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Bulls & Bears
This past week's "Bulls & Bears": Lenny Dykstra, former MLB All-Star and columnist for TheStreet.com; 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, and Gary Kaltbaum, Kaltbaum & Associates president.
Trading Pit: Target Companies Hiring Illegals?
Should the government go after companies employing illegal immigrants?
Lenny Dykstra: I am in full support of the government going after companies that hire illegal immigrants. I own car washes in southern California. My competitors are known to use illegal workers. All of my employees must have the proper papers and I will not hire anyone who does not. The business owners who are letting illegal immigrants work for them need to be dismissed.
Tobin Smith: Be careful what you wish for. First off, I am a businessperson, and in fact I used to own a car wash in southern California. If employers are turned into immigration specialists and enforcement agents, it will kill our economy. Their businesses will be taken away from them and the cost to run their businesses will skyrocket. Also, it's not their job to say who is illegal; it's the federal government's job. Let's get real. Our strategy was to let these illegal immigrants in because the cost of keeping them out was too high. Now we have a problem? Come on, we've had a problem for twenty years.
Gary B. Smith: This is a problem for exactly the reason that Lenny points out. There are a lot of immigrants that come to the United States looking for work. These immigrants have to endure substandard conditions and low pay. We tried to fix the supply problem by erecting walls and providing more border security, but it hasn't worked. Now, we have to fix the demand problem and go after employers who are hiring illegals. The laws are on the books and need to be enforced.
Scott Bleier: You can't expect small businessmen to be policemen. Small businesses are the number one job creator in this country. Here's a little secret: Social Security gets paid billions of dollars every year by illegal immigrants. Businesses have to pay Social Security for everyone, even if the workers have fake papers. So it has set up a slush fund of money that has been paid in, but will never be paid out.
Gary Kaltbaum: I'm a big believer in immigration. We are a country of immigration, but there's something called the rule of law. If we want to take away the incentive for all these illegals coming in, we need to put the hammer down on the employers. We also need to talk with Mexico. Mexico is not great at creating businesses, but if it works to improve, their people will want to stay there. It's a combination of things, but I'm a big believer in a level playing field.
Pat Dorsey: I agree with Toby in that this is not as big of a problem as everyone else thinks. But, if you think it's a problem, focus on demand, not the supply. Focus on the employers. What helped out the drug war? Was it spraying pesticide in Columbia or was it increasing the penalties for trafficking here in the United States? It definitely wasn't spraying pesticide in Columbia.
Lenny Dykstra's gone from all-star to stock star. Which are his home run stocks?
Lenny: I love Anheuser-Busch (BUD). This company is a monster because it does so much. In addition to Budweiser and other beer brands, it owns theme parks. I own this stock. (Anheuser-Busch closed on Friday at $42.02.)
Tobin: You are striking out here big time. Go back to the energy business where you can really make money. BUD is a dead stock. Beer consumption all over the world is down, while oil consumption is up.
Lenny: My next pick is Dow Chemical (DOW), which broke a 52-week low today. It's cheap and I think now is the time to buy. I also own Dow. (Dow Chemical closed on Friday at $40.16.)
Pat: I would like to get it a little bit cheaper. It's a more stable company than most people think. About half of its operations come from specialty chemicals, which is a better business.
Lenny: Finally, Intel (INTC) is one of my favorite stocks. If you like Apple (AAPL) or Microsoft (MSFT), you've got to like Intel. I own this stock and think it is at a great price right now. (Intel closed on Friday at $19.24.)
Gary K: I like root canals better than Intel right now. It's had some major sequential revenue drops and it is cutting prices by 66 percent. This stock is going under $15.