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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; Mike Norman, BIZRADIO talk show host; Tom Gardner, The Motley Fool co-founder, and Adam Lashinsky, Fortune magazine senior writer.
Trading Pit: Booming Economy Causing Immigration Crisis?
America's economy has been booming, but Mexico's has not been good at all. Millions who can't find work there are breaking the law and coming here illegally. Are we a victim of our own success?
Gary B. Smith: Yes! We provide the greatest economic opportunity. This is the only country in the world where you can literally start at zero and become a corporate CEO. You don't find people in the U.S. migrating to Mexico or Cuba. We're a victim of our own success and probably rightly so. We want to welcome people with open arms, but we don't want to be so porous that we don't have a country.
Mike Norman: Our economy is the greatest in the world. But Mexico is not a poor country. It has a trillion dollar economy, which is the same as Canada. You don't see Canadians coming over here illegally. The problem is that Mexico is horribly corrupt and all of the country's wealth is controlled by a handful of people.
Tobin Smith: Yes Mexico is a corrupt country, but the problem is that it has no middle class. If you want to work hard and start a business over there, you can't. Why would you want to be a painter in Mexico, when you could just cross the border and make five times more over here? This is the real issue and we have to help Mexico because the country is as corrupt as they come.
Tom Gardner: Our immigration laws make it too tough to get into this country legally. People have to take a test that I think most Americans wouldn't be able to pass. We need a lot of these people to be working here in the U.S. The key thing is to address the tough immigration laws. I don't think we should crack down on the people that are here already. We need to pass laws that make it more difficult than just crossing the border, but not substantially.
Adam Lashinsky: There is no question people are flocking to the U.S. because of our great economy. Legal and illegal immigrants want to come to the U.S. all the time — during good and bad economic times. However, I don't think we are a victim of our success. We want everyone that comes here to do it legally, but the brutal fact is that the people who are coming illegally are helping our economy.
Scott Bleier: People come here from all around the world during every type of economic environment — because even at our worst — America is better than where the immigrants come from. It's always going to be better here than it is in Mexico or the Fujian Province in China. So we are going to get these people whether it's good or bad for our economy. It just so happens that we're in a great economy right now, so we're getting more illegal immigrants.
These CEOs make big bucks, but can the companies they run make you big bucks?
Adam: I really like Genentech (DNA). CEO Arthur Levinson made $109 million last year and the shareholders have made way more than that. It makes cancer-fighting drugs and keeps coming up with more. The estimates keep going up and I think this is a great one to buy. (Genentech closed on Thursday at $81.68.)
Mike: Everything Adam says is correct, but the stock already had its move. It's expensive and I would stay away from it.
Tobin: It's pulling back right now. I would only buy if it were $5-10 cheaper.
Scott: It's fully priced.
Tobin: Go for Goldman Sachs (GS). Its CEO, Henry Paulson, Jr., made $45 million last year. This is the world's greatest hedge fund. People say that they can't invest in a hedge fund and I say invest in Goldman Sachs. The stock is worth $50 more. (Goldman Sachs closed on Thursday at $159.43.)
Scott: This is already priced for the three-year bull market that we've been in. It needs a whole new bull market to go higher.