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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, Exemplar Capital managing partner
• Tobin Smith, ChangeWave Research editor
• Scott Bleier, HybridInvestors.com president
• Pat Dorsey, Morningstar.com director of stock research
• John "Bradshaw" Layfield, WWE superstar & nationally syndicated radio show host
• Bob Froehlich, Scudder Investments chairman of investor strategy
Trading Pit: Dow 11,000
The Dow is in striking distance of 11,000. A big rally on Friday topped off a huge week for the blue chips, gaining well over 200 points in four trading days, placing the Dow at 10,959. Is this a sign stocks are about to soar?
Bob Froehlich: We should hit 11,000 on Monday. This is all about momentum. The interest rate cycle is over. The price of oil will continue to come down. We’re heading into earnings season, and I think this one is going to be a blockbuster. All of this is going to give the stock market the fuel it needs to head higher.
John “Bradshaw” Layfield: The Dow can hit 11,000 and stay above it. The market will finally appreciate with earnings. Earnings have gone up double digits for the past 10 quarters; only the third time in the last 50 years that this has happened. I think we’ll see record merger and acquisitions. This market is set to explode.
Tobin Smith: Investors that are concerned about a lot of things need to take a step back and take a breath, because things are really okay. Gary B has said, “The market does not follow the economy.” He’s been absolutely right. The economy is just going to be good, but the stock market is going to be great. There’s a lot of money on the sidelines right now. When the market starts going up, this money will be put in, and this will make stocks head even higher.
Gary B. Smith: I agree with Bob that this is all about momentum. 11K is important. We’ve spent 6 years digesting the gains from the bull market that ran from the early 1980s up to 2000. I think the Dow may hit 11,000 on Monday, but I don’t think it close above it. I believe that may take a week or two. But when it finally does, stocks will be off and running.
Scott Bleier: The Dow should get above 11K, but this will be another one of those years that we just move sideways. However, the trading range will be higher and we will get to Dow 11,500 very soon. We’ve been trying to get through Dow 11K for such a long time. December disappointed everyone and we all expected a weak January like last year. But we started this year off with a bang, and that surprised a lot of people.
Pat Dorsey: I think we’re just going to muddle along this year. What Bradshaw said is true, earnings have been strong for the past 10 quarters, but you don’t make investment decisions by looking in the rear view mirror. This year corporate profit margins are going to come down. Earnings are still going to be good, but the growth won’t be as high as it’s been.
The Bulls & Bears each picked the hottest spots for your money and the stocks that could catch fire.
Tobin Smith: My hot spot is titanium. It’s used in jets and lately we’ve seen huge orders for Boeing (BA) and Airbus. The stock that will benefit is Allegheny Technologies (ATI). I own it and love it. (Allegheny Technologies closed on Friday at $40.48.)
Pat: Titanium is a very good market, but right now earnings are inflated for Allegheny. It hasn’t been paying taxes for the past year or so because it’s been working off losses from 2001-2004. Next year, the company will have to pay taxes again and earnings growth will slow.
Scott Bleier: Telecom is going to be big in 2006 and Verizon (VZ) will do well. It’s performed miserably. This year should be better because the company has spent billions of dollars to send out fiber to the home. The stock is worth ten points more than it is now. I own and recommend it. (Verizon closed on Friday at $31.35.)
Gary B. Smith: Telecom is a good sector and Verizon has gotten off to a terrific start this year. I would wait for it to show a little more strength and wait until it closes above $32.