DISCLAIMER: THE FOLLOWING "Cost of Freedom Recap" CONTAINS STRONG OPINIONS WHICH ARE NOT A REFLECTION OF THE OPINIONS OF FOX NEWS AND SHOULD NOT BE RELIED UPON AS INVESTMENT ADVICE WHEN MAKING PERSONAL INVESTMENT DECISIONS. IT IS FOX NEWS' POLICY THAT CONTRIBUTORS DISCLOSE POSITIONS THEY HOLD IN STOCKS THEY DISCUSS, THOUGH POSITIONS MAY CHANGE. READERS OF "Cost of Freedom Recap" MUST TAKE RESPONSIBILITY FOR THEIR OWN INVESTMENT DECISIONS.
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Bulls & Bears
Trading Pit: Buyer’s Market?
Recent polls suggest investor confidence has been heading lower. No surprise really, because… so has the stock market. The Dow, Nasdaq, S&P are all down for the year. In fact, all three are trading at the same level they began 2004.
But is this a sign to buy? Is this the classic buyer's market?
Charles Payne: We are absolutely in a buyer’s market. You want to start building positions in stocks right now. But be careful. Don’t go out and spend all your cash Monday morning. A lot of people have the wrong expectations. They jumped in market in 1995 and think that you buy a stock today and double your money next week. This mindset is still very prevalent among individual investors and even with some institutions.
Danielle Hughes: I am buying, but I think we’re in a bear market. The Fed has been tightening, there’s inflation worries, and higher oil prices. But you can make money in a bear market. I think people should invest in companies that pay dividends, in other words, companies that pay you to be a shareholder.
Josh Wolfe: I don't care what economists say, people aren't rational. If there's any doubt to this, let me remind you that people once spent tens of millions of dollars on "Pet Rocks". A rock in a box. C'mon! The bottom line: people are emotional. Emotions lead to irrationality. Irrationality leads to market inefficiencies. And that means profits for shrewd investors. Greed and fear drives the market. The problem is we've met the enemy and the enemy is us. We wind up selling when we should be buying and buying when we should be selling. Stocks are on sale and it's a buying opportunity.
Tobin Smith: Last week was pretty strange. The dollar was going up, energy prices were falling off, and the Nasdaq, typically the bellwether for the future, was strongest index. I think if we see a 3-4 percent spike in the Nasdaq, it would be the best time to sell some of the old tech like Sun Microsystems (SUNW), Microsoft (MSFT), and Oracle (ORCL). However, I do like some small tech, energy, and infrastructure stocks.
Pat Dorsey: I don’t think investors are as pessimistic as most people think. Granted, not everyone’s as bullish as they were 5 years ago, but doesn’t mean everyone’s negative on the market. The best bargains are right under people’s noses. Home Depot (HD), Coke (KO), and AIG (AIG) are some of the big caps that were super expensive 5 years ago and have been left for dead. That’s where the opportunity is now. Also, moderate your expectations. Don’t expect the stock market to be a savings account that will return 10-12 percent every year. This is not going to happen. Stocks are trading at much higher valuations today. Expect about 4-5 percent from the market.
Want the best stocks to own based on the year you were born? The "Bulls & Bears" have "Stocks for the Ages:"
Dani: My best stock for twenty-year-olds is Sirius Satellite Radio (SIRI). It’s at a low price and the company quadrupled its revenue this year. Sirius has risk, but for someone so young with a long time horizon, that risk can be taken. I own Sirius. (Sirius Satellite Radio closed on Friday at $5.35.)
Josh: Sirius is doing a great job bringing in new talents like Martha Stewart, Jimmy Buffett, and Howard Stern. This is great for subscribers, but awful for shareholders because of the huge cost of their contracts.
Tobin: Thirty-year-olds should be buying EnCana (ECA), a very large independent oil and gas producer based in Canada. As thirty-year-olds age oil and energy is going to be less and less available. EnCana is adding long-term reserves and increasing production. I own the stock. (EnCana closed on Friday at $64.91.)
Pat: This is a very high quality company. I like that it is focusing on natural gas, because natural gas is not available throughout the world. But, I would wait to buy it at a lower price.
Josh: I really like FEI Corporation (FEIC) for forty-year-olds. It has an upside potential of betting on nanotechnology, but the of downside protection and exposure to the semiconductor industry. FEI has been providing infrastructure from early on, and usually, these are the companies that are the winners. (FEI closed on Friday at $19.10.)
Charles: FEI is too dangerous for that age group. I think it’s better for the twenty-year-olds.
Charles: My pick for fifty-year-olds is Johnson & Johnson (JNJ). It’s a household name and has tremendous management and execution. Plus, it pays a dividend. (Johnson & Johnson closed on Friday at $67.10.)
Tobin: This is a great pick and one to definitely own. Wait for 5 percent pullback and own it for the rest of your life.