Brenda Buttner was joined by: Gary B. Smith, RealMoney.com columnist, Pat Dorsey, Morningstar.com columnist; Scott Bleier, chief investment strategist at Prime Charter; Tobin Smith, portfolio manager of ChangeWave Capital Partners; and Brian Finnerty, head of trading at C.E. Unterberg Towbin.
 
Trading Pit

Even though the market has been rallying for the past two weeks, the Dow and Nasdaq have both sustained considerable losses this year.  Since the first of the year, the Dow has lost 13%, and the Nasdaq is lower by 31%.  So can the bull market ever return while Usama bin Laden is alive?

Tobin says no, and stated, "(The United States is) gonna get his head on a plate.  And I think that is going to happen sooner than later.  And let me tell you when that happens…we're going to have the first 500 or thousand point rally in the Nasdaq's history."

Brian said that the market is in the middle of a rally, and that bin Laden should remain alive so that we can find other terrorists.  But when bin Laden is captured, the markets will have a huge rally.

Pat believes that the market may rally when bin Laden is captured, although not to the degree that Tobin thinks it will rally.  Pat said the market is paying more attention to earnings because expectations have been lowered so much. 

Scott chimed in and said that bin Laden will not be brought back alive.  He stated short selling has dominated the Nasdaq, and he recommends buying stocks that are weak rather than chasing stocks that are strong.

This is a very emotional market, and essentially Gary B. charts the psychology of the market.  The Chartman said the charts are indicating that investors believe bin Laden will be captured, and he agrees with Toby that when Usama is captured, the Nasdaq will go up 1,000 points.  He totally disagrees with Pat, and said that the Nasdaq is reflecting pure emotion right now.

Brian concluded the segment stating that when Usama is captured the market will probably spike up quickly, and the pull back.  He advised short-term traders to sell into the Usama is Dead Rally, but long-term investors should hold what they have.

Stock X-Change

Scott, Tobin, and Brian all returned with a stock that each felt was the best way to defensively play the stock market in its current situation.

Scott chose ConAgra Foods (CAG) because it has a large amount of household food names that people buy in the supermarkets and has twenty-seven straight years of dividend growth.

Tobin picked Plum Creek Timber (PCL), the largest owner of timber in the United States.  He likes the stock because if timber prices go too low, the company does not have to cut it, and the timber becomes more valuable.  Also, he said a dividend is very important in a defensive stock, and it pays an 8½% dividend.

Brian selected Consumer Staples SPDR (XLP) because it is essentially a basket of stocks containing companies that make products almost all consumers need. 

Chartman

Gary B. and Pat returned, each with an aggressive stock pick for this wartime market.  They both conceded that their picks have a huge upside, but could fall hard if things don't go as planned.

Gary B. chose Advanced Micro Devices (AMD) because it is a great stock to "bottom-fish".  He explained that the best time to "bottom-fish" is when a stock has bounced off a bottom several times.  He thinks it could easily double if and when bin Laden is captured or killed. But, even if that doesn't happen, it should double by January or February.  Pat disagreed with the Chartman because the stock could suffer in a price war, it needs to change its strategy, and Linear Technology (LLTC) and Triquint Semiconductor (TQNT) are better chip investments right now.

Pat selected Qwest Communications (Q) because it is a "Baby Bell" on steroids, it is making all the right moves, and is better set up than other telecoms.  Gary B. studied its chart and did not like what he saw.  He said it is still a few points away from any kind of support, and he would wait until the stock hit $15.

Predictions

Brian's Prediction: Dow 10,300; Nasdaq 2000 by early 2002

Gary B's Prediction: 6 months from now Nasdaq at 1500

Tobin's Prediction: Varian Semiconductor (VSEA) up 50% next 90 days

Pat's Prediction: Capital One (COF) up 35% within 18 months

Scott's Prediction: 'Net retailers do well in tough environment