Brenda Buttner was joined by: Gary B. Smith, RealMoney.com columnist, Scott Bleier, chief investment strategist at Prime Charter; Tobin Smith, portfolio manager of ChangeWave Capital Partners; Gretchen Morgenson, New York Times business editor, and Gregg Hymowitz, founder of EnTrust Capital.
Trading Pit
Anthrax is keeping us all on edge, and has also hit the stock market. On October 11th, the Dow was above 9,400; up from a low of 8,235 shortly after the attacks on New York and Washington. But a month after those attacks, anthrax scares have grown, and the Dow has suffered, down more than 200 points.
Gretchen thinks that the fear factor is stifling the market's recovery. She said that the market hates uncertainty, and this uncertainty is so enormous and is impossible to measure. She predicts the market will have a series of unsettling weeks.
Gregg totally disagreed with Gretchen and believes that the market has handled the current situation very well because the market is down only 2.5% since the terrorist attacks in September.
Tobin chimed in and said that people need to keep the anthrax scare in perspective. As horrible as it is, he said only a few people have gotten infected, and that it is only a scare. He believes investors should use this current scare as a buying opportunity because the economy will be much better in six months.
Gary B. charted the Nasdaq and explained its chart shows how investors have gone from panic to greed and back to panic in a few short weeks.
Scott jumped in and said that for the past month, the market has been in the very bullish trend of being down in the morning and up in the afternoon.
Stock X-Change
The stocks of companies that provide services or make products that protect the United States have been soaring. Gretchen, Scott, and Gregg all gave their opinions on three of those stocks.
First up, iShares Dow Jones US Healthcare (IYH), which is a "basket" of stocks containing the big drug companies that have the research and development to combat bioterror attacks. It's up 3% since the attacks, and Gretchen thinks that it is an "even tempered investment" because the risk is balanced out. Gregg doesn't like it because 10 companies make up 70% of its "basket". Scott added that investors would limit their upside by buying it.
Next up, global aerospace and defense company, Northrop Grumman (NOC). Among their many defense products, they make radar defense systems, which seem more important than ever now. It is up an impressive 31% since the attacks. Everyone in the segment liked the stock. Scott believes that the stock can go higher because it is so diversified. Gretchen said it should have a big boost to its earnings because of an accounting change. And Gregg said the company should do well because it makes the products that will be needed in the current war.
Last up, internet security company, Symantec (SYMC) which is up an incredible 30% since the attacks. All three also liked this stock. Gregg likes its growth rate and valuation, Gretchen thinks it is cheap, and Scott likes its upside because Symantec is a leader in the industry and has a lot of cash.
Chartman
Gary B. had a new nemesis for this week's Chartman: Tobin Smith! Toby filled in for Pat Dorsey this week, and had the Chartman look at two of ChangeWave's biggest holdings, Atlas Air (CGO) and EMCOR (EME).
Unfortunately for Toby, the Chartman didn't like either. Toby likes Atlas Air because it benefits from domestic carrier slowdown, it will get business from the U.S. military, and it has lots of cash and assets. Gary B. charted the stock and does not like the fact that it has not broken a level of resistance at $16. The Chartman advised to wait for the stock to breakout above the $16 level.
The next big holding of Toby's fund to be "reviewed" by the Chartman was EMCOR. Toby likes it because it is a post-attack security play, it is involved in New York City rebuilding, and it is undervalued for such strong growth. Gary B. did not like this stock because it has quickly risen, but only to its downtrend line, and when that happens a lot of investors sell and take profits.
Predictions
Gregg: War on terror grows but market still gains
Gretchen: Stocks weaken amid terrorism in U.S.
Gary B.: Airline stocks up 50% within 12 months
Scott: Stocks paying high dividends best investments
Tobin: New government contracts help Titan (TTN) gain 20%
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