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    Bulls & Bears | Cavuto on Business | Forbes on FOX | Cashin' In

    Bulls & Bears

    This past week’s Bulls & Bears:

    • Gary B. Smith, RealMoney.com columnist

    • Pat Dorsey, Morningstar.com director of stock research

    • Tobin Smith, ChangeWave Research editor

    • Scott Bleier, HybridInvestors.com president

    • Bob Olstein, Olstein Funds president

    • Gary Kaltbaum, Kaltbaum & Associates president

    Trading Pit: Cut & Run in Iraq?

    A top Democrat has called for America to pull our troops out of Iraq. What will happen to the stock market if we cut and run right now?

    Gary Kaltbaum: I think Wall Street will have a negative reaction initially. If we pulled out of Iraq now, we lose our standing in the free world. Everyone will look at us as losers. This is the war on terror and is not just about today but about the generations to come. It’s not just about Iraq, but also about taking the offensive against any rogue states that believe in murder for the sake of murder. Wall Street will see this as not getting the job done. It also brings up a lot of questions, like what were we doing there in the first place, if we didn’t get the job done. But don’t forget, Wall Street will always concentrate on oil, interest rates, and earnings.

    Gary B. Smith: If we pull out of Iraq now the market, as it has been doing, will shrug its shoulders and will be glad that it has one less thing to worry about. It also means that we will spend a few billion dollars less overseas. I don’t think we should pull out right now, but if we do, stocks will head higher on the news.

    Bob Olstein: I believe that an early withdrawal from Iraq will create some short-term confusion, but will be a positive psychologically over the long-term. This war is wearing on the American public because we don’t knowing who the enemy is and it is tough seeing American soldiers die every day. I don’t think that we’ll totally pull out because there must be someone there to guard the oil. The markets always move on to the next event and over time, it really looks at earnings and cash flow.

    Tobin Smith: Pulling out of Iraq is a negative for stocks. Wall Street wants to see a plan. Democrats have come out with a fairy tale idea. The reality is that we made a five to ten year commitment to Iraq and the idea of pulling out is preposterous. The price of oil at $60/barrel is just starting to come down and now we have a rally. If we pull out immediately, oil will shoot up to $85-90. We need to finish the job.

    Pat Dorsey: The political repercussions aside, pulling out would mean less spending, and that means a reduction of the growing deficit. In general, this is positive for the economy because right now we have been spending beyond our means. However, the question is, “What is total victory?” There is a democratic elected government in Iraq now and the insurgents aren’t going to go away anytime soon.

    Scott Bleier: We’ve got to finish the job in Iraq. We can’t leave until there is a functioning government. Less government spending means less stimulation to the economy, which means a lower stock market. If we pull out, it will cause a civil war in Iraq.

    Scoreboard

    What have been the Bulls & Bears best and worst calls?

    First, let’s take a look at the losers.

    Back in October, Tobin picked Frontier Oil (FTO). The stock has fallen 23 percent since then. He said the stock probably fell because the cost of converting oil into gasoline collapsed. But even so, he said not to sell it here and thinks now is actually the time to buy. (Frontier Oil closed on Friday at $34.28.)