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Bulls & Bears
This past week's Bulls & Bears: Tobin Smith, editor of ChangeWave Research; Scott Bleier, president of HybridInvestors.com; Pat Dorsey, director of stock research for Morningstar.com; Gary B. Smith, managing partner of Exemplar Capital, and Bob Olstein, Olstein Funds president.
Trading Pit: Port Deal Firestorm: Capitalism v$. Terrorism
President Bush is under fire for agreeing to let an Arab company take over management of major ports in America. Is this a bad idea, or just good business?
Tobin Smith: Yes, this backlash is definitely bad for business. When did politicians start making economic policy? This is nothing but racism. When an English company managed our ports, it was ok. Now, that it could be an Arab nation it's bad. If you look at all the major ports in the U.S. they are run by foreign companies. It's a lousy business because our costs are so expensive. Our country has driven itself under. We should be thanking them because they are running our terminals.
Bob Olstein: If this deal gets snuffed out, it could drive investors away from the United States. There's a big difference between running the ports and security. The U.S. government is responsible for the security. Now, the Arabs will allow our government on their turf, which is going to make it even safer. Our administration screwed up in the way they sold it to the American public.
Gary B. Smith: I agree with everything Toby and Bob said. I do think the great equalizer or unifier is economics and capitalism. You can see what has happened in Japan. It may be the greatest example. They are one of our best allies now, and a lot of it is due to the great trade relations we have with them. I think we start to cut off our nose; there'll be a great backlash.
Pat Dorsey: Just because a couple of the 9/11 terrorists were from the United Arab Emirates (UAE) doesn't mean the UAE has not been a staunch ally. Dubai is like the Hong Kong of the Middle East. It is essentially a trading-based country. The bulk of the country's economy does not come from oil; it comes from trade and financial investments. Because of that, it needs to maintain good relations around the world and that's exactly what it is doing here. It's in their best interest to maintain security and let those ports run as efficiently as possible.
Scott Bleier: This is not racism. There are certain businesses that should not be owned by foreign governments and running the ports is perceived to be one of them. Maybe the UAE is good at running ports and maybe they do it well in other countries. However, it's perception over reality. Would they let us run their ports? Would the United States government run the ports in Dubai? There are some businesses that should not be run by foreign companies, end of story.
Gary B. was on vacation last week, but instead of reading a good book on the beach, he was studying his charts! Let's get his best buys in the market right now.
Gary B: My first pick is Triad Hospitals (TRI), which is one of the largest publicly owned hospitals companies in the U.S. The stock has been in a downtrend since June, but that is finally over. It just broke out and I think it's going back up to the mid $50s later this year. (Triad Hospitals closed on Friday at $43.40.)
Bob: Triad has a lot of capital expenditures and the stock is fully priced right now.
Gary B: TRW Automotive (TRW) looks ready to speed ahead. It just broke out from a long downtrend and is finally ready to move up. Look for it to hit the mid $30s by late 2006. (TRW Automotive closed on Friday at $26.38.)
Bob: Gary, you must have had too many pina coladas on vacation. This stock is way to expensive.
Gary B: Longs Drug Stores (LDG) is saying so long to the bad times! The stock had been moving sideways and then had a big dive down in October. It recently broke through that downtrend and is going back up to $45. (Longs Drug Stores closed on Friday at $38.35.)
Bob: Longs is also too expensive. I would not be buying this right now.
Want to retire rich? Pat's picking the best funds for you, no matter your age.