• Stock Smarts: Victory Rally?

    America is digging in for war with Iraq. Any doubts about that were surely erased this past week when Colin Powell spoke to the United Nations. On Friday, Feb. 7 more tensions came about as the terror threat level was raised to “High”.

    But could a quick war and a big American victory actually be exactly what this stock market needs to make a big turn-around?

    Hilary Kramer of FOX Business News says a quick victory will give the market the shot in the arm it needs to turn positive. She says oil prices will come down and that will help to boost companies’ profitability and bring investors back into the market.

    Jonathan Hoenig of Capitalistpig Asset Management does not agree.  He says he sees the charts of a lot of big stocks in the major indices breaking down like McDonald’s (MCD), Home Depot (HD), and  AIG (AIG) and he’s very skeptical that a quick war could help turn those around. He’s still betting against the Dow.  He says the only thing he sees going up right now is the cost of energy which is not good for these stocks.

    Wayne Rogers of Wayne Rogers & Co. agrees with Jonathan.  He thinks that there are spots in the market where you can still make money, but he says the outlook for the broader market right now is very negative, and he doesn’t think a quick war will turn it around. He says a quick war may bring a bump up in stocks, but it will be short lived unless the profit picture starts looking more positive than if does right now.

    Dagen McDowell of FOX Business News says she thinks a quick victory in Iraq will turn  confidence around.  She believes businesses will start spending more money and investors will come back to the market and stocks will move higher.  She says now is the right time to buy stocks while most people are negative and stocks are cheap.

    Gary Kaltbaum of Investor’s Edge Partners says, “The market will pop if we win the war; it’s a fact!”  BUT he says investors should sell when it does pop because the underlying fundamentals will eventually cause the market to continue lower.  He says earnings are “horrible” and stocks are still priced too high and the market’s message over the last couple of weeks is SELL!

    Best Bets: Victory Winners!

    Which stocks will be the biggest winners if we see a big American victory in Iraq? The panel offered their best bets.

    Gary's Victory Stock: Golden West Financial (GDW)

    52-week high: $76.40

    52-week low: $56.20

    Friday's close (2-7-03): $73.19

    Gary says he doesn’t think anything will change after the war, and he says you should bet on what’s working now to continue to work when the war is over.  He likes GDW because the stock has acted well all along and has “refused” to go down in a bear market.  Jonathan says there’s no question that savings and loans are about the only stocks behaving well right now.  He says GDW is a strong stock.  He prefers the smaller, microcap stocks in this sector -- those with a market cap of under $100 million.  He says these companies are really performing the best right now.

    Wayne's Victory Stock: Plains All American (PAA)

    52-week high: $27.30

    52-week low: $19.50

    Friday's close (2-7-03): $24.78

    Wayne has picked this stock before.  He owns shares.  He says he doesn’t think we are going to get a big run up in any stocks despite the war outcome, and he likes PAA because the dividend helps preserve capital.  Hilary likes the stock.  Jonathan also likes the stock.

    Hilary's Victory Stock: Royal Dutch Petroleum (RD)

    52-week high: $57.30

    52-week low: $38.60

    Friday's close (2-7-03): $39.89