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Bulls & Bears
Brenda was joined by: Judge Andrew Napolitano, Fox News Senior Judicial Analyst; Gary B. Smith, columnist for RealMoney.com; Pat Dorsey, director of stock research at Morningstar.com; Tobin Smith, editor ChangeWave Investing; and Scott Bleier, president of HybridInvestors.com; and Joe Besecker, president of Emerald Asset Management.
Trading Pit: $upreme Decision
Supreme Court Justice Sandra Day O’Connor retires from the Supreme Court. Now the battle begins for her replacement. What kind of justice does Wall Street want?
Gary B: Wall Street will want the new justice who is most pro-business, but the Supreme Court doesn’t really get a lot of cases that directly affects business. I think Wall Street will like the one that gets confirmed the fastest. However, I don’t think there are any real potential names out there right now and a successor probably won’t be named until October 1st.
Judge Napolitano: Sandra Day O’Connor was generally seen as someone who was an ally for business. She was seen as someone with a conservative instinct in respect to the economy and someone who believed in the free market. She sometimes did things that seemed to contradict this, but the business world liked them anyway. A good example is when she wrote the opinion authorizing affirmative action, allowing businesses to be more diverse. President Bush isn’t going to appoint a big social reformer; he’s going to appoint someone who basically believes in the free market—and that’s what Wall Street wants.
Tobin: Wall Street is really looking to the second nominee because the first one won’t get through. I disagree with Gary B. because there are many business issues the Supreme Court decides. For example, the recent imminent domain verdict, which essentially allows a business to bulldoze a home, was a very big decision for commercial property development in the U.S.
Pat: One of the most interesting things to watch will be the battle between the religious right and the business community. The religious right tends to favor the rulings of states’ rights, which usually get socially conservative items pushed through. However, businesses would prefer if these cases were handled at the federal level, putting aside the huge jury awards from the state courts. That’s an area where conservative groups don’t always align with business.
Joe: I agree with Gary B. Let’s get this over with. However, it probably won’t happen quickly. And as the weeks and months go on, all the other things that President Bush wants to do, like the Social Security reform, will get lost in this bruising battle. For investors, this is going to get very old, very fast.
Scott: Wall Street is in the process of spinning its wheels. This is just another way to keep the market in this miserable range. Nothing is getting done. Social Security reform is all but dead. Tort reform is very important, but probably won’t be addressed until next year. There is such partisanship in Washington that nothing is getting done.
The best and worst calls from the first half of the year.
First, the good ones.
This past May, Toby liked Urban Outfitters (URBN), a clothing retailer that caters to teenagers. And in just two months the stock has definitely seen tremendous growth, up 25-percent! Toby still likes Urban Outfitters and thinks it will head up to $85-90. (Urban Outfitters closed at $57.50 on Friday.)
Gary B. knows that a "google" is a very large and powerful number. He also knew that Google (GOOG), the search engine, was a good stock. On April 23rd, he said the stock was ready to take charge as a new leader of the market.
And, since his pick, Google has gained 35-percent. Gary said the stock shows no signs of stopping and hold onto it. (Google closed at $291.25 on Friday.)
In April, Scott predicted that semiconductor maker, LSI Logic (LSI), was going up 30 percent by this fall. Just after this prediction, technology started looking up and LSI has gained 64-percent. Scott still likes it and thinks the stock can hit $10. (LSI Logic closed on Friday at $8.69.)
And the best call of the first six months? It belongs to Pat. On April 23rd, he said the Chicago Mercantile Exchange (CME) a.k.a. “The Merc”, sold off for stupid reasons. Right he was! The stock has made a huge move, gaining 72-percent. In fact, since Pat first recommended “The Merc” about a year and a half ago, it is up over 300- percent! But Pat didn’t recommend the stock again. He said it’s getting expensive and once it got over $300 he would sell. (The Merc closed at $294.15 on Friday.)