Stock Smarts: Buy Before War?
Saddam has never kept his word before, and if he balks this time, we go to war. Should you wait to see if it’s a quick American victory, or buy stocks now?
Adam Lashinsky of Fortune magazine says he thinks it’s a bad idea to “trade the war,” but if you are going to try it, then you want to buy now because typically during the “saber rattling” period before a war begins people get nervous and stocks stay down. But once the war actually begins (assuming the U.S. does well) stocks tend to rally.
Hilary Kramer of Montgomery Asset Management agrees. She says “buy on rumor, sell on war!” Hilary thinks oil companies are a great buy before the war - “we’re not going to have $25 a barrel oil forever.” She thinks BP (BP) and ExxonMobil (XOM) oil are good buys right now and good trades two or three months down the road.
Jonas Max Ferris of Maxfunds.com thinks it’s dangerous to assume the market will follow the same pattern this time around as it did during the Gulf War because stocks are not as cheap as they were then. He also says “we really can’t afford this war and I think the market sees that.”
Wayne Rogers of Wayne Rogers & Co. says the market hates uncertainty and we don’t know the outcome of this war, and we don’t know who will run Iraq. Once the war starts (and if it is going well) he think that stocks will rally, but he doesn’t recommend trying to guess the timing.
Jonathan Hoenig of Capitalistpig Asset Management says now is a great time to trade. If your focus is more short term, these are great days for you because there is so much volatility in the market. He sees trading opportunities in Internet stocks and even some large cap tech stocks - “if you are trader, not a long term investor, you can make money here.” But he says you have to stay in top of your trades.
Bin Laden Bets
There are stocks that suffer as long as Usama bin Laden lives – buy them now and profit when he’s finally taken out.
Hilary's bin Laden Bet: Starwood Hotels (HOT)
52-week high: $39.94
52-week low: $19.00
Friday's close (11-15-02): $24.40
Jonathan thinks it may be too early for this stock. He says it’s a weak stock in a weak sector. Adam agrees with Hilary that this stock will get a pop when bin Laden is finally captured because it’s part of the hard hit travel industry that is suffering from fears of terrorism.
Adam's bin Laden Bet: Southwest Airlines (LUV)
52-week high: $22.00
52-week low: $10.90
Friday's close (11-15-02): $15.10
Jonathan would only by Ryanair (RYAAY) in the airline sector. Hilary says Southwest Airlines is the premier company in the sector and it’s a great company that has managed to avoid all the pitfalls of other airlines - she likes the pick.
Jonathan's bin Laden Bet: Royal KPN (KPN)
52-week high: $6.75
52-week low: $3.45
Friday's close (11-15-02): $6.32
(Jonathan owns this stock)
Hilary says the telecom market is over saturated and she doesn’t like this pick. Adam says, “if the “Evil One” gets knocked off, certain things are going to go up on that news, telecom is going to be the last one.” He doesn’t like the pick.