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    Bulls & Bears

    Brenda was joined by: Gary B. Smith, columnist for RealMoney.com; Pat Dorsey, director of stock research at Morningstar.com; Tobin Smith, founder and chairman of ChangeWave Research; Scott Bleier, president of HybridInvestors.com; Charles Payne, CEO of Wall Street Strategies

    Trading Pit: Bullish New Year!

    Another winning year for stocks! This makes 2 years in a row that the Dow, Nasdaq and S&P have made investors money. Will this streak continue in 2005?

    Gary B: We will have a winning 2005. Looking at a chart of the Dow, we see that it moved up in ’03, paused in ’04 and now it looks ready to head higher. I predict Dow 12,700 in ’05!

    Charles: I think small cap stocks will definitely outperform large cap stocks this year. The Nasdaq will be up 30 percent or more in 2005.

    Tobin: Looking at a combination of inflation, interest rates and earnings growth, we see that the market is undervalued now. I think the market on the whole will be up 7-8 percent this year. I agree with Charles that small cap stocks will lead the market.

    Pat: I disagree that small caps will lead the market this year. Large cap stocks will do better because the small caps are more expensive. We’ve seen a lot of large cap stocks like Wal-Mart (WMT), Johnson & Johnson (JNJ), and Medtronic (MDT) that haven’t gone anywhere the past 5 years, but they have lots of cash and continue to grow. This means each will be a lot cheaper.

    Scott: The first half of the year will be good and we will test the old highs on the Dow, but the second half will not be as good. I disagree with Tobin, the market is not cheap right now.

    The Scoreboard: Best and Worst Calls of 2004!

    First, the best calls:

    Last November, Charles said to buy Goodyear (GT). Since then, it is up 20 percent. (Goodyear closed on Friday at $14.66.) He isn’t sure how much further it can go from here. He suggests taking your profits now.

    About six months ago, Scott liked Hovnanian Enterprises (HOV). It has gone up more than 60 percent since then. (Hovnanian Enterprises closed on Friday at $49.52.) Scott sold it, but he does think it has 20-30 percent more to go.

    In March, Gary B. suggested buying eBay (EBAY). Since then, eBay is up more than 68 percent. (eBay closed on Friday at $116.34.) Gary says it still looks good and there is no reason to sell. eBay is ready for another nice run up.

    Three months ago, Tobin said to buy Sirius Satellite Radio (SIRI). Since that time, it is up 106 percent! (Sirius Satellite Radio closed on Friday at $7.62.) Toby still likes it and thinks it will eventually hit $10-11.

    And the best call of the year goes to Pat! One year ago, he said, “Buy the Chicago Mercantile Exchange (CME)” and since then, it is up 227 percent! (Chicago Mercantile Exchange closed on Friday at $228.70.) He still likes it and says to keep holding on.

    And now, the worst calls of 2004:

    In May, Pat said to buy Alliance Gaming (AGI), but it is down 38 percent since then. (Alliance Gaming closed on Friday at $13.81.) Pat said this was a terrible call. The company made some huge strategic errors and he doesn’t think it will turn around. He says sell now and take the loss.