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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; and Bob Olstein, president of the Olstein Funds.
Trading Pit: $ocial $ecurity
Do you want the option to invest some of your Social Security money in the stock market? Right now, the answer appears to be no!
That's the word from a new FOX News/Opinion Dynamics poll. 47-percent say it's a bad idea; only 40-percent like it.
By almost any measure, Social Security would be in far better shape if it had been invested in the market. So what gives?
Gary B. Smith: The strength of our society is based on ownership—the ability to go out and do things on your own. Our country did pretty well for 160 years without Social Security. I think this is a good idea, but President Bush needs to “sell” his reform plan better.
Bob Olstein: Americans are ill equipped to do private accounts. I agree that there is a problem with Social Security as it is currently funded. But any type of reform is not going to go through until they figure out how it is going to work. You can’t allow the lunatics to run the asylum.
Tobin Smith: Private accounts is a good idea. The 47-percent against it are probably a lot of people who lost money recently in the stock market. Right now is a lousy time for Bush to try to convince people to invest in the market. But he shouldn’t emphasize the stock market. Instead he should focus on the ownership. With these accounts you can sell it, give it to your kids, etc. Also, these accounts are going to be invested in bonds or a very large index fund like the Wilshire 5000.
Scott Bleier: The reason the majority of people do not want privatization is because it is going to cost a lot of people a lot of money. Anyone who works for a living is going to get hurt. The only way to fix Social Security is to raise taxes.
Pat Dorsey: The reason this is losing support is that President Bush is now saying what he didn’t say in his State of the Union. Benefits are going to have to be cut or taxes are going to have to be raised. Benefits will have to be reduced somehow to pay for the transition to private accounts. In this case, young people win, but people getting benefits now lose.
Bob’s always saying that we’re in a “stock picker’s market,” so we made him the stock picker and gave him the whole market. (Bob owns all of these picks.)
Bob: My first pick is brewing company, Molson Coors (TAP). Molson and Coors recently merged and there’s a lot of room for cost cutting. It has lots of cash and I think the stock is worth $90. (Molson Coors closed on Friday at $71.65.)
Tobin: This is a lousy company. But Bob does well in these stocks because there’s so much bad news and people expect nothing. If it does anything good, it’ll go up.
Pat: I agree that there are a lot of cost cutting opportunities. It was an awfully run company before the merger. I don’t see as much upside as Bob. I think the stock’s worth $75-80.
Scott: I’m bullish on Molson Coors and agree that it’s worth $90.
Bob: Next, Diebold (DBD). The company is working to technologically upgrade its ATM machines. It has good earnings power and is going to $65-70. (Diebold closed on Friday at $53.56.)
Pat: This is a wonderful company and I also see a lot of upside. It is going through a huge upgrade cycle in ATM’s right now. Plus, there are a lot of opportunities for it in the international market.
Scott: Diebold is a great security business and has a great balance sheet. The ATM upgrade is huge.
Tobin: The other thing that hasn’t been mentioned yet is that election machines are also a big deal, which the company also is involved in. This could create a lot of growth.