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Bulls & Bears
Brenda was joined by: Gary B. Smith, columnist for RealMoney.com; Tobin Smith, founder and chairman of ChangeWave Research; Scott Bleier, president of HybridInvestors.com; Joe Battipaglia, chief investment officer of Ryan Beck Company; and Adam Lashinsky, senior writer at Fortune Magazine.
Trading Pit: Money Christmas
Right before Christmas, the Dow gave investors a gift, and closed at its highest level in more than 3 years!
Will it be a Money Christmas for investors?
Joe: Yes. The stock market looks very healthy going into 2005. I expect a 10 percent gain for the S&P 500. Consumers will stay strong, oil prices will continue to slide, and the Fed will move rates slowly.
Adam: The market feels more confident than it has in months. Oil prices are relatively stable, the weak dollar is helping U.S. companies turn profits, and we’re at a point haven’t seen in 5 years. Investors will make money if they’re long the big indexes. It looks like a Goldilocks stock market, not too hot, not too cold, just right.
Gary B.: The market is in good shape. I’m still bullish. I’m a little worried Adam’s bullish, but the chart is backing him up. I expect a nice run to finish the year and that the S&P 500 could hit 1250 by the end of January.
Tobin: The Santa Rally will carry through 2005 because the good news will continue. A bull market means there’s more good news than bad news. The first quarter of 2005 will be the second strongest quarter as far as sales demand and growth that we’ve seen in 3 years! You don’t want to chase stocks and don’t want to own the big caps. You want to own the leaders in the S&P 600 (the Standard & Poor’s index of small cap stocks) because the S&P 600 has led the markets the past 4 years.
Scott: 2004 was very tough for investors. The market was stuck in a miserable trading range until the election and then the Dow, Nasdaq, and S&P 500 all had an incredible rally. But now is the time to sell because there is going to be a vicious correction coming in the first quarter of 2005. I expect the Nasdaq to lose 8 percent and the Dow to drop 4-5 percent. However that will be an excellent buying opportunity.
A Secret Santa Stock X-Change with Joe, Adam, Tobin, and Scott.
• Joe: Western Digital (WDC). The stock is cheap and its PCs are flying out the stores’ doors. Its next several quarters will be very strong.
Tobin: I like Hitachi (HIT) better.
Adam: There’s not a lot of growth upcoming for the PC market.
(Western Digital closed at $10.49 on Thursday.)
• Tobin: Fording Canadian Coal Trust (FDG). This company is going to double the contract rate of the coal it sells and this will make its dividend explode from $8 to $16-18. And that dividend is almost 100 percent tax-free because it’s a Canadian trust.
Adam: Yes, I like the coal theme.