ahead.

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welcome back to "fast money" live in times square. investing in foreclosures for real returns. our next guest says gross yields can be as much as 14% before expenses. joins us is jeff jacobs principal at the empire group. thanks for being with us. >> thanks for having me. >> what did you do with them? did you rent them? resell them? how'd you make money? >> well, we initial loi looked at this as being a growth play. prices were so overcorrected at the depths of the housing crisis that we figured we could really take advantage of the appreciation that was coming. what we didn't realize is how good the rental market was going to be. we prssed a thousand houses now.

these are long-term holds. we have not sold one house in our portfolios. the goal is not only to take advantage of the strong rental market. but also what we think as the market starts to heal. >> walk us through the costs here. what have you come across? turn into a rental property, it cost roughly $6800 per home. once you do that, how do you manage these properties and achieve scale when you have to mow the lawns and clean the gutters out and all sort of household things? >> well, don't have a lot of lawns to mow. it's a lot of rock lawns. the number is on the money. our average is just under seven grand a house. it does not take a lot of money to get these rent ready. we've been in this market as real estate developers for 30 years. so for us to develop into single family homes is simple.

so with scale -- you get economies at scale. you can keep your costs down. you can achieve -- again, because this rental market is so strong, and i think getting stronger nationwide as we are a rental nation for awhile now, that you can achieve real meaningful results in a short amount of time. because these houses rent so quickly and they stay longer term than you typically would have than the apartment renter. >> let me ask you. how much competition are you seeing for these properties? >> well, i mean -- you know, when we started this, there were few people doing this. now that we've sort of been one of a handful of people proving this concept not just here but nationwide, there is talk of big money coming into a lot of these markets. not just phoenix but the other bubble markets we talk about. so there's clearly increased

competition out there. you typically see your mom and pop type of investors the you have in this space. but now you're seeing institutional type investors as they have realized this is a viable business and can sol vaj returns for them. >> i was in phoenix five times last year. as hard hit as it was, it's an interesting city. it has bounced back economically. but prices are still impressed. if you're a mom and pop investor who wants to buy two, three properties in phoenix, cents on the dollar. what can you get a nice house there for? >> well, we typically look at it as comparing it to prices -- compared to the peak and replacement costs. to give an example, when we bottomed out in late '09, early 2010, our prices dropped 57% across the board. in the type of asset class that we typically see, we're talking of declines of 70%. you're still seeing prices that are a fraction of replacement

cost. and if you're buying distressed properties opposed to distressed properties, there's an arbitrage in there. you get lift already when you buy a distressed property. so we look at it in terms of those replacement costs where we were at the peak. so the numbers are really compelling. frankly, the pricing that we saw continue to see, it's getting -- it's starting to move up a bit. it's still pricing on an inflation basis. we haven't seen in our lifetime. >> we got to leave it there. we hope you'll join us again here on "fast." jeff jacobs an investor in foreclosed properties. this is an interesting investment given all the foreclosed properties out there. even buffett said he'd buy them and rent them. >> yeah. fantastic area right now. i'm glad jeff's doing well with it. >> more "fast money" coming on. "for starters, it didn't cost me anything." "and i got a one-hundred dollar cash bonus for rolling over by

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all right. welcome back. we want to go to mike khouw for his low beta, high return pick. >> i'm looking at cvs. maybe the flipside of the tobacco market. but this is just a company that has had steady revenue other

time. and of course health care is a steady place to be in times of turmoil. >> karen, you've liked this name as well. >> i've liked this far long time. give them chance to take business away. >> all right. we'll take a break. got your first move tomorrow when we come right back. stay tuned. what makes the sleep number store different? the sleep number bed. the magic of this bed is that you're sleeping on

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it is time for the final trade. let's go around. mike khouw. >> consol energy. maybe not low beta. but close to its lows. sell puts there. >> tim. >> not back in black today, but philip morris buy at 82% and get into this long range stock. >> ron. >> i say do absolutely nothing for two reasons. watch the technicals over the next couple days. also we have to see what the unemployment report looks like friday morning. that is going to be a critical number. >> karen finerman. >> well, i like p.a.y. general. i like that switchover from the strike. but the stock's had a nice run on earnings last night. sell the april 50 calls against it. give yourself a bit of cushion. >> dr. j. >> vphm. they were buying april 25 puts much larger than the open interest. tells me that