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Bulls & Bears
Brenda was joined by: Gary B. Smith, columnist for RealMoney.com; Tobin Smith, editor ChangeWave Investing; Scott Bleier, president of HybridInvestors.com; Bob Olstein, president of The Olstein Funds; Adam Lashinsky, senior writer at Fortune Magazine
Trading Pit: Market Madness
April was shaping up to be one of the worst months for the stock market in two years. Then, President Bush took on his critics and took his case to the American people, selling his Social Security and energy plans. Just like that, the price of oil dropped, and there were whispers his plan to privatize Social Security might have a shot. Stocks surged to end the week with the Dow up 122 points on Friday. Was Wall Street cheering the president’s agenda?
Tobin: Wall Street is cheering the fact that the president’s plan could go through. The president has been out for 60 days trying to sell his Social Security plan. If he gets this plan through, the market will love it.
Bob: I don’t think the president’s plan has anything to do with the market. I think that stocks are just ready to rally. Anything could have been the catalyst for the move up on Friday. Stocks have gotten too cheap and we’re fully invested for the first time in 1 ½ years.
Gary B: I think that Friday’s rally had more to do with the drop in oil prices. And like Bob said, the market is due for a rally. A chart of the Nasdaq shows that it is stuck between a rock and a hard place. If it breaks above the downtrend we’ve been in since March (about 1,950), the market will head up. However, if we dip below 1,900, looks like we could be headed lower.
Scott: It was the last trading day of the month. The market has been down 3 of the last 4 months. The people who are betting against stocks are taking some profits. The only way the President can fix Social Security is by taxing and he will tax the rich, the people who do the most investing.
Adam: I disagree with Scott. Taxing isn’t the only way to fix Social Security. President Bush said he could cut benefits for rich people. There was no connection between his speech last week and the stock market. Like Bob and Gary B. said, the market was due for an up day.
“Sell in May and go away” is an old stock market saying. Historically, May is the beginning of the worst six months for the stock market. The Bulls and Bears are ready to prove it wrong this year with stocks that are set to defy the odds.
Bob: I like PanAmSat (PA), which provides satellite capabilities to television stations and Internet providers. I really like that this stock pays a great dividend. I own it. (PanAmSat closed on Friday at $17.65.)
Tobin: I also like it. The secret here is high definition television. This company distributes high definition TV and will be riding the wave as it becomes more popular.
Scott: This is a great stock. Looks like it could be headed to $25.
Scott: My pick is Motorola (MOT). The stock has been very disappointing in the past, but now has new management that is turning things around. I own it. (Motorola closed on Friday at $15.34.)
Tobin: Motorola needs to keep doing well before I like it.
Bob: This is going to continue to disappoint.
Tobin: Fording Canadian Coal Trust (FDG) is the stock that is going to keep heading up. Its dividend is going to grow. Plus, Fording just increased its mining capability. I own it. (Fording Canadian Coal Trust closed on Friday at $88.84.)
Scott: Fording makes coal that is then made into steel and steel prices are going down. I think this stock is going down to $70.