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.
Reminder: We'll be back at our regular day and time next week. The Cost of Freedom will start Saturday at 10 a.m. ET with "Bulls & Bears."
Bulls & Bears | Cavuto on Business | Forbes on FOX | Cashin' In
Bulls & Bears
Brenda was joined by: Gary B. Smith, columnist for RealMoney.com; Pat Dorsey, director of stock research at Morningstar.com; Tobin Smith, editor ChangeWave Investing; Scott Bleier, president of HybridInvestors.com; and Joe Battipaglia, chief investment officer of Ryan Beck Co.
Trading Pit: Bulls Back in Charge?
What a difference a month makes!
Remember four weeks ago? The Dow was a hair above 10,000 and tech was a wreck in the Nasdaq.
But since then, the Dow has gained 5-percent—much of it last week alone. And as for the Nasdaq, it’s even hotter, up 7-percent in the past month.
Are the bulls back in charge?
Gary B. Smith: Absolutely. I think the market will have a good summer because most people still hate the market. But unemployment has dropped, inflation has been tamed, and the economy is chugging along. Stocks can go even higher because enough people right now hate the market.
Pat Dorsey: I don’t know if the bears have actually in charge recently. The S&P 500 was down only about 5 percent before this rally. I still think, at best, we’re going to finish flat this year. Rates are rising and earnings growth is slowing. But this is actually good news. If stocks are flat this year and if earnings continue to grow slowly, stocks will be cheaper at the end of the road.
Joe Battipaglia: What I like most about the rally that we’re having right now is that fundamentals are driving back the fears we’ve had all year. The Federal Reserve is going easy on raising interest rates. Inflation is at zero. And if profits come in at 10 percent, we’re in good shape. Also, the economy isn’t flattening out, it’s accelerating again. There’s enough fuel to get this market heading higher.
Tobin Smith: Stocks are the place to be right now. There was too much fear in April, and it still hasn’t gone away. Earnings growth will be slightly higher for the next quarter. Bonds are too expensive and corporate bonds are tanking. This is the right time for stocks. The market took off without hedge fund money. Buy now because when they do, it’ll be too late.
Scott Bleier: There was tremendous fear in the market until the beginning of May. This fear forced institutional investors to sell stocks outright. Although the indices didn’t do too badly, the average stock did. You should do the exact opposite of the old saying, “Sell in May and go away.” Buy stocks this May because we are going to have a terrific summer.
Gary B. and Joe each picked stocks with big risk, but the potential for big reward.
Gary B.: I like Toll Brothers (TOL), the quintessential homebuilder. The stock had been moving sideways the past three months, but finally last week it broke above resistance in the low $80s. Housing is back and strong. Now is the time to own it. I think Toll Brothers will keep heading higher, break through $90, and make a new all-time high. (Toll Brothers closed on Friday at $84.48.)
Joe: The investors that have ridden this stock from $20 to $90 are taking profits. It may have some spikes, but the glory days of housing from the last couple of years is gone. I’d be inclined to sell the stock, rather than buy.
Joe: My risky pick is Career Education (CECO), which offers private and post-secondary education. The stock is way down due to enrollment concerns and investigations. It’s cheap compared to its peers and it has a lot of momentum. I own it. (Career Education closed on Friday at $34.70)
Gary B.: The chart for Career Education isn’t so strong and could easily drop down. It’s too risky.