• Stock Smarts: Saddam’s Bull!

    Uncertainty – the market hates it! And right now there’s plenty of it going around.  Over there, Saddam Hussein. He’s prepared a 12,000 page confession on his weapons stash, but he’s lied before.  Over here, a White House shake-up. President Bush’s top two money men quit, raising concerns that our economy may be in worse shape than we thought.  What does all this mean for the market?

    Jason Trennert of ISI Group says he thinks the market can weather both Saddam and the shake-up. His firm has looked at market performance during past military conflicts and he says the only one in which the market performed poorly was Vietnam.  But,  he says, Vietnam was a long drawn out war with very different problems than the ones we face right now.  As for the shake-up in Washington, he says Paul O’Neill’s and Larry Lindsey’s resignations look like a prelude to a new tax package that could eliminate individual’s taxes on dividends which would be a huge benefit for the market.

    Wayne Rogers of Wayne Rogers & Co. agrees with Jason.  He points out that Saddam was in power all throughout the 1990’s bull market and that whether he is in or out is immaterial to the market unless we have a drawn out conflict to get him out.  And the market will then be concerned about who will run Iraq once Saddam is gone.

    Jonathan Hoenig of Capitalistpig Asset Management says Iraq and Saddam are low on his list of concerns for the market.   He says the O’Neill and Lindsey resignations are his number one concern.  He’s also wondering if the latest tech rally can last.

    Hilary Kramer of Montgomery Asset Management says she’s not concerned about the resignations at all.  Like Jason, she sees the shake-up as a positive that will ultimately result in a new tax package that will be bullish for stocks. 

    Jonas Max Ferris of Maxfunds.com says the abrupt nature of the White House shake up makes it appear to him as though there may be some very bad economic news coming down the pike and he thinks the market may suffer some jitters as a result of that suspicion.


    Tech Traps?

    We made big money, and then many of us lost our shirts! Now tech is a four-letter word (not the good kind!), but the very same names than inflicted the pain are rallying again. Do we dare buy them?

    Dell (DELL)

    All-time high: $58.13

    Fell to: $16.62

    Friday's close (12-6-02): $28.65

    Jason thinks Dell is a buy here and that it has a great business model.  Hilary likes it, but thinks it’s a little pricey here.  She would buy it on a pullback.  Wayne owns Dell shares.  He bought some at $11 and some more at $17, but he thinks the stock is too expensive here.  Jonathan says if he had a loss in Dell, he’d take it for the write off and swap into something else.  But if he were sitting on a winning trade he would let it ride.

    *eBay (EBAY)

    All-time high: $121.88

    Fell to: $27.94

    Friday's close (12-6-02): $68.54

    *Split-adjusted prices

    Wayne is not buying eBay.  He thinks it’s a good long-term holding, but too pricey to buy here.  Jonathan says there’s a mini bull run in these Internet stocks and they can make for great trades.  Hilary and Jason both like the company, but think the stock is fully valued. 

    Verizon (VZ)

    All-time high: $69.50

    Fell to: $27.43

    Friday's close (12-6-02): $40.19