Neil Cavuto was joined by Gregg Hymowitz, founder of Entrust Capital; Jim Rogers, president of JimRogers.com; Tom Dorsey, president of Dorsey, Wright & Associates; and Price Headley, investment strategist of BigTrends.com.
Usama vs. Saddam
Last year President Bush said "Usama: Dead or Alive." But Wall Street seems to be saying we just want him dead, but leave Saddam alone for now. So why does the market tank when Al Qaeda strikes and a Usama tape shows up, but rallies on any sign war with Iraq can be averted?
Jim says investors and Americans in general do not like war. Since it would take a war to remove Saddam from power, stocks go up after any news indicating we will not go to war. On the other hand, Usama is a bigger threat than Iraq and any news that Bin Laden is alive sends the market down.
Gregg agrees, but says he does not think we will go to war with Iraq. If he is wrong, he thinks a quick victory would ensue and that would be a positive for the economy and stocks.
Tom thinks if we go to war it will be short lived because the Iraqi soldiers remember what happened in 1991. Initially the market would rally, but then it will settle down and continue in its desired direction.
Price thinks a longer war would hurt investor confidence. We would likely make lower lows and the Dow would trade in a range between 6-9,000.
In late 1962, we saw the Dow start a 78 percent, four-year Bull Run. This after a quick end to the Cuban Missile Crisis and after a bear market. Now we have the Iraqi crisis and a bear market, albeit a much worse one than back then. We also have tax cuts in the works like back then. Is history repeating itself?
Gregg says history will repeat itself. He also points out that like now back in the 60s there was one party rule, slow but rising GDP, rising interest rates, and tame inflation. He thinks financials will do well in this environment and recommends J.P. Morgan Chase (JPM), which he owns.
Jim says stocks would rally if we settle the Iraqi crisis peacefully, but he does not think that would lead to a new bull market a la 1962 or any other. He believes the bear market will continue in the U.S. But he is bullish on Austria's market and recommends the MS Austria Index (EWO), which he owns.
Tom does not think we are repeating history. He thinks stocks will be stuck in a narrow trading range for several years. Price agrees and points out that our current bear market is much deeper and longer than the one before the 1962-66 Bull Run. So, it will take longer for stocks to rise again now. Tom and Price say while the overall market will not move higher, specific stocks will. Tom likes telecom stocks like Nokia (NOK) and DJ Telecom Ishares (IYZ), which he does not own. Price recommends Charles Schwab (SCH), which he doesn't own it.
Neil Cavuto says people are not paying their "fair share" of taxes. In fact anyone who makes a decent living is paying way too much. The top 10 percent of earners in America pay more than two thirds of all taxes in America. And if you are in the top 10 percent that just means you make at least $87,000. That's not filthy rich. Eleanor Clift, contributing editor at Newsweek and FOX News political analyst says the top one percent are getting too much taxes cut and it should be given to the middle class.
FOX on the Spot
Price predicts the Dow hits 10,000 by April 2003!
Tom says to buy telecom now! This beaten down sector rebounds over the next 2 years!
Gregg thinks the Fed will cut rates again on worries of deflation!
Jim predicts Michael Eisner's 'magic' is running out. He may get the boot from Disney!
Neil says Republicans will act low key when it comes to tax cut issues. They don't want to overplay their election victory like Newt Gingrich did in 1994!