me at cnn.com/sanjay. it's a one-stop place for all my blogs and tweets and behind-the-scenes photos. thanks for joining us. see you back next sunday on "the next list." the stock market continues its bull run, but the wider economy is still playing catch-up. is it too early to celebrate america's coming reason advance? i'm ali velshi and this is "your money." the dow is up 11%. that's better than you would do in an entire year in some years. those who invested since the market bottomed have taken advantage of 130% rise in the s&p 500. that's the benchmark index for retirement investments including your 401(k). and your i.r.a. then there's housing. that other leg on the stool. finally, housing bottomed out last year with home prices

steadily going up largely due to historically low mortgage rates. with home values climbing again, americans have gotten back their number one tool to help build wealth and put it to work for them. and finally there's this boom in america's energy sector which has already started to reduce america's dependence on foreign oil and has crushed natural gas prices. by some 75% in just five years. industry is taking advantage of the savings to bring back manufacturing jobs to this country. i continue to maintain this energy boom could fuel an economic renaissance in america for years to come. but many of you are not buying it. not yet any way. more than half of you are afraid to get in the stock market. in spite of the gains over the last four years. some of you, by the way, because of it it. consumers are still wary of this economy and they may have a point. despite 36 straight months of jobs growth, the overall economy only grew by .4% in the last quarter of 2012.

the last three months of 2012. why? one reason could be our broken government in washington, which still can't pass a long-term budget and prefers to govern from one fiscal crisis to another. crises of its own making, by the way. joining me to discuss this and more is mohammed arian, the ceo pimco, one of the world's largest investors in bonds. chrystia freeland is the editor at thomson reuters digital and christine romans the host of "your bottom line." welcome. it's good to have you here. you warned that those forced government spending cuts, which we called the sequester were going to do great damage to the economy. strangely, the stock market doesn't seem to buy into any of this. does that mean the sequester wasn't the big deal we thought it was going to be or does it mean there's more to come? that the market is ignoring. >> unfortunately, there's more to come. the issues are really important. the economy is stuck here. the stock market is there. that's why we have a mix of

excitement and anxiety. how do you reconcile? it's the wedge. it's the wedge of monetary policy. it's the wedge of an aggressive fed. what's critical is for the assisted growth to come up to genuine growth to validate the stock market. that's why it's important to remove these head winds from washington. >> that's interesting. that could happen. or it could go the other way. the stock market could figure out, wait a second. there's some air underneath us. earnings are -- prices are not high compared to where they were the last time the markets hit these records. clearly there's some fed stimulus pushing people into the stock market. do you think the prices are real? >> i think all prices are artificial. three months ago if i told you we had an 11% increase in the dow jones and the ten year would be stuck at 185, and gold would be at 1,600 $, you would say

that's inconsistent. it's the fed. they have a printing press in the basement. >> there's that disconnect that mohammed talks about and then this weird disconnect about how people feel. christine pointed out earlier to me that there are 12 or 15 or 20 million people in america who don't buy the argument that things are going well because they don't have a job. talk to me about the economic disconnect. >> i noticed when you had the three legs, you had the stock market, housing and energy. those are very important legs. i buy that argument. you didn't have jobs. >> right. >> and i think -- >> that's the most leg really. >> that's the most important for everybody. not so much for mohammed, he's in the investor group. >> everybody needs an income. >> he makes it from investing. most of us are making it from our paychecks every month. and i agree with the argument about the fed, but there's another disconnect going on as well. a lot of the forces driving the rise in the stock market are not actually affecting people's jobs.

part of what's happening is and this is one of the disconnects that new in the economy, is increases in productivity are notingi into increases in wages. we have seen that since the late 1990s. >> sometimes it's the opposite. we have increases in productivity. and you take the profit off, but the worker doesn't get the benefit. >> maybe you fire people as a result. >> and we're watching you used to see 1% or 2% of gdp and say that's going to mean "x" number of jobs. it doesn't mean that anymore. people are trying to figure out at what point do you start getting jobs. can you have 2 1/2% or 3% economic growth and lowering the unemployment rate. i mean, i want to be clear here. the u.s. is moving in the right direction. you have europe in a recession, a very big property market concerns in china. the u.s. is moving -- this week a lot of economists in the u.s. actually raised their forecast for first quarter gdp.

we talked about the fourth quarter. the first quarter looks like it will be stronger. despite all these things and with the help of the fed, the economy is doing better. >> the problem is the decision about whether to be in this market in some fashion or not, that means bonds or stocks is binary. it's either the economy is doing really well and i want in. or it's all a bubble and it's weird and it's inconsistent. the fact is for all the inconsistencies, if you were invested in the stock market over the last four years, you would have made a great deal of money. now what do you do? >> absolutely right. because the fed has been your best friend. right? >> don't fight the fed they say. >> don't fight the fed and if you can get on that train, get on that train. but we talked about two things. we're not using inclusive growth. secondly, there's an income distribution issue. which is if you have a globalized set of skills, you're doing great in this economy. if you happen not to have that, you're struggling. >> who is supposed to fix that? how does one fix that? >> that's where washington comes in. i think of it as the global financial crisis sent us into the icu. we recovered, we're out of the hospital.

we are better than others, but we are still structurally impaired. so everybody is expecting us to run, but we're just walking. in order to get running, we need to improve the structure of the economy. >> that's a long-term project. it's nonobvious. right? the thing about being in icu is it's pretty obvious things need to be done to get past the financial crisis. >> stimulus and bailouts at the moment. >> mohammed is talking about the big project of the 21st century and no one really knows how to do it. >> we are in a period where people are running and making a lot of money in housing and the stock market. they are the people who predictably who already have capital, already have money to deploy. and the vast majority of us are not able to go ahead and ride the fed. >> that speaks to the fundamental issue any investor should be asking today. it's not what can go well, but if i make a mistake, what

mistake can i afford to make. the reason why the average american is not getting involved is because they can't afford a big mistake. rich people can afford a mistake. they get the upside and also have self-insurance against the downside. >> that's what so many viewers have told us. i would have loved to have gotten into the market back then. even now. but i can't afford to lose what i can't afford to lose. stay with us here. if this economy is a runner on the road to economic renaissance, it could use some cheering on from washington. that's not happening. have our leaders stopped sticking out their feet to trip up the runner? that's next on "your money." [ female announcer ] what if the next big thing, isn't a thing at all?

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we still don't have a budget. we haven't had one in four years, but at least we don't have to worry about a government shutdown. for now. this week president obama signed a continuing resolution to fund government through end of september. he will present a budget proposal on april 10th about a month and a half late. the end of the year fiscal cliff

debacle delayed everything. the budget cuts have been in effect for a month but the sky hasn't fallen. although it's probably too early to say whether it will or not because few of the cuts have happened yet. agencies are finding ways to deal with the bad policy that's been thrust on them. the pentagon says it only has to furlough workers for 14 days instead of 22 days. and we have a bit of a breather before the next mini crisis hits. a fight over the debt ceiling is brewing again. shat showdown isn't likely to hit fever pitch until midsummer. there are even signs of reaching across the aisle. president obama made a rare visit with the capitol this month to meet with lawmakers of both major parties. both parties. no major breakthroughs though, at least they're talking. he's called on johnny isaacson to organize a dinner with senate republicans. this would be the second sit-down with gop senators in a matter of weeks. for just a moment here, for just a moment, it appears

washington may have stepped aside just enough to get out of the way of economic recovery. is it going to last? david moore is a writer for "the wall street journal." and john avalon, theese are gret friends of our show. steven, am i imagining it or is washington the impediment it's been to the american recovery? >> you're on to something here. i talked to businessmen and women all the time. recently they are saying we don't always like the policies out of washington, but right now there's a benign neglect going on. at least we don't feel like a lot of bad things are coming down the pike. so, yeah, i think a lot of businesses are moving forward. you're starting to see an expansion of hiring. you saw what happened with the stock market over the last three months. a lot of the businessmen and women and work efls are saying maybe there's a calm. whether this is a calm before the storm, i don't know. >> john, steven called it benign neglect. possibly. there's a difference between

benign neglect and doing something helpful. this government has lowered expectations about what it should be doing to help the economy. should it be doing anything at all or is this now the new normal and it's okay? >> absolutely it should. benign neglect is not enough. i do think the economy is improving despite washington, d.c.'s chronic dysfunction and division. there are some signs of silver lining. immigration reform, something that businesses really needs to happen. skilled businesses. there seems to be a political moment where both parties see their self-interest in passing something for the national interest. that's positive for both the country and the economy. but we're going to have to see real movement on the grand bargain. it it seems unattainable, but it's not. we're going to need to see infrastructure investment. there's a role for government. government has hurt this economy enormously with its brinkmanship. with some sign their can work together, maybe we'll start to get some progress out of washington. >> john, i agree with most of what you just said.

>> that's shocking. >> the one kind of interesting thing, though, is if you look at these two budgets, you know, you mentioned that for the first time in what was it four years the senate in the wee hours last weekend passed a budget. but that's a polar opposite of the budget that the house republicans passed. so this big, you know, grand canyon divide between the two parties on these fiscal issues, let's face it, that's still the number one issue. that's still pretty wide. >> it's very frustrating to see the budgets get passed. it's more frustrating to see no budgets, but in some ways we've skipped the real way that budgets is supposed to be done in this country, john, which the president puts forth his budget proposal which he will put forward on april 10th and have been has to get to negotiating. we skip right to the voting pr it. it's not the kind of way a budget is going to happen. when they come back from vacation, the bickering will start all over again. the house and the senate, they both passed budgets but neither

of these will actually be the budget that we'll end up having if we ever have one. are we ever going to have another budget? you said there's a hope of a grand bargain. where do you see that hope? >> i think with the debt ceiling pushed to summer, there's a realization that they aren't too far apart. the president might be willing to give a little bit on entitlement reforms. anyone who is clinging to this illusion to have a solution, they are living in reality of divided government. it's ridiculous we haven't had a budget in four years. the fact that the house passed a budget, the senate passed a budget. they are feeling self-interest in trying to pass something. and two, it's a recognition, even by boehner in particular, this ultimately will get resolved in conference. the two parties are too polarized to get something done. we'll start with positional bargainirin bargaining and get it resolved in congress. >> we have johnny isaacson on the show a lot. president obama asked him to put this dinner together. he's an ex-businessman. he knows about a lot of stuff. he definitely is one of a

handful of republican senators who have been able to reach across the aisle. they liked simpson-bowles and were able to do stuff. do you think they are going to prevail over hard liners? >> it's a tough call. it really is. because, you know, the parties are so far apart. john is right. it's interesting that the news that leaked out the past several days that maybe the president is going to put some entitlement reforms on the table. that's a big step forward if that's true. and because that's one of the things the republicans have been holding out for. i want to make one point that i disagree on. when you started, you think these automatic cuts are a bad way to deal with the budget. you know, i actually -- number one, weep have not seen armageddon. right? a lot of people thought it would be terrible. i'm not sure it's so terrible to start this process by just asking every agency of government to cut their expenditures by 4% or 5%. and you said it. they are finding ways of doing this, become a little more

efficient, saving money on conferences and paper costs. bilss do that all the time. >> i guess it's the methodology i didn't like. it's the sledge hammer approach. i agree. we have to find ways to do it. >> i think we're going to get hurt. >> there's too much agreement going on on this show. good to see you. that's the end of the segment. never mind is the sky not falling, it's another record-breaking week for stocks. you would not know it by looking at the floor of the new york stock exchange. gone are thousands of traders frantically placing buy and sell signs up. begins with arthritis pain... and a choice. take up to 6 tylenol in a day or just 2 aleve for all day relief. all aboard. ♪ ♪ 'cause germs don't stick on me ♪ [ female announcer ] band-aid brand has quiltvent technology with air channels

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things have changed in the stock market over the last 30 years or so. there are robots trading and moving the market. some estimates put their

activity at 70% of all trading volume and that's got a lot of people scared. once upon a time, a regular investor called his broker to buy shares in a company. the broker called that order into a trader on the stock exchange floor. and for that, you paid the broker a substantial commission. that was then and this is now. today floor traders are becoming a thing of the past. the majority of stock trades in the united states aren't even made by human beings. they are made by computers. and the time it takes to execute your stock trade is dramatically faster and the commissions are dramatically lower. in the 1990s investors started migrating online for trade. for the first time we had access to real time market information and could trade in real time. that innovation gave birth to the individual day trader. but when it comes to innovation, big-time institutional investors are leaps and bounds ahead of us. they are using superfast computers, running complex

math mat cal algo rhythms. they are trading firms that use superfast connections to take advantage of stock movements measured in fractions of a penny within fractions of a second. they do it it countless times a day. you can't do that from home. in fact, up to half of all trading volume on exchanges is now taken up by such high frequency trades. where does that leave the little guy? many would say at a disadvantage. some would say the little guy has always been at a disadvantage. for retail investors who stayed invested in the stock market over the last four years they saw a gain in the s&p 500 of 130%. disadvantage or not, that gain is all that matters to some people. i'm joined by christine romans host of, your bottom line" and camilla sullivan the writer and producer of a new film called "ghost exchange" that feocuses n

high-speed trading. here's a clip from your interview with the owner of liquid net, a so-called dark pool that allows institutional investors to trade large blocks of securities without wild swings in prices. >> we continue to invent things faster than the regulators can understand it. and faster than we have the ability to assess the risk of it. so what happens and what has happened is that the industry makes a tremendous amount of money creating these new types of products until it blows up the world. >> wow. i didn't even know there was a movie on this. what made you think this was something you'd make a movie about? >> it's such a complex topic. it's so hard to get your head around. figured the movie medium as a documentary is probably the best way to bring this discussion mainstream. >> probably is. let's start by bringing it mainstream right now. if you had a little time, how would you explain to my viewers

the perils of this type of trading? >> think about it this way. if you have a car that can do 200 miles an hour, should you drive it 200 miles an hour? no. this is like a freeway with no speed limits and some people have ferraris and some people have camrys. >> just to be clear, the average investor, the person watching me now cannot get that ferrari. this is not something you can compete with. if you're the most active day trader going, this high frequency trading can trigger a flash crash. that you can have nothing to do with. >> these are systems that are very closely guarded by the big companies that use them. in some cases it's brainiac m.i.t.s who for their final project -- there was one time we profiled a kid who made the black box. he said because i'm hoping goldman sachs buys it for $10 million. look at it this way. when i first started, people used a grid chart and would look at three different or four or five different kinds of

commodities and they would see the relationship between them and place trades in them. these computers do that with hundreds and thousands, a human isn't doing it. a box is doing it. when i first started covering markets, imagine atari when we were kids. right? this phone, the technology has changed so much this phone has 500 million times the power of that 2600 atari. that technology has been applied to trading. what we do that was the atari of when we were learning how to trade is now a 500 million times that complex. am i right? >> absolutely. when you look at the complexity, if you look at the price of disney in one second, there are 30,000 price changes in one second of disney stock. what's the price? >> wow. >> here's my main question. we're talking to people about whether they should have been invested over the last four years and whether with the traditional measure of the stock's value, the price to earnings ratio, being lower than it was four years ago, whether you should still be invested. let me ask you this. is the deck stacked against?

>> the deck is stacked against a day trader. i personally believe the days of day trading are over. for retail investors, you have access to firms who will manage this for you who do have the superpowers for you. but trying to do it yourself and thinking you're going to outday trade a black box, you're dreaming. >> christine, there's been a lot of pushback. last week we did a show that told people you need to be invested. there's mo other game in town because the fed has pushed interest rates that either you get into a house or you get into the stock market. this is the stuff that makes people not trust the world. should they trust it? >> regulators are looking at it. the market has always moved ahead of regulators. i think we all agree on that, right? it's no question. when it was people. people. just when you look at the computerized trading versus hand to hand people, when people were trading we said is the deck stacked against the lone investor? because now they're front running and doing this. small investors have always worried that the system is big

and complex it's bigger than they are. >> i hate to sound like an old fuddy-duddy, but when we worked on the floor of the new york stock exchange, there were 6,000 traders. were things fairer with people? and is that a silly argument? >> it's a great argument. it's easier to regulate. when they wrote a lot of t regulations, they wrote instantaneous. what is that? me talking to you. now it's the speed of light and if my service half the speed of light? it's just the fact that technology has leaped from our ability to regulate. >> it's not an argument against investing but it is an argument thinking that you can compete with the big boys if you are an active trader. that deck is stacked against you. camilla, thank you so much. she's the writer and producer of "ghost exchange." of course, christine host of "your bottom line." coming up, it is a two-headed bull shark discovered by a fisherman in gulf of mexico. creepy. doesn't have anything to do with money, but the phrase two-headed bull shark struck me as a perfect way to describe the stock market right now.

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aarrggh! the stock market continues its bull run, but does that mean the economy is set to soar? this week the s&p 500 was trading above its all-time closing record set back in 2007. this matters to you because you probably have 401(k) funds that mimic the index. it's up 10% in just the first three months of the euro. some are lucky to get 10% in an entire year. those who stayed invested from some time when the market bottomed out would have a gain of 130% in four years. on top of that, the dow just wrapped up its best first quarter since 1998. i can tell from my tweets that many of you still aren't buying it. that's in part because of a disconnect that some of you think exists between this bull market and the broader economy.

despite 36 months of private sector job growth and a stock market that's more than doubled, folks are wary or don't have the money to invest or don't trust governments or banks. they figure it would be dumb to buy into a record-setting market. look at this. despite four years of almost constant gains in the market, 55% of you say that investing even $1,000 in the stock market is a bad idea. needless to say, i couldn't disagree with you more. the more important question isn't necessarily when you should buy. when a market is on a tear like this, it's when you should sell. you don't make money until you sell but a rising market can make you greedy. you fear losing out on the next bull run. one thing you can do is set a target selling price. that's not easy to decide. what to set it at. some say if you lock in a i 20% gain you're doing pretty well. carter worth is the chief market

technician and amy smith, and thank you for joining us. amy, let's start with you. thinking about the market generally, how should an investor decide when to sell? all i ever get is tweets and questions about should i buy this. nobody asks whether i should sell something. >> first, you should always consider selling a stock if it falls 7% to 8% below what you paid for it. that way you're protecting your portfolio. frint, if yfor instance, if youe a 33% loss of a stock it will take a 50% gain to get back to even begin. that's too big of a loss. it's hard for all of us to come back from that. that's the first thing. the next thing is to talk about about offensive selling. this is when we get to take profits off the table. you're going to do that mostly -- most stocks with great earnings and sales will run up on average historically about 20% to 25% before they begin

pulling back in price. you might want to think about locking in profits at 20% to 25%. the next is the individual investor must look at the average indexes and what individual stocks are doing. if there's heavy duty volume that comes into the market or indexes or heavy duty markets that come in leading stocks, the institutional investors are heading to the sidelines. we want to do with the institutional investors are doing. three out of four stocks will follow what the general market is doing. you don't want to argue with the market. you just want to get out. >> ned, you seem to think selling it right now despite the run-up the market is a terrible idea. what would have to happen for you to decide it's time to sell some stocks? >> well, selling stocks is selling individual stocks actually goes to the same equation. it's mainly profits. and where profits are going. the first thing i tell people is to watch the momentum and earnings year over year. if there's a deterioration in the growth rite of a company's

earnings, then one should be wary. analysts will justify one shortfall in earnings, but the second one is problematic. so i tell people maybe take some profits off the table with that first warning signal and wait for the next. the second issue is with profits but it's with accounting changes. look for companies doing accounting changes that enhance short-term earnings. this is what i call fluff reporting. basically when you see a company that's starting to change the way in its methodology and enhances short-term earnings that's a problem. the third thing i tell people is watch wall street estimates. if they start to deteriorate, there's growing concern about the future of the company. but more important, look for the outliers. those that are most pessimistic on a stock and see if the rationale for that pessimism is there. if it is there, i would suggest, if you agree with them, that you start to sell that stock immediately. regardless of what wall street says. >> all right. but the interesting point that i'm taking from everything that you're saying is that you're

asking people to do some research about the companies. don't get caught up in momentum and plays about the market in general. carter, you have a different view about what the stock market is going to do. you say the market is in for a correction pretty soon. maybe between 6% and 9%. you brought this chart, it's a two-year chart of the s&p 500. if you want to look at the chart broadly you can say in the last two years the thing has done nothing but go up and it looks fantastic. but you have a warning, those red arrows. >> we're in a bullish phase. it's a great bull market. history shows that when you have very euphoric bull phases, they give way to corrections. what amy cited is prudent. there are rules for offensive selling. and she cited 20%, 25%. the stock market is annualizing somewhere between 40% to 70% depending on what index you look at. from a november low, we're up

about 20%. at this point, this is exactly a normative pullback or correction or pause occurs. in fact, in the last two years, three years, we've had several between 10% and 15% pullbacks. last september it was 12%. april and so forth, a similar kind of thing. so is this a time to be getting more aggressive or to be actually harvesting some gains? many things are up more than 20%. i would put it in this context. intermediate tops or bottoms, peaks or troughs, intermediate tops are typically identified by rapid price increases, just what we're seeing now while everyone's trying to get in. just as intermediate bottoms are typically identified by rapid price declines when everyone is desperately trying to sell and get out. >> excellent conversation. good advice. not the same advice, but if you are listening to this you got some advice of when to buy and sell in this market. carter worth, ned riley, and amy smith, thank you.

take a look at ben bernanke. he doesn't look that scary. he has a lot of people worried. should you be worried? richard quest joins us for q&a. stick around.

it's time for a little q&a with my good friend richard quest, host of "quest means business" on cnn international. he's spoiling for a fight. one of reasons we're seeing this bull market in u.s. is because of intervention by the federal reserve pumping $85 billion a month into the economy, keeping interest rates low and that's

pushing money out of bond markets and into stocks. it's why a lot of people think it's artificially fueling the bull market. so today's question, are the world's central banks too powerful? let me go first, richard, for a change. give me 60 seconds on the clock, starting right now. i take issue with the premise of the question which was your idea. the too big or too powerful question is silly. if central banks weren't as powerful as they are, the united states would have been sent back to the stone age by the financial crisis and europe would be decimated by its subsequent debt crisis. central banks exist to set monetary policy and manage interest rate levels and promote growth and ensure adequate money supply. they do it two ways, richard, you know. they print money, which puts more of it into the system, makes it cheaper to borrow money. that's why america is seeing a housing boom after years of bust because mortgage rates have never been lower.

when prices across the board start to rise, inflation, central banks take money out of the system making it more expensive to borrow without central bank intervention, richard, receptions can become depressions. that's why they can be good or evil, but they must be powerful and independent of politics otherwise they would be useless. richard? what are you huffing and puffing about? >> if you take a strictly narrow definition of central banks as you have blinkeredly done so, then, yes, they are fine. but the problem, ali, is that central banks today have a wider and widening remix. the fed with its 6.5% threshold on employment, widening the remit. the bank of england with its vast new supervisory powers, widening the remit.

the ecb with its omt policy and with its new supervisory powers, widening the remit. the imf chief economist, the former president of the bundesbank, numerous people are now saying there's a contradiction between the widening remits and central banking dependence. politicians make those decisions, not unelected central bankers. be warned, there's a contradiction, there is a conflict and they are too powerful. >> that's an almost perfect argument if i had anybody idea what widening the remit means. but, boy, you made it really well. richard quest champion of his debating union. whenever it was that he ended up going to school. the banks that are too big to fail before the financial crisis are bigger today. but one person's too big to fail is another's buying opportunity. could the banks that drove the u.s. into recession power your portfolio's recovery up next.

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for market discipline to effectively constrain risk financial institutions must be allowed to fail. >> that was 2008. five years later the banks and rescue institutions are still too big to fail. >> too big to fail was a major part of the source of the crisis. we will not have successfully responded to the crisis if we don't address that problem successfully. >> in 2007 the biggest five banks held $6.2 trillion in assets equivalent to 44% of the economic output. today it's 8 trillion or 56% of gdp. dick is a banking expert. you say the u.s. needs big banks. did you ever agree they were too big to fail or needed to be less big? >> i think it's very definitely needed to have banks that were too big to fail. if the united states wants to be an effective competitor in the global financial markets.

remember, the united states is the biggest, strongest financial entity in the world. but they are rapidly losing that position. in the the last, say, ten days, a number of chinese banks have reported their earnings and what that shows is that each one of the top four banks in china are earning substantially more money than the top four banks in the united states. the chinese are gathering greater control over the global financial system and as they move to push the dollar aside with the yuan, their currency, in the united states we're trying to shrink ourselves out of the way. it is almost as if we have a death wish for our financial system that we want to be the next great britain with the next pound while the yuan takes over and pushes the dollar aside. >> do you think there's any risk in banks being too big to fail or none whatsoever? >> there is a great deal of risk in banks being too big to fail but we must take that risk. that's the difference in the

thought that i have with your commentators. in other words, they believe that you should run for the hills and not accept risk and not accept the cost of risk, if you will. we must accept the cost of risk, because if we don't, our financial system, which is shrinking badly, shrinking dramatically relative to the world financial system, our financial system will no longer dominate the global financial markets. that is not good for the united states. it means that the united states will have to repay its debt, which is something that we cannot do. so the net effect is they have to think beyond simply what the costs are when these big banks fail which obviously admittedly is very high and they have to understand that the united states has to absorb it. >> so instead of just being on the seechg end of this, account little guy benefit from it, financial stocks are coming back but they still actually lag the broader market. here's a chart. blue is the s&p 500. the red is financial stocks. the pattern is roughly the same. they've moved in some degree of

lock step but the gains haven't been anywhere near the broader market, dick. tell me what your thoughts are on that. >> well first off, over the last 18 to 20 months banking stocks have outperformed the market. if you had purchased bank stocks a year ago, a year-and-a-half ago, 20 months ago, you would have been making more money than if you had bought the broader market. secondly, i'll give you a shocking statistic. assume you are a mutual fund manager and you put $10,000 a week into purchasing bank of america, one of the worst of all the stocks. correct? of all the bank stocks. if you had bought it every week from the day that bear stearns failed to the present, you'd be sitting with a profit now of about $300,000. so you didn't lose money in terms of buying these stocks on a dollar cost averaging basis through this period. and if you were buying them over the past 12 to 18 months, you'd beat the market soundly. >> should you be buying them now assuming you think you should be getting into the market

generally? >> yeah, i do think he should be getting into the market generally. at the present time you have a large number of banks in the united states selling at discounts to their book value. their book values are actually rising because of the boom that's occurring in housing so the net effect is not only are these stocks selling at discounts to their book values but the book values are understated because as housing prices go up, all of this distressed assets on the books of the banks are in a position with their rising. i think bank stocks are incredibly cheap and i think basically you are looking at least at a 20% rise between now and the next 12 months on these issues. >> dick, as always, thanks for joining us. i suggest you look into buying stocks. i haven't bought a new car in a while. i drive a 2005 nissan xterra suv. this car is a little bit different. >> people are try the electric

car first. they never know when it is on or off. there's no noise, no vibration. no smell, nothing at all. >> nissan's ceo says this car is the car of the future. why aren't you buying them? i'll take a test drive next. [ male announcer ] this is george. the day building a play set begins with a surprise twinge of back pain... and a choice. take up to 4 advil in a day or 2 aleve for all day relief. [ male announcer ] that's handy. ♪ hmm, we need a new game. ♪

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frmplts the new york auto show, i'm ali velshi. this is "your money." this is a nissan leap.

take a look. look for a tailpipe. get lower. get lower. look for a tailpipe. there isn't one. this is a fully electric zero emission vehicle. i went for a test drive with the head of nissan. >> it is always amazing because people drive electric car first, they don't know whether it is on or off. no noise, vibration, no smell, nothing at all. >> what's the feedback you get why people come in, try it out and don't buy it. what's the thing that stops them? >> well, you know, people who try it and don't buy it are waiting. they're just saying look, this is a good idea but let me discuss it with my friends, my neighbors, let me try people who own electric cars, where are the charging stations. this of car in my opinion is going to carry a lot of brand and is one of the big engine of growth for the future. i don't think on the short term

is it makes any big impact for the moment on our sales. nissan is approaching 5 million cars sold a year. 50,000 leaf a year is not going to make a big difference for the company. but in terms of tech noknow logical image, it's pretty good car. >> we talked about a good lineup, your lineup has increased dramatically in the last few years as you promised it would. availability of credit was a real hindrance to your business. are we done with that in the united states? is there still a remnant of people who want to buy cars and in your opinion should qualify for loans who are still not getting them? >> no, i don't think so. i think in the u.s. there have been a dramatic change. i think the problem that we've seen in 2008, 2009 are really way behind us today and i don't think it is