Brenda Buttner was joined by: Pat Dorsey, director of stock research at Morningstar.com; Tobin Smith, founder and chairman of ChangeWave Research; Scott Bleier, president of HybridInvestors.com; and Gretchen Morgenson, New York Times business editor.

Trading Pit

Traditionally 'tis the season for a stock surge.  But this year it's also the season of a Saddam showdown.

Wall Street was looking forward to a Santa Claus rally.  However, the Dow suffered its second straight losing week and is down 5.6 percent since Thanksgiving.

Gretchen believes the market can weather a war, but it cannot overcome profit warnings and the fact that we are not seeing a broad turnaround.

Tobin said Christmas came in October for the market.  That’s when we had a huge rally.  He said it’s not unusual for a healthy market to pull back, rest and catch its breath.  What worries Tobin is that from now until January 15 we’re only going to get bad news.  He thinks the market will be flat until the end of year and then it’ll take off.

Pat disagreed that all the news has been bad.  He said we are starting to see better economic fundamentals like those we had glimpses of over the summer.  This is being reflected in corporate profit outlooks and ultimately corporate profits are what drive the market.

Scott said there had been a huge rally in beaten down Nasdaq stocks and these stocks are now consolidating.  Even though things may look weak, we have traded in a relatively narrow range.  He said the stocks to own now are ones with a dividend and metal and oil stocks because they have made huge gains over the last few weeks.

Stock X-Change

What stocks are on the Bulls & Bears holiday shopping list?

Scott said Eastman Kodak (EK) is going on sale and he would buy it at $34.  (It closed at $36.81 on Friday.)  Scott never thought he would ever recommend this stock, but it has a relatively safe 5 percent yield and a lot of institutions have recently bought it.  Toby and Gretchen liked it, but Pat seemed skeptical.

Toby likes Teva Pharmaceutical (TEVA) at $35.  The stock closed Friday at $38.75.  He said the company has 5 new generic drugs coming out next year and generic drugs take revenue from big pharmaceutical companies.  Scott likes the stock, but Gretchen does not.

Gretchen said Advanced Micro Devices (AMD) is a buy at $5.  (It closed Friday at $7.32.)  She said the company has been second to Intel for years, but it’s coming on strong and is stealing business from Intel.  Pat and Toby hate the stock.  Scott said it’s a buy at $5.

Pat recommended to buy Moody’s (MCO) right now!  The stock closed Friday at $41.37.  He thinks it is one of the best franchises in the world. Moody’s is one of three companies allowed to rate bonds.  Pat believes the stock will head higher because it has a lot of growth potential in Europe.  Tobin and Scott both think the stock is too expensive.

Everyone then came back to tell if the stocks making news today could make investors money tomorrow.

First up, Amgen (AMGN).  The company says things are looking up and when most stocks fell last week, Amgen was strong.  Pat said it’s a bit expensive now, but if it dropped into the $40s, he’d buy Amgen and hold on to it.  Toby also said he’d buy it on a pull back.  Scott thinks the stock looks good, but is a bit expensive right now.

Procter & Gamble (PG) also has a good outlook, a winning week in a down market.  Scott, Tobin and Pat all recommended to stay away from the stock and if you own it, sell it.

Now onto United Airlines (UAL).  It declared bankruptcy and gained almost than 90 percent last week!  Gretchen thinks the stock is going to zero and there is no value in owning it. Pat recommended to run away from this stock.  Tobin said people were betting that the government would loan the company money and the pilots and mechanics would give in on their demands.  Scott said individual investors should not buy any airline stocks right now.

And finally Coca-Cola (KO).  The company says it will never give out guidance again on how its earnings will do.  And the stock didn't do much when that news came out. Tobin said the real growth in the company is in its water business.  He said if you want to bet on water, buy a water company.  Gretchen thinks it is admirable that Coca-Cola will not give out earnings guidance because this has become a ridiculous obsession.  She thinks part of the recent problems with the market is the obsession with quarterly numbers.  Pat does not like the stock, but agreed with Gretchen’s point. Scott thinks this is going to upset a lot of institutional investors, who will probably sell the stock because they are not going to want to deal with the situation.

Predictions

Gretchen: Tech stalls until at lest mid-2003

Scott: Time to mine more gold; Buy AngloGold (AU)

Pat: General Dynamics (GD) is a buying opportunity

Tobin: Sell your REITs; stocks beat them in 2003