Brenda Buttner was joined by: Gary B. Smith, RealMoney.com columnist, Pat Dorsey, director of stock research at Morningstar.com; Tobin Smith, CEO of ChangeWave Capital Partners; Scott Bleier, chief investment strategist at Prime Charter; and Gregg Hymowitz, founder of EnTrust Capital.
Trading Pit
For investors, it's the most wonderful time of the year. That's because December is usually a winning month. We almost always get what is commonly known as a Santa Claus rally. And we sure did have one last week, with the Dow making an impressive gain of 224 points. So what will win out: holiday spirit or uncertainty about Usama bin Laden and more attacks?
Gary B.'s initial response was "Bin Laden? Who's that?" He points out that he's not being glib, but clearly the American investor right now is not as concerned as before. Malls and airports are jammed and he is bullish even if we do not catch Usama in the short term.
Gregg Hymowitz agreed with Gary B. 100%. Saying Bin Laden is not a factor and that now it's "the economy, the economy, the economy!"
Brenda pointed out the market has been trading on the war for quite a while and wonders if it is completely out of the psychology of the market.
Tobin Smith agreed. There has been anticipation of getting Bin Laden by Christmas and that didn't happen. He's also concerned the market was expecting a stimulus package from Washington and that fell through. He adds if you own stocks that are up 80% percent or in that range there should be a concern about "giving those profits back."
Scott Bleier says trading on the war won't matter after the first of the year because all the big money folks "deploy their assets" and set themselves up for the year. This should send the stock market higher to start the new year.
Pat Dorsey agrees the economy has taken priority over the war in the minds of investors. He did add one stern warning that holiday retail sales will be soft in his opinion and this could weigh on the stock market. He says "If you're heavy into retail right now I would think about taking profits." Pat cites Best Buy (BBY) is very pricey right now from his perspective.
Gary B. showed a chart of the IShares Russell 2000 Value index. This tracks value stocks and he believes there is a chance for a breakout to the upside for value stocks. Gregg pointed out that if you believe the economy is coming back then growth stocks is the place to be. But Toby said it depends how fast the economy comes back. He says the people who think it's coming back quickly are "smoking dope."
Stock X-Change
Is the War on Terror going well enough for our economy so we can get out of this recession? If retailers, entertainment and leisure, and the housing market are all doing well, chances are the economy is on the mend.
Scott, Toby and Gregg participated.
Up first the world's number one retailer, Wal-Mar (WMT). The stock has rallied lately and is now up for the year.
Gregg: Thinks it's a great company for a retailer. But he sees problems. All growth from new stores. It can't keep growing this fast and the stock is very expensive right now.
Toby points out Wal-Mart is opening stores overseas and that will help. But he thinks there are a lot more attractive stocks out there.
Scott says the charts are bullish on Wal-Mart.
Next up, entertainment and leisure giant, Disney (DIS). The "Mouse" having a rough time this year, down 28 percent.
Scott: "You are going to need a lot of patience." The stock has nothing in the 5 years since CEO Michael Eisner sold a big chunk. It's got a great brand name but you have to have a long term view of over 5 years to make money with the stock.
Gregg thinks Disney is hurt by the continuing war on terror.
Toby says "no upside surprises for Disney, only downside." He says the only big things that will happen in this stock will be bad news, not good.
Finally Centex (CTX), which is involved in every aspect of the home market from building to loans, and is up a stunning 46% in 2001.
Toby says stay away from this stock at the current price. But you can buy it for the long term.
Gregg likes the stock. Despite the recent run he still thinks it's a very cheap stock. The stock is not economically sensitive. Home demand outstrips home supply.
Scott agrees. He says the street hasn't given the stock high enough numbers yet and the stock is going up.
Chartman
Sometimes you get gifts you love, and other times you get gifts, you well…RE-GIFT! The Chartman and Pat came back to give each other a stock gift.
The Chartman chose to give Pat Procter & Gamble (PG) because the stock just broke through $80 after staying below that price for nearly 2 years. He thinks the stock is headed to $100 by April. But Pat would rather holiday fruitcake because he thinks Procter & Gamble's huge restructuring hasn't paid off and has "fuzzy math" in its earnings report.
Pat picked Nextel (NXTL) as the stock he'd put under the Chartman's tree. Pat admitted the stock was risky, but its core business is from the corporate world and it is a takeover candidate. The Chartman appreciated the thought behind Pat's "gift", but the Nextel needs to break through its current two year downtrend before Gary B. would accept it.
Predictions
Gary B: Call me Grinch! Markets flat or down 2002
Gregg: No stimulus deal? No problem! Stocks rally!
Tobin: Nasdaq 1850 on Jan 1st; blame DC!
Pat: Fiorina out at Hewlett (HWP); helps stock
Scott: Feds kill Echostar (DISH)/Hughes (GMH) deal
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