the dubai new year. this is the tallest building in the world, the fireworks, i think there are more than 400,000 of them illuminating the iconic landmark from 400 locations in dubai. let's listen in. ♪ you're witnessing the most

spectacular fireworks display ever put on there in dubai. what they're trying to do with this new year's celebration is set a new world record with 400,000 individual fireworks. and this would defeat last year's record set by kuwait. you know how many they set off that year? 77,000. >> oh, wow. >> so this takes it out big time. so we're watching a huge celebration there and probably will be the biggest this year for new year's. that one in dubai as they kick off 2014. >> and that's just a small piece of the whole showing. the guy's over here saying dubai's crushing it. by the way, that's what surplus will do for you. >> yes. a few oil dollars will help there. that economy has been doing well obviously there in the middle of the persian gulf. a spectacular display that will not be equalled anywhere around. and of course we've had a spectacular display on wall

street for the stock market in 2013. the best market year for the dow, for example, since 1995. and we're still going higher today. the dow's up another 25 points with less than an hour to go. and we head into the history books here. >> yeah. we're seeing small gains across the s&p 500, across the nasdaq as well. i mean, we could talk about so many different ways of illustrating what a strong year it's been. it's extraordinary really. >> all ten of the sectors that make up the s&p 500 positive for the year. all the major averages, the dow, the transports, utilities, the s&p 500 and the russell 2000 hit their 52-week low a year ago today on this date. meaning they never closed lower than this date. >> that's extremely rare. >> for all of 2013. that's incredible. that kind of perspective right there. >> we can talk about the flip side as well which is anything in the precious metals. the gold index, the gold miners,

there are going to be a lot of people tax harvesting some of these etfs, declines 50%, 80%, 90% of the year. that's been the place not to be. >> i was testing her before we came on the air. she got them all right. best performing world currency this year? >> it's the euro. >> brent crude for the year. >> basically unchanged. >> it was down .3% for the year. complete round turn there. and this was the worst performance for gold this year in over 30 years. >> now, talking about the fact that crude has been unchanged, we're talking about wti, dubai of course more exposed to how brent oil is doing, even if it's off his highs has still been high by historical levels. and by the way they're a hydrocarbon economy. if you want to know the best performing commodity of 2013 was, bill, it is natural gas in fact. so there are many ways in which dubai is benefitting. by the way, the non-oil piece of

that economy is bigger than the oil piece in terms of gdp today, it's tourism, it's services, it's travel. and it's a hub to a fast growing part of the world. >> the fireworks display you're watching is on the pond island, the manmade island, the incredible manmade island they built seven years ago. at any rate, by the way in case you're wondering who put this display on, img, the american artists group. >> and the uae is the second biggest economy in the middle east after saudi arabia and so much smaller but so much more concentrated. >> fun stuff. happy new year there in dubai as we get ready to celebrate here in the united states as well. let's talk about the markets and where we have been and where we're heading into the new year with rob stein from astro investment management, ben willis here at the big board and bob pisani and rick santelli in chicago. rob, an incredible year. give us your assessment of what 2013 means for 2014.

>> sure. 2013 was a year where the economy trubed along, did a little better. but the big story i think was the risk premiums changed. we went from uncertainty to visible risk. that's what propelled the markets. the economy did better, but did it do 30% better? unlikely. it was the change in risk premiums. in 2014 i don't think you'll se premiums change. we had a head wind. government and government spending which i think probably made a 2% head wind in gdp and that's not going to be here in 2014 to the same degree so it's possible that we can offset some of the big movements that we've had in the equity markets with equity premiums with stronger economic growth in 2014. i don't think you'll see anything like we saw in 2013. probably more volatility, less returns. >> at the same time, ben, if you look back to 1995 when we had a similarly strong year, '96, '97,

those are double digit gainers as well. >> i certainly think as we're going forward that the markets themselves, you have to look back in history to where we came from in the last five years. we were in a virtual depression so the market's reaction to that is -- i don't think is really all that unusual to expect it to continue. we like to call this the bullmantina. they appear to be put aside as we go into 2014. provided that the central banks of the world that inflated us step away successfully, i don't think it's unreasonable for us to continue to reach 2014 in 2014. >> that's the forecast, by the way, for at least one of the houses on wall street. bob fasini, let's remember. the first trading day of 2013 was a monster rally. we had a huge gain and it really foreshadowed the kind of year we had. i don't hear anybody talking about that for thursday. >> i think the really important thing is that the only thing that gave the markets a real pause in the middle of the year

was when ben bernanke started talking about the taper. that's when interest rates started moving up. that's when the market moved down. its only notable hiccup on the year, even that wasn't 10%, yet the market still recovered from that. i think in 2014 we have to ask the question, is rising rates, everyone believes it's going to be there. where are you on that rising rate curve. everyone agrees if it happens too fast, that's going to put a halt to the stock market rally quickly. the hope is gradual rise, 3.5 to 4% on the ten year. a lot of people have throughout the middle of the year might be gentle enough to keep the markets going. >> a lot of attention, rick, will be on that ten year. it seems different from the summer when it rose and you had, for example, the housing sensitive parts of the market collapse. this time around housing is one of the outperformers. >> well, i think interethere's of time in 2040 to see how that will develop. i think it's so fascinating on the last trading of the year that the long maturities closed

down the low price high year. in ten year this is the lowest priced highest yield going back to the 7th of july 2011. on the 30 year, august 1st of 2011. dollar index very close to unchanged and those were magnificent fireworks, bill. it shows you there's a high correlation between really great fireworks and a budget surplus and a trade surplus. >> yeah, we were just talking about that. what was it you said, that the disparate in performance between stocks to bonds this year -- >> is at its widest since 1972 i believe. >> 1978. >> 32 percentage points given how we've done the last day or two between the equity market and the small losses. >> ben willis, back in 1978 bonds were getting killed so stocks didn't have to do all that much to outperform that much. >> exactly. but i think, again, we go to the point, those people that lived in fear that tried to stay in the bond market and tried to stay in the gold market in

particular because of the fear, what, of the unknown were punished severely for not believing in what was in front of them. the world economy continues to improve and rising interest rates are not a negative to the economy. it's an indication of health and that's a reason to buy stocks when interest rates are going up. you can also take a look at what happened to the interest rates in through 1987, what the markets did then. >> rob, why are people, yourself included, taking profits in the financials here. >> you know, i think people are just rotating through and trying to find the sectors that will give them the best out performance. i don't think it's a statement necessarily on financials per se, just financials relative to the other equities. as rates rise it's uncertain whether that will be a good thing for the financial sector as the spreads get wider or create challenges for them on long demand. we'll see. there are other sectors that look promising. >> i'm curious. you say one of the sectors that still looks promising which is health care which is being the second best performer this year and entering obama care where it

seems like the ability to always keep passing on costs is going to be greatly diminished in the years ahead. why is health care the place you think to be ahead in 2014. >> they still haven't solved death yet and it seems that the aging population will do anything to keep things going and spending more and more on health care and health care-related problems and obamacare not withstanding. >> some of the biggest ipos were in health care. cloud computing and health care. they haven't repealed death. i see more and more scientific advantages. >> i sure hope they repeal death soon. i have to many books i want to read. as we hear from mark about the selling pressure, the number is $600 billion for sale as we head towards the close. ma ina couple people are taking some profits here. >> well, nobody needs to panic over the fact that there's $600 million worth of stock for sale on the last day of the year. the exchanges are really open as

a courtesy for the portfolios who want a mark. the fact of the matter is all the equity indices will close on their highs for the year and $600 million going to the bell is really, i would think, eventually turn into a nonevent. we'll get a burst of volume that will add to the volume on the tape that otherwise has been dismal. >> rick santelli, i never ask you to forecast but what do you think is going to happen to gold in 2014? here you have the end of a 12-year monster bull market. they're down how many percents? 28% this year. worst performance in 20 some odd years. are we going to get a bounce or what do you think is going to happen based on your view of currency markets? >> higher rates is not kind to sterile commodities so i think that's going against but that's being priced in. i think in the first half of 2014 we will make a significant bottom and go, but that really isn't the question. the question is will it get a big bounce? that i say no to even though we'll make a bottom.

>> and a bigger question of course is where inflation goes at this point. a lot of people trying to figure out what the velocity of money will be like in 2014. if the economy significantly picks up a lot of the concern is that means by definition the velocity of money will pick up. we don't know what that means for inflation. >> bob, by the way when we're talking about wages in general, this is the space to watch in 2014 if knock else. that will tell you whether inflation goes from, say, 1% to 2% or above. the minimum wage debates, the extent to which employers are going to pass or raise wages, that is absolutely going to be the thing to watch. it will have a lot of bearings on earnings next year as well. >> i think the big issue, too, the problem is the markets have been so distorted by the fed's actions that it's very hard to figure out where that band that's been stretched so much kind of really either breaks or twangs along and where we get a significant jump in inflation. it's very hard to predict that point. i don't know if we get employment down to --

unemployment down to 6% or the economy goes to 4% gdp, it's hard to figure out where inflation will reach. >> bob, you make a good point about the velocity of money. something to keep track of in 2014 is if the fed will keep paying interest on reserves. they haven't done that until this particular period. if they make the announcement they're not going to continue to do that, i think that could have inflationary repercussions. >> bill -- >> go ahead, rick. >> that if the velocity of money picks up, inflation will jump like a jack rabbit on a hot tin roof. >> all right. there you are. we're on record for all of that. gentleman, thank you guys. >> okay. >> have a great new year. appreciate your insights as always. >> happy new year. >> the markets are coming off their highs big time. we're up 50, 55 points about half hour ago. now just a 16-point gain on the dow industrials as we head towards the close. >> if you have a couple minutes tomorrow to relax, what book are you going to be reading? >> you know what i'm reading

right now, not that you people are that interested, but frank sinatra's valet. just passed away over the weekend. george jacobs wrote "mr. s, my life with frank sinatra" it's fascinating. i'm loving it. >> you're going to be reading a business book. >> no, i'm not. coming up next, insurance coverage over obamacare kicking in tomorrow. have enough feel signed up to make it affordable. we'll have real numbers. >> yes, she will be reading a business book. from the payroll tax to the death tax, a slew of new tax increases going into effect when the clock strikes midnight tonight. one in particular will bring bik changes that could turn the housing market on its head and not in a good way. can you turn something on its head in a good way? >> i don't think so. >> we'll have more on that coming up, stay with us. >> it's a book on world war i, by the way. >> i thought so. if you're living with moderate to severe crohn's disease,

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welcome back. we've only got about 45 minutes left in this trading year. what a year it's been. >> yes, indeed. dominic chu joins us where we stand on the major averages.

>> it's very impressive, bill. we're less than an hour away from closing the books on 2013. it's been one heck of a year. here's how things stand as we head towards the close. if we stay on our current track we will set new record highs in both the dow industrials and the s&p 500. now at a very minimum we're going to set really really big record highs on the record highs even if we manage to go lower. drilling down deeper we know the single best performing sector in the s&p 500 is the consumer discretionary sector. it's up 41% this year. we're on track for the best performing year in that sector in data going back to at least 1994. another big story line has of course been gold. we're down 28% for that metal in 2013. its seating up to be the worst annual performance in over 20 years for gold. that's a rough way to end a 12-year winning streak for all the gold bugs and gold investors, kelly, back over to you. >> don, thanks very much.

tomorrow is january 1st. obamacare takes effect for people. in fact, 2 million for the latest figures in government. that's how many have signed up so far. >> that's far short of the 3.3 million that it hoped to have signed up by this time so will the exchanges be able to make up that ground so the system works economically as it's supposed to. kevin kunehan is the ceo of access health connecticut. you've signed up how many to this point? >> we've enrolled about 69,000 people so far. >> which is much more than you were expecting, isn't it? >> it's significantly more than expected. we enrolled over 6700 on december 23rd, our last day for january 1st, which was over double our best previous day. >> and, kevin, what can you tell us, have all of those people paid for these plans? what's the last day that they'll be able to do so for the coverage that begins tomorrow? >> so the last day the premium can be received in the offices of the insurance companies is

friday, january 10th, and the carriers have released pretty much all the premium statements at this point. we're beginning to run radio ads next weaken couraging people to get their premium in by the 10th. >> all right. let's talk about how this is going to work. in order for it to work economically there needs to be enough young healthy people signed up to this -- for it to work so that it will help pay for those people who will have the higher premiums because of their illnesses or whatever it is. who's signed up can you tell demographically in your state so far? >> well, it's a couple things on that. one is we have a higher percentage of younger people than we expected. almost 30% of our enrollees are under age 35r, which was more than we thought. the other side is we have a higher percentage be of people above 55 than we expected. so roughly 28% of our enrollees are 55 to 64, but to be frank

with you, bill, i think it's a little bit of a red herring only because the affordable care act provides a lot of plead yaremed for the health plans in case they get bad selection. there's a very rich re-insurance program. there's a risk re-add justment program and there's a risk sharing, risk corridor program for the last of the three years so i know there's a lot of attention paid to the mix of ages, but i think, frankly, some of it's just a little bit premature. >> kevin, one important consequence of that mix is going to be how much people have to pay for their premiums going forward, say, in the next year or the year after that and so forth. from the early trends here, what do you think? does that mean that the typical costs of the plans then is going to be lower because more people and more young people are involved or higher because that 55 to 64 population is greater than you expected? >> well, it's a really good

question, kelly. to be frank, i think when the premiums get set for 2015 much of them are really going to be based on the experience or the utilization of 2013 and so there really won't be that much claims experience in for 2014 for the insurance companies to make much of an educated prediction, which is one of the reasons there are these risk reinsurance and risk sharing programs to ameliorate against that. so i honestly think that the implementation for the law is really a multi-year implementation. >> right. it sounds like it's going to take several years, exactly, before we really know whether it's economical. a related question i'm curious about as well, you mentioned about 65,000 people have signed up in connecticut. how much -- how many of those people have signed up for the medicaid expansion? >> so of the 69,000 that we have so far, 38,000 have enrolled for private insurance plans and 31,000 for medicaid. >> so 38,000 are on the private

insurance plan. of that population, does the same thing hold where there's a lot of people in the younger demographic and the 55 to 64 cohort? >> it is. we have roughly 55% of our enroll lees come into private insurance, which is among the highest if not the highest in the country. >> why do you think you had a much bigger number sign up than you expected? who set the original expectation there? i'm curious. >> well, i think one is we may not be the best people at projecting in our state. maybe we're a little bit too conservative new englanders. number two is i think that our marketing campaign, which really focused on making sure people didn't leave money on the table, has worked. >> finally, kevin, how much is it going to cost connecticut for that medicaid expansion? >> i'm sorry, could you repeat? >> how much is it going to cost connecticut for the medicaid expansion? >> well, i don't know the exact dollar numbers. as you know, the feds pay 90% of

that so i don't know the exact dollars, but i know that it's something that the governor and the legislature is very committed to. >> all right. kevin counihan, thank you so much for joining us with those numbers on this important deadline. really appreciate t. happy new year. >> happy new year. >> indeed. tomorrow is a whole new day. >> it's only 1/6 of the economy. >> about 35 minutes left to go before the closing bell. the s&p is up by 3. the nasdaq is adding 15 at this hour. hewlett-packard was the best performer in the dow. had a huge run, nearly doubling, despite being pulled from the industrial average. but ceo meg whitman announced an additional 5,000 layoffs so we're wondering is hp out of the woods coming up for 2014. if you follow famous jack vogel's advice, you're ahead of

the smart money. beating those of the hedge fund group this year. which strategy should you subscribe to in 2014. we'll keep it right here. we're back in two. this december, experience the gift of true artistry and some of the best offers of the year at the lexus december to remember sales event. this is the pursuit of . it's as simple as this.

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at the lexus december to remember sales event. this is the pursuit of perfection. wall street is going out in 2013. we're capping off a near record year going back to 1995. i thought you made an interesting point. you know, who knows what's going to happen down the road but if you equate this from the 1990s,

1995 was really just the beginning of the great bull run. >> of course, we know that ended badly. >> we know how that ended. >> for all of those out there who say they want a 10% correction. >> we've already had a big run to this point. >> absolutely. >> the dow is up 93% since march of 2009. >> the s&p 500 in terms of the bull market is up 72%. that puts it right smack in the middle of what the average length and scope is of these runs. >> for the dow, hp was the best running. it was removed from the industrial average when they did some rejiggering this year. it's up 96% for 2013. >> the company announced it will cut 5,000 more jobs which is 34,000 affected. how should investors process that considering the huge gains we've seen in the last 12 months. with us our very own jon fortt and paul meeks, thanks for being here. >> look, paul, first to you, do

you like hp for 2014? >> i don't. i think it's an aggressive sale at this point. stocks trading at a 52-week high. you just mentioned it's almost doubled this year. and here's a company that is seeing a lot of their businesses, you know, this company still almost 80% hardware and those businesses, some of them are in secular decline, not transitory decline, secular decline. the consensus on the street is for revenues to continue to decline each of the next two fiscal years and only through financial engineering and cost cutting will earnings grow and they're going to grow at a rate that is much less than the gdp growth so i don't see any sort of growth forecast for this company and why would you own a growth stock if it doesn't grow? >> which points up, jon, meg whitman's turn around is still very much in process. she's far from finished. >> absolutely. she went from saying that 2014 would be the year where we start to see meaningful growth to backing off of that in the past

few weeks saying really no growth in 2014 but it's going to be pivotal to the turn around. when we see something like this coming out in the 10 k saying that these cuts are going to be on the high end of initial expectations, that they're going to be in the 34,000 range as opposed to the 29,000 before, it really speaks to they've been guiding to eps, not to revenue, so maybe they have to do this. they're realizing they have to do this in the coming year given the macro uncertainty, the slowdown in the emerging markets to hit the numbers they have to hit. they have to tell us where the revenue growth is going to come from. it's not in the p.c. market, secular decline as paul is mentioning. are they going to come with mobile? are they going to be able to excaccelerate services that muc more? is imaging and printing going to be able to fuel that much more? hard to believe there's going to be strong growth coming from there. we don't know. >> you know, paul, what about the server play here because looking back at the s&p 100 stocks down this year, there's

only five, one of them is emc. a couple of people are saying maybe that's because hp is coming after it eating its lunch in the server game. is that enough to like hp as a story? >> no, i think you want to be more companies that are more software and services even than hp is. it's only 24% of last year's revenues and emc is more of a storage play than a server play and i do think that that business is competitive but i actually like emc where the stock is priced much more than hewlett-packard where its stock is trading. >> is there anything you like about hp at this point, paul? obviously somebody liked it. we have to remember that they were coming out of a huge debacle with the previous ceo so maybe some of this was just a recovery time for that stock, but somebody likes the prospects for this corporation obviously. >> it's a good point that you make. they have done a couple things right. now unfortunately this has been a stock that's moved on the

thesis of it's less bad than people think and i think the less bad value trade has been played out and to specifically address your question, they have done a couple things right. the company does continue to generate a lot of cash and with that free cash flow, they pay a pretty nice dividend for a tech company. even more important, they are buying back a lot of debt and now their company is still 22 billion debt and about 10 billion net debt but still it's going in the right direction there. >> they've got cash flow happening there. a company this size, a number of levers you can pull. a number of either breakup or spinoff scenarios that you could pull to create value here so the game is far from over. >> wonder if the layoffs are, too. guys, thank you very much. >> best wishes. >> and to you. >> 40 points higher on the dow. we are looking at a record close as we finish out the year, another one. >> i usually say salt and pepper. up next, new year, new tax

hikes. one such hike could bring some real pain for the housing market. we're going to tell you what it is and what it means for your money coming up. later, gold posting its biggest annual decline in over three decades while bitcoin emerges the controversial currency. in 2014 if you had to have one, which would it be. se seema mody and done chu will battle this one out. >> announcer: tech check is brought to you by oracle. hardware and software engineered to work together. and my customers are really liking your flat rate shipping. fedex one rate. really makes my life easier. good news. i got a new title. and a raise? management couldn't make that happen. [ male announcer ] introducing fedex one rate. simple, flat rate shipping with the reliability of fedex.

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. welcome back. there's one important tax increase coming at the stroke of midnight. it could deal a big blow to some homeowners making your tax bill skyrocket. it's those selling their home in a short sale, that is, for those selling it less than it's worth. you ask think about it in a sale, the tax could add thousands. >> let's give you an example. the bank forgives $50,000 of what you owe it. the government will treat that $50,000 as income. so if you're in the 25% tax bracket, you owe more than $12,000 in taxes. that's just one example.

there's another one where you owe -- say you owe 100,000, you sell the house for 80,000, that $20,000 difference is taxable as well. joining us to talk about the impact this could have, andrew stolten is a partner at the stolten law offices and mike is a realtor and host of "power broker." thanks for joining us. we should point out it's possible congress could take these back and make it retroactive, but there's been no hint that that's going to happen here, andrew. >> yeah, i know. look, every now and then there's such a common sense sickal answer to a problem. the answer to this problem is extending it out. the fact that congress is playing games with this information, it's an important piece of legislation. if congress doesn't do it, they're absolute idiots. >> mike, are you hearing from buyers? are they concerned about this? >> honestly, i have a client who

i know is watching this bit right now who is concerned about this very matter. he's been going through the short sale process. his lender is in a position where he's about to prove it and if he gets approval and this law is not extended, he'll be in a position where he can't afford the taxes and he's going to have to go to foreclosure instead. how does that make sense? >> yeah. it makes no sense, andrew, which is why frankly it's unimaginable that this won't be fixed. i honestly can't understand why it wouldn't. >> well, i think it's a great amount of tax revenue for the government. that would be one reason right there, right? >> bill, it's only $2.7 billion a year and there are so many better ways to raise money where you're not kicking the most vulnerable people in society. i have an idea, why don't you tax hedge fund profits at a normal income. there are so many different ways to raise money. this is the worst possible way. >> that kind of money adds up at some point. i agree with you. mike aubrey, what impact would this have on real estate?

how many people are out there that are underwater at this point? >> core logic put a report out in the third quarter that says there are still 6 million underwater homeowners nationwide. if you start looking at those 6 million people who are the people who most need this help? and suddenly the help is not available. i've got news for you, bill, we're not out of the woods on this foreclosure crisis yet. if they don't extend this legislation, it's going to create a much bigger problem. the impact is going to be major on real estate. >> bill, 41 attorney generals got together last week and drafted a letter that said 24th is a piece of legislation that has to be pushed forward. there's a question of whether congress does it and if they don't do t i think it's inexcusable. >> lastly, when we talk about the impact of various tax changes, investment changes in 2014, would you rank this as the top concern or are there others equally as important to the housing market that we should be

discussing as well? >> you know, i've got to be honest with you. i think that the other big thing that looms for us is the qualified mortgage stuff that is coming out. i mean, you know, the dodd frank act. i'm concerned it's a day late and a dollar short. i think the industry is self-regulated. if we make it harder to get a loan and we all see that certainly based on the case-shiller numbers that came out this morning, real estate is beginning to slip some. if we make it harder to get a loan are we not saying to the sector we're not worried about this sector being an engine that will drive our economy in 2014? >> that's the one that requires a lot more due diligence before they lend the money. gentleman, thank you. let's see if congress will come back to work and fix it. >> happy new year's, guys. heading towards the close. 20 minutes left in the trading session. still a bias to the sell side, but it's lightening up at this point. the dow is up 41 points capping off what has been a stellar year for u.s. he can wiequities.

we're close to making it a 30 point basis. i have to imagine those will be the headlines and a lot of people will wake up and read these. is bitcoin a financial underdog that will end badly or a better investment than gold. coming up seema mody and don chu duking it out. after the bell are you going out for a new year's eve dinner tonight? i know somebody who is. don't throw those leftovers out. they might actually be worth something sort of. the co-founder of leftover swap.com joins us to explain his new venture. wait until you hear this. it's fascinating. coming up on "the closing bell." something that runs office and has a keyboard. but i wanted a tablet for me, for stuff like twitter and xbox, so my downtime can be more like uptime. that's why i got a windows 2 in 1 which does both -- works as a laptop and a tablet. so i can manage my crazy life, and also have a life. [ beep ]

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two incredible stories this year. gold had its biggest annual loss in over 30 years and bitcoin, which emerged on the financial scene to great controversy and wild, wild swings both up and down. >> so which one is a better bet for 2014? here to duke that out now is marvelous sema mody and dominic dynamite chu. over to you guys. >> let's start with bitcoin. it's a digital peer-to-peer

coin. it functions without a central bank. now you take a look at bitcoin right now, it has gained 6,000% just this year. it's sitting on this monstrous gain this year, although gold shares on the other hand are down 28% and it continues to move lower. add to that experts seem to be more bullish on bitcoin outperforming in 2014 especially if bitcoin fundamentally reshapes a multi-billion dollar company. b of a believes that it can become a major payment for ecommerce. that could be a benefit next year. >> how about that bitcoin's only got, what, maybe a year or two of history behind it. so 6,000% in a year, that sounds a lot like internet bubble to me. how about one asset that's been around for thousands of years. yeah, sure, maybe it's a little bit of a demand issue right now, jim steel, a chief commodity analyst over at hsbc says you know what, maybe people will take this opportunity to buy

gold at a discount. maybe it's in emerging markets. in india and china, think of thailand, indonesia, the philippines, there could be all kinds of demand from those places because they want to buy gold historically speaking when it's cheaper. they want to own those hard assets, those stores of value. that's the reason why history may be on the side of zbloeld okay. while bitcoin might be new, don, there are people investing. mark an dreessen, fred wilson as well as the winkle boss twins. it's not just investors. more companies will start accepting bitcoin. there are talks at other customers. paypal may be on the board next. clearly a lot of interest and potential seen in this digital currency. >> okay. i'll buy that. if people start taking it. >> retailers. >> fair enough. you can take that. there's a reason though why

things are a little bit for weak, gold at least. it could be technical. the spider gold ets, the biggest one that tracks gold, people are selling it off. people are selling it further to take advantage of tax losses. this is the last day to realize the tax losses. when all of that selling goes you might see a pop in 2014. a lot more stable growth higher for those because of technical factors. that's the reason why at least for now gold could be an outperformer in 2014. >> there's one thing we can agree on, kelly and bill, these two asset classes will be a big story in 2014. >> big time. >> right about that. >> thank you. happy new year. see you later. >> this is you. >> i know. there's an interesting phenomenon here where if you hold one of these precious metal etfs you play the collectibles tax. if you sell out to something else you may not be subject to the wash sale rules. >> is there nothing you don't

know? >> this could be huge implications if the irs doesn't come out and say you can or cannot do it. >> 13 minutes left to go. >> look at this. >> for the year. the dow is now up -- is that -- >> yeah, that's up 81 points. >> the dow is up 81 points. is the s&p at 1850. >> yes. it's turned around. the buyers moved to the sell side earlier. now it's suddenly to the buy side. so here we go. >> on a day where we typically don't have the buy. >> exactly. gentleman later in the show, a big change may be coming to the internet where addresses don't need to be dotcom, dot net, it could be dot your company or anything you can think of. good idea? bad idea? tweet us what you thin think @cnbcclosingbell. >> people will be celebrating the new year. before you toast, join us to make sure your 2013 fiscal plans don't give you a hangover next

year. we'll be right back. [ male announcer ] here's a question for you:

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left in the trading session. we've had a pop in the market.

kelly and i were saying, boy, if we had art cashen here. oh, wait, we do. and abigail doolittle joining us from peak theories. what happened? >> well, we had some early indications that the close was going to be big to sell. in fact, the first indication was that there was about a billion dollars worth to sell on balance and that's when the valley and the dow faded, maybe up 12 or so. and then slowly but surely the buyers came in and now we're in balance with the buy side of about 250 million. so we should get some very big volume prints at close but luckily i think we'll hold these prices. >> and you are very skeptical about this rally, aren't you? >> i am very skeptical. it's no secret on "the closing bell" that i am bearish on the stock market, have been for two years. some people may be curious why i stay bearish as the market goes higher. >> why are you? >> i become more bearish as the market goes higher because my

work with the charts suggests that we're in some sort of manic parabolic phase of what could turn out to be a bubble. what we know about those sorts of uptrends or rallies, they typically reverse. it starts slowly, happens suddenly. takes a lot of people by surprise. i think in 2014 investors want to consider stepping back from the edge of the risk asset cliff, the curve, and do three things. first, you want to identify some down side levels in the broader markets where you would reduce if we do see a selloff. it's not about shorting today, it's about preparing to be defensive. second, you could take some profits in your winners or high flyers of the year, chipotle, google, twitter, tesla, netflix. the container store even. what goes up must come down. then, last, you want to identify some stocks that could do well in a weak market or a weak tape. i like apple. numbers are going the right way. i like energy names. chevron, that's what people want. >> even you admit we're over bought at this point.

we're due for something. >> we are. i think, i don't disagree with abigail, but i think the first part of the year your hope is that you're going to get iras and other things pre-funded. people say last year, which started off like a rocket shot, i want to get started early, and then i think in the middle of january sometime you want to take another look because we are somewhat over extended here and when abigail says the word parabolic, i break out in a rash. >> i'm thinking twitter at that point. >> it's the same thing for me. i look at the long-term charts of the stock markets. they scare me. honestly, it just is not sustainable. it would be healthy if we could have a 10 or 15% pull back because then it would act as a toe holding to climb higher. right now we're setting up for something that could be significant. >> very good. thank you, abigail. >> very good. >> mr. cashin, thank you. >> may your ice cubes be marinated well. >> they don't have a chance. >> we're going to head to the closing countdown for the new

year's eve. with the dow up 75 points, here we go again. after the bell, almost everyone enjoys a good steak, of course, but not everyone can finish 18 ounces of said steak. a new company that doesn't want you to throw the steak away. we'll tell you about their plans of profiting from your leftovers. coming up, you're watching cnbc, first in business worldwide. >> announcer: cnbc sector sort is sponsored by sector spider ets. sector spider ets. visit us on the web at sector spdrs.com. ♪

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wherever you are with the mobile trader app from td ameritrade. two minutes left in the year. look at this chart. this is a microcosm of the year. turned out we had a fakeout selloff going into the final hour of the trade and they bought the dip. with a gain of 10 to 15 points on the dow, suddenly a gain of 81 points. now we're off that high for the session. let's look at the year. what a year it was for the industrial average with a gain overall of 26%. best gain we've seen for the dow since 1995. and through it all you had a rise in long interest rates as well. the yield on the ten year finishing on its high, up 3% with a gain of 72% in terms of yield for the year. terry dolan, what a year.

what do you think we do going into the new year? are you still a buyer at this point or -- >> actually, i'm on the cautious side because i think the market has gotten a little ahead of itself, number one. number two, i think the bond market is trying to find its way after the fed's taken its foot off the gas. i think the bond market will be our cue for next year to see how it settles in. >> if yields continue higher, that could put a cap on the stock market? >> i think it will put a little bit of a strain in the short term of the market. it will draw money back in anyway in the longer run. rates are going to be relatively low in terms of the return for the investors anyway. >> at the beginning of this year, first trading day of the year, monster rally led to this kind of year. i'm not going to ask you to forecast that kind of event for thursday -- >> no. >> -- but will thursday be as important for 2014 as january 2nd was to 2013? >> i don't think so. i think january on balance may be to see how the bond market settles, how they absorb the changing interest rates and what's going on forward. i expect a little more

volatility in january with a little more down side perhaps. >> keep hearing that. terry, happy new year. all the best to you. that will do it for this first hour. the last trading day of 2013, what a stellar year it was. what happens on 2014? kelly and i will see you on thursday. meantime, hour two now with ms. evans and company. happy new year, everybody! welcome to "the closing bell." how appropriate that it's a champaign maker which is ringing the closing bell on this day marking the end of a year that will go down in history on wall street. 2013, one for the record books. an incredible year for stocks. here's a look at how we're finishing the day on wall street. 72 points on the dow which jumped in the last 15 minutes or so of trading to a new closing high of 16,576. the s&p 500 just shy of that 1850 mark, up seven points for the day. the nasdaq, by the way, adding 22 points to 4176. let's get straight to our panel

for more on the stock market this year. what happens now? with us today is our very own kate kelly. rick santelli. kenny wrapping up some trades will be here. we have former vermont governor howard dean and from ""fast money"" tim seymour. >> it's phenomenal. i've been talking to people about year end performance and what's to come. people are bullish equities. they really are. >> why? >> first of all, they think there's more of a valuation rise. the s&p is not fully valued. they think it's fairly valued. >> didn't mr. buffet tell us it was fully valued? >> well, look. there's always room for disagreement. i'm hearing a lot about distress. i'm also hearing within equities and to some degree credit a lot about event driven opportunities whether that be m and a, some other event. some guys are looking at companies as they come out of bankruptcy, for instance. getting creative,

dividend-paying stocks, it's a lot of the same. >> howard dean, do you feel wealthier? >> we're going to get into ets a little later but, yes, this has been an incredible market and it's built a base for six months between 15-5 and 16-5. it's extraordinary. >> are you watching the market this closely? because i feel like you know more about the technical, you know, analysis than some of the guys -- >> i'm not a technician but i don't think technicians -- i think technicians are worth listening to and this -- this is a classic base building. it's been going on for a long time. the old climbing the wall of worry. i think there's a way to go here. i'm not an expert in this, but, you know, corporate earnings are very strong. >> yeah. >> people are starting to feel better. wall street usually leads the way out of a recession. i -- i am pretty optimistic about the market. >> kenny, this line i thought summed it up so well. i'm downstairs before the show getting a candy bar as i do with

arkie. he says, come on, kelly, you have to get the market to go my way. i said, what do you mean? he said, no, i'm sitting out. i'm down and i need to get in. >> you called them the other day, the negligent bears. >> fully invested bears. >> the fully invested bears. the guys who have been invested but they're bearish all along. i happen to agree with governor dean, definitely there's been a base building. i think 2014 will be a better year not only in the u.s. but i think globally. that's a part of what will fuel the movement. >> here's a comment that will warm my wall street sources or listener's hearts. i think we'll see more deal making and more creative places to invest in 2014. i hear a lot about private equity backed exits. we saw a lot of ipo this year. we could see continuation of that, m and a. stock buy backs, continuing. people freeing it up. >> ipos had their best year since 2000. the markets just had -- >> that's remarkable when you

think about it. >> twitter and facebook took a big chunk of that even though facebook did that for a while. >> right. >> even extended stay. >> hotels that just came. right. unbelievable. >> kenny, what to you sums it up best? what to you really sort of captures the moment here? >> i think the ipo world. i think all of that private equity money. these guys cashed in big. they made bets three and four years ago at the depths of despair, really, and they've turned around this year and cashed out. people that were in that game with them really benefitted fully. >> let me ask you about this. what you always have to worry about when people are feeling good is, a, january, because that predicts everything and, b, frothiness. have you seen that? >> only in the end. come january i wouldn't be surprised to see some pressure in the market because some asset managers, individuals, this market ran right to the highs this year. if they're going to make a sale, put it off in january and put off that whole tax thing for another 15 months. >> rick santelli, i want to get

you and tim into this. david temper said when he's looking at the 38% gain, he bet on america and that paid off. will that be the case for 2014? will it be another year of betting on america? >> i think betting on corporate america is one of the legs that people haven't priced into eps growth. corporate spending, if you asked them what they were going to do and how they were going to allocate, they were going to be very tight to the vest. they were probably not going to be spending. i think a little less dysfunction in washington, a little bit more at least transparency and outlook from the fed. you have corporate spending that i think will be part of the spending for america in 2014. that will drive eps. that will drive unemployment down. that will drive consumption. we've seen consumption has been a major part of the rally in the last two or three months which has a lot of people upgrading gdp for 2014. >> true. >> if you want that story, it's there. >> rick, i guess here's my point, is the market doing well because this has been such a good year for the u.s. economy or is it doing well because we've figured out how to make

the stock market do well between buy backs and the fed support and everything else that's going on but it doesn't actually reflect as much fundamental strength? >> let me think about it. the latter, i would say. and i would just make it quite simple as one of the popular websites everybody's been talking about today, put it aptly, the s&p up close to 30% for the year. earnings per share up 6%. just ponder that for a moment. >> yeah. it's true, but, rick, what about the fact that we've added a couple million jobs that were out of the deflationary environment. >> maybe you and howard, the governor, could talk about that. i'm he not buying the jobs thing. listen, we have created a lot of jobs, but we've also stopped counting a lot of people that don't have jobs and structural unemployment is absolutely impervious to a lot of the medicine that's being dolled out to it. >> there is also one other thing that worries me. consumer debt is starting to rise again. we know what happened before the

'08 crash. there was so much of the growth that was funded by consumer debt that it all came crashing down. that's a number we ought to be watching in the next few months, i think. >> funny enough, a lot of people point to that and be say that's a reason to get optimistic. they say the savings rate will come down. that will be another source for consumption. >> that's going to short it long term. >> in terms of shifting from debt to saving, we have to see a backup in rates to make it worth people's while, roo snit. >> rick, there are so many things about this market that are eastererily reminiscent of last siebcycle. it feels like things are moving in the right direction but everybody has this sense that it will end badly. >> we're nowhere near where this were. >> that's right. >> the consumer while the savings rate is going down. i think to call this a comparison to that is crazy.

i think if you listen to what we've all been saying, the places you want to incompetent vest, go to the private equity guys. they're minting money right now. they're growing their aum 10% per annum. they're exiting a lot of deals as kate talked about. look at the banks. look at the financials. these are the places where i think actually the less credit constrained consumer and corporate will actually be a very big benefit. >> kenny, do you want to jump in? >> but there is still a disconnect i think between what most of america feels and what the stock market says they should zbleel that's right. >> except the stock market usually is a leading indicator. >> it is but it doesn't mean everybody feels as ebb bu lent. >> the market is predicted eight of the last three recessions. >> let's hope that you're right. maybe there is a better consumer sentiment around the corner. >> not yet. >> by the way, rick, we did get that pop in consumer confidence today. it jumped to 78. that was several points above

expectations. november was devised a little bit higher. you can see an outcome where it turns out okay. >> we had professor schiller on today. he made a very cogent comment. he said i have my own confidence index and it doesn't look like the conference board and michigan. he's right. anybody who's done research on confidence realizes that the biggest fundamental are stock prices. all of the issues of the day, what are we so happy about? syria missed a deadline with regard to its toxic weapons being turned over. we are losing more people being insured than are gaining insurance. so to try to fix something, we made it worse. student loans, government will take it over. it hasn't been fixed. these are concrete realities everybody wants to gloss over. >> the list was much, much longer at the beginning of 2013. now historically here's the problem, in 2009 the people who bet on that outcome -- >> i think it's worse. >> -- looked more relevant, they

were making the right kind of bets. in 2013 they were on the wrong side of the move. >> if you want to talk about betsz and casinos, you're right. i've never advocated selling since march of 2009. >> i don't think we're making -- >> it's about bets. >> i don't think we're making a call here on weather the gap between the rich and poor is getting tighter. >> that's more campaign. >> this is not a comment on whether this is all good for main street. the comment is about the market. ultimately if you look at the global environment, the global economy, g3 acceleration will be good for people. it will mean eps can go higher next year. >> and the recovery in europe had a lot to do with this. the dow was driven by multi-nationals. if they do well, a lot of corporations do well. >> there's a one in five chance because if there's a one in five chance that the stock market could have a 25% correction, trust me, there will be a one in five chance of a recession. >> i do think volatility will be back in 2014, but this economy is mid cycle right now.

to say that we're close to a recession dnchts mid cycle in the old days. no $4 trillion balance sheet. no europe where the banks are imploding on themselves. these issues haven't gotten away, we just don't talk about them because the s&p is up 30%. >> rick, that's why we're keeping you around the whole program. tim, we have to let you go. tim seymour you can be sure to catch coming up on "fast money" at 5:00 p.m. straight ahead, wall street gimp main street and times square revelers a reason to celebrate. the big party begins here in a couple of hours. been kind of a party on wall street this whole year, by the way. stocks locking in their best annual gains since the mid 1990s. much more on how big a year this has been coming up. plus, chalk this up for the little guy, so called big money beating hedge funds. kate kelly going to weigh in on that. we could see some fireworks all on our own on the nyse. you won't want to miss it.

welcome back on this new year's eve. wall street making history. the major averages posting their best annual gains since the 1990s. dominic chu with the final

tallies. >> put a lid on it, stick a fork in it, whatever you want to call it. it's official. we've pulled out a banner year for stocks. the trades are settling out. it looks like we'll get an updated closeout, 2013 the s&p 500 will close out the day, quarter and year at 1848. that's a record closing high. that means it's up 29.5% for the year. the best year for the s&p 500 in 16 years. as for the dow industrials, they're closing out at 16577. that's a record close as well. up 26.5% for 2013. more than half of all dow components at some point hit record highs this year. like we've been saying, big blue, ibm, the only dow stock that's lower on the year. the nasdaq composite not at a record high but it was the best performer closing out at 41 7 for the composite. that's up 38%. that's a nice gain there. honorable mentions go to the russell 2000 small cap index and the dow transports, both setting

closing record highs. kelly, back over to you. >> dom, just incredible. stay right there if you want to bring in our ace reporters. bob here at the nyse. keeping watch at the nasdaq. sheila, we're talking about almost a 40% gain for the nasdaq. what happens now? >> yeah. here's the good news. the party may not be over at the nasdaq. similar to the s&p and the dow, a good year tends to be followed by another good year here at the nasdaq. here's the thing, it performs better at the s&p and the dow. if you think overall the equities will go higher, the nasdaq may not be a bad bet. keep in mind, technology, biotech, two of the major sectors that have run up big this year, the main reasons we've seen such big nasdaq gains, people are bullish on strategists. overwhelmingly bullish in 2014. several biotech analysts think despite the 65% run that we have seen in the sector this year, there is still more room ahead.

remember, baby boomers are getting older. they need more drugs. they want to use more drugs. companies are executing. >> wow. hey, dom, quick question. are we talking about price appreciation or total return? >> this is interesting here. this is price appreciation. >> wow. >> if you factor in total returns, that's even more. that's even better. with a lot of stocks, especially in the dow, especially for a bulk of the s&p 500, these guys have been returning tons more money this year. >> right. >> for shareholders either through buy backs or improved dividend payments. >> that's what i want to ask bob about. if we take dom's numbers and round up, we're talking easily, what is that, a 30% year for the s&p 500. the dow is going to be something somewhere close. a lot of people think actually the dividend story isn't over for a lot of these companies next year. >> that's a really good question. there's really two big questions. one is what do you think the global economy's going to look like and what do you think inflation will look like? if you have a position on this, you could pick your stocks and choose from. the global economy, most people

feel europe will improve dramatically. european stocks have had a big run. it's the emerging stocks that have had a lousy year. they've had their p.e. ratios half that of the united states. if the theory is buy low and sell high, it's emerging markets that are most attractive if you believe the global economy. on that inflation question, the issue of what you're talking about there with interest rate sensitive stocks, if you think inflation is a major problem, then you've got an issue with interest rate sensitive stocks. they all under perform on modestly higher stocks. >> bob, great point. happy new year and we'll see what happens come thursday. well, it's the smart money versus the so-called dumb money. this year the dumb money won. we'll debate why hedge funds fell short of old-fashioned indexes and if that will hold true for 2014. keep it right here. revolves around your symptoms, ask your gastroenterologist about humira adalimumab. humira has been proven to work for adults

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into powerful investment strategies. for a university endowment. it funds a marine biologist... who studies the peruvian anchovy. invested in the world. bny mellon. welcome back. you didn't really have to go out on a limb to reap big returns in 2013. so-called dumb money strategies, buying and holding, save index funds or etfs, outperformed the costlier hedge funds this year. will dumb money deliver again in 2014 or is this a time for your money to be actively managed? with us is mark lopresti. >> happy new year. >> happy new year. so what do you think here? >> i think one thing we have to be careful about is talk about what segment of the hedge fund industry we're referring to. there is no doubt that in this market in the past few years

very large multi-billion dollar funds have a significant disadvantage in being able to perform or outperform the market more broadly. >> what, just on sheer size? >> in part because of sheer size, that's right. but the other thing we have to bear in mind is that hedge funds, some, are actually intended to hedge and should not be outperforming the market. if you're invested in a hedge fund that is hedging your market exposure on the long side, it really should not be on pace with the s&p or outperforming the s&p because then you're paying for beta or market correlation which makes no sense. >> interesting point. kay kelly our hedge fund reporter extraordinaire here. here's what i'm wondering. if you're willing to give up a couple of points on good years, was that true in past years? >> let's look at a chart i made that shows you if you look at the average hedge fund tracked by the hfr, it underperfect forms the s&p in good times and

bad times. in 2011 for instance you had a flat market but the average hedge fund was down 5%. just anecdotally speaking during the downturn, i don't have that on the chart, i can tell you some really well-managed head funds did less badly than the market. one fund that's top of the mind is sec capital. they were down 18%. that was 2008, of course. >> you're learning this year as well. that's a difficult example to pick but they are up 19%. >> a loaded example, up 19% as of now. they underperformed the broader market. however, they had a few legal issues to contend with. if you're lucky enough to get into one of the well-managed hedge funds, you can get a 2 and 20% model, you might have killed it this year because there are a number of funds that did beat the market by a wide margin. >> but you would have had to have picked exactly the right

ones. >> exactly. that's always the key, right, which one do you pick? you know, it's funny because i think there will be this return to back to basics, right? people are tired of that casino mentality that you get in the market, more so because of the algorithmic, high frequency trading. people are frustrated and certainly during the crash where all of these derivative, very complex derivative strategies blew up. people lost complete confidence and security in the system. it's been a while to get them to come back into the market and back to basics i think is where you're going to get them. >> governor, if i could ask, when you invest, what do you do? do you kind of do the passive index thing or do you put your money with some of the savvier hedge fund guys? >> i'm a small investor. we're not playing with these guys down here, but i believe 30% of your portfolio should be in foreign stocks. we're in the middle of globalization. 10% is gone. that's all etfs. i'm not smart enough to buy

foreign stocks. especially in emerging markets. some of it hasn't done well. i've made a lot of money in singapore. >> do you look for the lowest cost ones? it's all about expenses over the long term. >> i do look at that. and here i buy -- at home i buy stuff like general electric, names i know, things that i know are -- if the economy does well, these are companies -- >> the peter lynch principle, what you know, what you understand. >> i don't fool around much. i have a few small companies. i don't fool around much. you have to be smart and know the market. >> that's what you're paying the hedge fund guys for. you can look at there are always the outperformers, david teppers, 38% after fees, that's what i'm talking about, but what about everyone else? how is anyone supposed to know with any degree of confidence err this' betting on the right horse? >> hedge fund selection management is best left to the

professionals. it's worth pointing out that we have to look at what kind of manager we're investing in and why. if we're investing in a manager that's strategy is to hedge my portfolio, i should not correlate to the market and they would have underperformed this year. kelly you'll know pro track and hfr and other industries do show that hedge funds large and small did actually protect investors in the down years including 2008 down 19 versus 37.5 on the s&p, but if you go a little bit downstream, which is i think going to be a trend for 2014 as it has been in the past two years, smaller is becoming beautiful and it's part of because of what you brought up. you can't deploy $2 billion in google, facebook and apple right now and expect yourself to be able to generate outperforming returns. it's not possible. >> this is something you hear a lot about from the larger hedge fund managers. louis bacon giving money back to

investors but they get to a pond where they no longer are nimble. >> right. >> we love to talk about them on air because what they do is so interesting or certainly influence other people, but specialization is a huge issue right now. you've got forex ample at credit suisse, they've seated a bunch of asset hedge funds. mexican credit, mortgages might be another. you read in the journal like buenos aires is doing particularly well. talk about specialty knowledge. >> when you get too specialty like the commodity funds, some kaptd make t. i want to ask the rickster what he makes of it. rick? >> i don't think it's a question of being nimble. this year, kelly, if you go to las vegas and you bet everything that you own and you borrow every accident from what you have, i don't know that that makes you a genius. i think whether it's hedge funds

or the fact that people like jcpenney, tesla, netflix, what, 105 pe, you know, everybody's a win fwher this year and everybody that hasn't fully incompetent vested becomes dumb money. this is only one year. five or ten years from now when we listen to this conversation, i think we're all going to be grinning and thinking, oh, my god, i can't believe we said that. >> rick, what about when we talk about specialized lending. i talked to a hedge fund mapping gir today who did well picking companies emerging from bankruptcy and making money once they reentered the markets. his point is there is no wall street research on it and be comfortable with no risk. >> i agree. why even waste your time? we talked about firms like bacon that couldn't move the money. look at carl icahn. just dump all your money in because liquidity is flowing. jcpenney shouldn't be alive, it is. tesla shouldn't be where it is, but it is. >> we've got to leave it there.

rick, thank you guys. kate and marc, thank you very much for being here. >> happy new year. >> considering the market has gains this year, where are financial markets telling people to put their money. we will chime in next and what they have to say may surprise you. be right back.

welcome back. 2013 ended on a pretty high note in the market. record highs. most would like the good fortune to carry forward. we've gathered members from cnbc's digital financial council. see what they're doing to keep it moving in the right direction. joining me diane laseuse. richard cofa is managing director of wealth health. all, as i said, are members of the cnbc financial advisory council. thank you for being here. >> thank you. >> one of the things right away that intrigues me from a big picture point of view, how much of your clients portfolios you're putting into equities. diane, average portfolio 2013 and what about 2014? >> right now we're looking at 65% in what we would classify as our moderate risk portfolios, but that also includes some of our alternative investments.

>> alternative investments such as? >> real estate. some of our hedge strategies funds, that type of investment. >> you do invest in hedge funds? >> not hedge funds. >> hedged -- >> hedged strategy funds. >> what's the difference? >> the difference is these funds are funds like go anywhere funds. funds that are really actively managed, that really try to defend against down markets. >> so you've found that generally worth the price of fees to be invested in those strategies for your clients? >> for some selective funds, yes, we've found it very worth while. >> rich, what about you guys? >> similarly, i think we are not increasing our equity allocation necessarily, but we haven't really truly decreased that much. we can shift around enduring some harder times. we had some dividend allocations. we might be balancing that out between growth and value. >> where does it sit roughly? i know it's hard to generalize. >> on a balanced portfolio, we have 70% in equities?

>> no kidding? >> yeah. >> we let the market ride. we haven't necessarily brought that back for rebalancing. that's something that might be different for some folks that sit out there. we, too, have alternative allocation. i think there's a place for hedge funds in a portfolio. >> has that performance this year when they're lagging, have you found that they're accomplishing what you want them to accomplish? it's worth keeping up that strategy? >> hey, look, the clients have to know that it's an education process. alternatives aren't there to be what an s&p index is. they have not performed nearly as well as the s&p. when you have the uncertain tigs that we all get concerned with, whether it's euro crisis, debt ceiling, those things, we'll have more of those through time, the benefit of those hedge funds are going to be there less correlated, have more balanced portfolios. >> what about you. 70%, are you that high in terms of equity investment? >> sure. still have 65, maybe 70% in

equities. if you think about what's happening with the fed, there's no place else to go. i certainly agree with alternative strategies. real estate might be one of them. to the extent that we have fixed income, it will be shorter term bonds. i'll put some pair trades on. i might be short the emerging markets but might be long that. way we can buy the cleaner short in the laundry bin and get excess returns. >> ivory, you sound like a hedge fund manager almost. i mean, there is a lot of research that goes into being able to pick those winners, put on some of the strategies that you're talking about and do your clients -- i guess that's what they pay you for? >> it is. i mean, the fact is if you're going over a bridge, you obviously want a guardrail. there's a lot of risk right now. certainly think there will be a pull back. it's not just quantitative easing. the last two times we had quantitative easing end, the markets dropped by double digits. you're increasing demand. you're reducing the supply.

in some ways it's financial engineering. you just don't know how much longer that can sustain itself and what impact that will have on the market. >> does anyone here think the market is poised to drop by 10, 20% in the next six months? >> i for one think that at least 10% we don't find that to be a correction. i find that healthy. we should expect that. the one thing we would agree as financial advisors, we need a plan. we need to stick with it. we're not looking when to guess, when to get out. we won't see big swoops in our portfolio as fixed incomes, equities. you see this market run. planning is an important part of it. i think 10% is potentially likely. that will be healthy. >> diane, final word. >> we definitely need some level of pull back. if that's caused by earnings, disappointing, or whether it's caused by a macro event, it is an opportunity to rebalance and to take some of those profits and to move to some of the other asset classes. >> i've never heard so many people, advisors, traders

begging for a pull back here, ivory. >> well, i just think it's healthy. if you look at the last 24 quarter, nine pull backs of 10% or more, last year was a straight line up. nobody knows the extent or the velocity, but clearly whatever can't go on forever will stop. we know there's going to be pull back. >> right. >> not only that, we have margin debt. hasn't been this high since 2000 or 2007. you have a lot of artificial demand for stocks. we know that can't go on forever. you can go back in and rebalance the port folio. >> thanks so much for being here. ivory, rich, and diane. >> happy new year. the top stories you've been clicking on our website are coming up next. plus, big changes coming to your computer screens and mobile devices? the days of dotcom and dot net are ending an may be replaced with dot, well, just about anything you can think of. is this a good idea? tweet us your dot ideal doe mate @cnbc.com. we'll be right back.

welcome back on this final day of 2013. let's check out which stories you're clicking on right now. cnbc.com, katie little filling in for alan wassler today. what's on top of the list? >> hi, kelly. all eyes are on the remarkable gains we've seen this year and whether these gains can continue into next year as we enter 2014. in the lead spot we've got kate gibson's market wrap in which she details the gains we've seen

today with the s&p posting its biggest increase in 16 years and the dow in 18 years. she quotes one portfolio manager saying it surpasses even the most bullish of predictions. >> exactly. two and three, katie? >> the most read story right now is jeremy siegel's appearance on "halftime" report in which he says the dow could hit 21,000 surpassing even what he estimates the fair value of 18,000. >> and the last one? >> well, with 40,000 new laws passing this year, many of them are set to take effect next year which can affect -- will affect tanning beds in some states, vending machines and then also incandescent light bulbs. >> yes. >> better stock up on the light bulbs because they're going to be much harder to find coming up soon. >> katie little, thanks so much.

happy new year. >> thanks so much. a couple of mentions. i want to get to our panel. jeremy siegel who is not only talking about dow 21,000, kenny, he doesn't sound crazy. >> no, he doesn't sound crazy. the dow will go to 21,000. of course. it will go to 25,000. okay, great, but when? >> makes me nervous. >> makes me nervous. i get very nervous. >> jeremy siegel gets up there, everyone knows who he is. the dow is going to 21,000. okay, great. >> i'm less nervous about the fact that jeremy siegel is saying it than it's one of the most read sites. >> it could be 18,000. >> you're yearning for it. >> when the small investor comes in, the prediction is made by the number of hits. >> i did a story in 2011 on mark spitsnegle, the black swan fund in l.a. very smart guy. tail risk became a huge trend in

recent years. that said in 2011 he was calling for a 30 plus correction in the s&p. >> wow. >> didn't happen. at some point it might happen. who knows. >> right. exactly. >> he thought it would be within two years or so. >> i bet that story was well read. rick? >> you know, i think it's highly possible. the stock market and much of the investing sectors is acting a lot like a commodity market. it's going to go parabolic. i think anybody who looks at the six months before the tech wreck saw that the nasdaq almost doubled in price in that six-month period. i don't think it's out of the realm of possibility at all. >> rick, you're with -- >> the important thing is what happens afterwards. >> it's going to go parabolic. rick santili, december 31, 2013. >> a 10% move in the dow will take us to 18,000. if you expect that 10% -- if you expect the dow will return between 8 and 12% back to a normal rate, 18,000 is absolutely possible next year. >> one thing we can be sure if

it gets to 18,000, it's not going like that. >> is everyone able to get out of the portfolio? my hats off to them. will it be like 1,000 ralph cramdens trying to get through a catchup jar? >> people are talking about we'd love to see 10%, 15% correction. they're pounding the table for it. >> or until they see it. >> exactly. all right, coming up, there's an app for everything. up next, the founder of leftoverswap.com. he'll tell us what his app does, what it sounds like it does and wait until you hear what kind of profits it's raking in. "closing bell" is back after this. fedex one rate. really makes my life easier. maybe a promotion is in order. good news. i got a new title.

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welcome back. well, 2013 also has been the year of the sharing economy. there's the uber car service. a lot of people will use that. there's the runway. user sharing dresses. you can rent out your apartment as a vacation home. whatever the service, there seems to be an app for it. now you can even share your leftover food. here to explain more is dan k w newman, leftoverfoodswap.com.

how did you come up with this? >> we have a little over 8,000 people who have downloaded the application so far and the idea came up when i was visiting my friend out here in seattle and we just had too much pizza one night and thought how cool of an idea it would be to share that pizza with people around us. >> and so what's fascinating, i want to get thoughts from my panel here as well on this, but, i mean, there are all sorts of things about hygiene and logistically how do you get the food from one place to another. what do you think the appeal is of being able to do this? >> i think the appeal goes back to when you were a kid and your mom always told you to clean your plate. you know, people don't want to waste food. food is a sacred kind of thing and if people can avoid that guilt, i think they want to. >> kate, would you do it? >> i would never do it. i have to say, dan, i really applaud the idea. i think the intention here is great and you're absolutely on

to a problem that needs to be addressed. i get upset about the waste of food in my own home, especially in new york city where we don't have garbage dispose sals. >> this is not vermont. >> seriously, broadly and in my own home, i think it's a serious issue. i would never want to go online and eat someone else's food. i don't like the idea of day old pizza and chinese food. >> little known fact, i'm also a physician. so what do you do about quality control? because clearly the leftovers have to be stored at a reasonable temperature or salmonella or something will go next door. how do you deal with that? >> of course. we have guidelines for users. you know, reheat food to the proper temperature. don't give away anything that you wouldn't eat yourself. they mostly boil down to common sense. >> and what's interesting, kenny, you're the chef here. you make a lot of delicious food. why not be able to share it with

more people? is this about leftovers or is this just about food sharing and swapping? >> i think it's a little bit of both. that's what it sounds like to me. i agree with kate and maybe it's because it's my age. i'm not necessarily sure that i would just do it, but i have to tell you, i think clearly would user profile has got to be that younger generation, the 18 to 26 generation. >> i have two small children. i remember with both of them, i was aware that there was such a thing as a breast milk bank that some people were involved with who wanted to give their babies mother's milk but didn't have access to it themselves. even that was a problem. people were very careful in storing things but there was an issue with that supply in the local issue. >> you know, i have a problem sometimes eating cookies that neighbors make. there is no way i could do this in a million years. i think the website ought to have an extra way to look at it. maybe to give some of this food to pets. pets eat too.

at least it wouldn't go to waste. >> i think this is a cultural thing. it's emblah the matic of the un 30 generation. >> you think people will want to do it? >> absolutely. >> let me ask you a question. talk to me about how you are making money with this. because that's really the both at the line, right? >> so far, we aren't. we're take the early tech start-up model of just gaining users first. we'll look at monization down the road. >> but do people -- do i pay -- like, am i buying somebody's leftover food? >> no, no. you get that for free. >> here's where i think this could work well. another individual example. i belong to a community supported agricultureco op where we get local farms -- >> that's so brooklyn. >> it's very, very brooklyn. i apologize to our viewers. we get more than even our relatively large family can eat in a week.

a lot of people will share those. >> that's different because that's uncooked food, right? >> it's not pizza from yesterday. >> maybe the moniker is a bit misleading. dan, we'll give you the last word. >> it's any excess food, not just, you know, stuff that you've taken bites of. you go to costco, you get a giant package of something, you can split that up and share that easily. >> and that's a great idea. >> fascinating stuff. trying to get rid of waste. >> goes right to that generation, absolutely. >> yeah, well, things going back to how they used to be to some extent, saving food. we'll all be thinking about that over dinner tonight. the tweets have been coming in fast and furious. we are asking for your fantasy internet domain names. some pretty creative ones. we'll put them on air next. bring what inspires you -881 tdd#: 1-888-648-6021 out there... in here. tdd#: 1-888-648-6021 out there, tdd#: 1-888-648-6021 there are stocks on the move. tdd#: 1-888-648-6021 in here, streetsmart edge has tdd#: 1-888-648-6021 chart pattern recognition

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♪ i wanna see you be brave ♪ i just wanna see you ♪ i just wanna see you ♪ i wanna see you be brave ♪ welcome back. there's a big change coming to the internet where domain names don't have to be dotcom or dotnet anymore. it can be "dot anything." i asked what would it be? he says, dotdollarsign. being able to customize like this would take some time

getting used to. the interesting thing, there are a lot of people who are just domain squatters who bought up the dotcom, dotnet name over the years. now suddenly if any brand can become a dot nike, those become less valuable. >> one of his political opponents actually brought up domain names related to people who were state officials. you could use this -- >> standard operating procedure in politics. >> why am i shocked? >> right. exactly. >> i want to get back to markets here as well. because we're talking about things that are happening come january. yeah, you can register domain names. by the way, there are going to be a lot of people opening their statement, taking a look at their accounts and thinking to themselves, do i stay invested in this market? do i get involved if i haven't been? i'm just curious, generally, kenny what your thoughts are here. >> i'm very surprised there are people who have been so sitting this out all along that go, oh,

my god, i've missed this whole thing. i don't have that mentality because i'm in this business. but you're kind of in it right, for the long term. it's not something you get in on tuesday and you're out on thursday. >> there are a lot of people who got their money out in some cases before the -- >> and i was one of them. >> they felt like geniuses until about now. and now they're -- >> if you waited, right, i'd be the first one to say i got out before the crash. it took me a year before i jumped back in, right? >> the ones that kill themselves are the ones that get out at the bottom. >> and at the top, right. >> at the end of the day, unless you're try to make 1 million bucks, most people like me -- >> are buy and hold. >> you buy the american economy, you buy the world economy, and over time -- >> the governor hears the question, does it make sense to do that? we're talking about a 30% move in some of these markets. >> i think the answer's yes. maybe if you're not 65 and about to retire but if you're 30, it

makes -- >> you think it's not too late to get in? >> depends what you want to do. if you want to get out next year, you have to worry about that. >> if you're a 30-year-old -- i'm telling my kid, dad, what do i do? put it away. put it in big cap americana names. >> there is a huge gap between how well the stock market did this year and what happened on the bond side. i think it was the first down year for the aggregate index. a lot wondering if that's the precursor for losses to come on the fixed income -- >> oh, i'm sorry. >> yeah an go ahead. >> i think the spread is really wide but even wider when it comes to commodities versus stocks. when i see those relationships get that out of sync, it causes me to get nervous. its learn about writing some calls against my long equities. >> do you think commodities will have a better year in two2014? >> i don't think they will.

i think the grains got off kilter with the drought last year. >> and it's going to be interesting, rick, to watch the dollar, too, because a lot of people who where putting their money overseas right now have to be aware the stronger dollar means those investments are going to be worth less, forget about what the markets do. >> i don't say stronger dollar. it's against weaker currencies. i think the yen trade is something to pay attention to. in the end, remember, you never go broke, at least writing some calls against some profits and your equities. >> final thoughts, guys? we want to just wish viewers here happy new year perhaps. >> absolutely, happy new year. >> thank you for being here. "fast money" is coming up in just a couple seconds. you guys got a couple good interviews coming up. i hear $375 is what they're charging new year's eve times square. >> per person for the applebee's in times square. apparently, we're going to find out if there's tickets left. maybe this is the perfect place

to actually ring in the new year. you get an unlimited amount of food. >> it's unlimited, what about the drinks? >> the drink is -- apparently it's open bar, premium, you know, liquor et cetera. a view of times square, the ball dropping. so the whole nine yards. we'll get a little taste of what is on the menu tonight. >> you guys are right in the middle of the action. >> "fast money" starts right now. live on new year's eve right in the center of the action from the nasdaq market site in times square, i'm melissa lee. net flik, the best performing stock on the s&p 500 this year, does it have room or is the party over? it's not a party without whiskey. the demand has doubled over the past decade. we talk to the ceo of whiskey dog. still vent made plans for tonight? applebee's in times square is offering a party for a basement