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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; Bob Froehlich, DWS Scudder chairman of investor strategy, and Lenny Dykstra, former MLB All-Star.

    Trading Pit: Stock market reaction if America pulls out of Iraq

    Secretary Rumsfeld resigns after the Democrats win the midterms and take control of Congress. How will stocks react if this all means our troops leave Iraq before the nation is secure?

    Tobin: It's hard to make a case that Iraq will ever be secure. The results of the election basically showed we do not want to spend another trillion dollars and 250,000 Americans over there. We are not going to pull out tomorrow, but it's time Iraq starts solving its own problems. We're not going to baby sit their civil war.

    Lenny: It's not good for stocks if we pull out! We need a game plan and go on the attack. We need to train Iraqi troops for 4 weeks with the intensity of Hell Week in football. Keep our special forces on the side, but ready if needed. This way our troops know they're coming home

    Gary B.: The American public will love if we pull out of Iraq. For the short-term, stocks will head up. But this is very bad over the long-term down, because it will show the rest of the world — and terrorists — that we do not have the stomach to fight an unconventional war. This will embolden the terrorists and we'll see more attacks over here. And that will badly hurt the stock market and economy.

    Bob: It could help the deficit — if we don't spend the money on something else. So I don't know if it will actually be a net gain. To me, this will not be the defining moment. Wars come and go. I totally agree with Gary B. and think it'll be a short-term rally, with long-term pain. We'll have to ask ourselves, "What changed?" Yes, our troops will be home, but if Iraq's still a mess, there will still be a lot of uncertainty about global terrorism. The market isn't going to trade off of that.

    Scott: If we leave Iraq now, before there is some stability, stocks would go down due to lower confidence. Our market is built on confidence. We don't want to occupy Iraq. We want to build democracy and capitalism. And if we can get that done, the market will skyrocket.

    Wall Street: Election Day Winner or Loser?

    Democrats win on Election Day and take control of both houses of Congress. Is this a win or loss for Wall Street?

    Gary B: The market seems to think it's a win — and for the short term, it is. Going forward though, this will be terrible for the market. Once this honeymoon of bipartisanship is over, the Democrats will show their true colors. They hate big business. They hate Person A making more than Person B. They hate not being able to dictate everything from oil prices to drug prices. Now that the Democrats have control of both houses of Congress, they'll probably get their way, and we'll be living the European dream in a few years.

    Tobin: The Democrats just elected are not the ones you just demonized. The men and women just elected are fiscally conservative. This group is much more like Republicans the way I remember Republicans, not spending money we don't have. Raising taxes is not in their plan.

    Lenny: They are raising taxes no matter what they say. These Democrats say one thing and do the other. When I got my first big league contract and finally made some money, Clinton taxed us and I got buried.

    Bob: Yes, a divided Washington does mean less government spending. President Bush has a pretty big veto pen. I agree with Lenny that the Democrats will probably propose raising taxes. I don't think there will be much compromise in the next two years. So if the Dems can't do anything at all, at least they won't hurt us.

    Scott: I don't think the market likes the outcome of the election and is in denial. The first time we hear belligerent words about big business from any member of Congress, the market will react negatively.

    Stock X-Change

    Democrats ready to take over Congress. How can you cash in? "Power-$hift" plays.