Neil Cavuto was joined by Jim Rogers, president of JimRogers.com; Gregg Hymowitz, founder of Entrust Capital; Charles Payne, CEO of Wall Street Strategies; and Meredith Whitney, portfolio manager at Circle T Partners.
Bushwhack the Bear!
Should the war room at the White House set its sights on this rocky economy and stock market?
Jim says yes. The market would be going up right now if investors were not worried about a possible war with Iraq. He points out that stock prices are low and the economy is improving. Jim thinks the government should cut spending and replace the income tax with a consumption tax.
Gregg thinks President Bush should and will begin focusing more on the economy after the November elections. He says the President should shake up his economic team, by getting rid of Treasury Secretary Paul O’Neill or SEC Chairman Harvey Pitt.
Charles says the President needs to help improve investors and consumers negative sentiment by making a major speech on how to improve the economy. He also says the government needs to help the back bone of the economy, small business, with tax breaks and deregulations. Charles also thinks removing the capital gains tax will spur the market.
Meredith says the problem in the economy is specifically one of excess capacity and that there is very little Bush can do about it other than encourage a more prudent fiscal strategy with few bailouts. She thinks the President did the right thing by ordering the West Coast port workers back to work. A continuation of such a work stoppage would have done significant damage to an already fragile economy.
Is tech about to get revived. The sector led the rally on Thursday and Friday, and while history shows October is the worst month for the tech laden NASDAQ, it also shows it’s a buying opportunity with November, December & January usually among the top performing months for the NASDAQ. Will we see a tech rebound this time around?
Gregg says yes. He thinks prices are too beaten down, and that business spending for technology is starting to pick up. He does not think we’ll see another tech rally of the late 1990’s but he does think now may be a good time to buy proven leaders like Microsoft (MSFT) and Dell Computer (DELL). He does not own either stock.
Jim says tech stocks and the overall market are due for a rally, but he does not think it will last. So he would not recommend to buy any tech shares right now, and suggests selling IBM (IBM) if it rises in a rally. Jim recently covered his “shorts” on IBM, Microsoft (MSFT), Cisco Systems (CSCO), J.P. Morgan Chase (JPM), General Electric (GE), Fannie Mae (FNM), Freddie Mac (FRE), Bank of America (BAC) and AOL Time Warner (AOL).
Meredith says investors should stay away from tech, because of excess capacity and bad economic fundamentals that won’t get fixed anytime soon. She recommends shorting Research In Motion (RIMM) because Wall Street, the largest consumer of RIMM technology, is laying off a quarter of its employee base by year end. Her firm is currently short the stock.
Charles says tech will not recoup the big losses suffered over the past 18 months, but he does think some stocks will recoup 20-30% of those losses. He recommends, but does not own, chip makers Linear Technology (LLTC) and KLA-Tencor (KLAC) for a short term buy.
Head to Head: “Best Investment For Your Money?”
Neil says stocks are a good investment for long term investors, because history shows stocks go up an average of 7.5% a year in the long run. Rob Stein, Managing Partner with Astor Asset Management, disagrees and says it’s impossible for the average investor to time what year stocks will go up versus going down. He recommends staying out of the market altogether unless you are a professional investor.
FOX on the Spot
Meredith predicts the government will have to save a major financial institution from bankruptcy by the end of the year! Three banks on her watch list are J.P. Morgan (JPM), Credit Suisse (CSR) and German based Commerzbank.
Charles says stocks rise in Q4 on stronger than expected numbers from IBM and the housing market!
Jim thinks there will be huge layoffs in states and municipalities after the November elections!
Gregg thinks the U.S. does not go to war with Iraq, and that Treasury Secretary Paul O’Neill gets fired!