Brenda Buttner was joined by: Gary B. Smith, columnist for RealMoney.com; Pat Dorsey, director of stock research at Morningstar.com; Tobin Smith, founder and chairman of ChangeWave Research; Scott Bleier, president of HybridInvestors.com; Bob Olstein, president of the Olstein Funds; Joe Battipaglia, chief investment officer of Ryan, Beck & Co; Adam Lashinsky, senior writer for Fortune magazine; and Mike Norman, the chief investment strategist of Great Eastern Securities.

Trading Pit

Looks like investors got a lump of coal for Christmas. It’s an almost certainty this year will be the third straight down year for the market. It would be the first time that's happened in over 60 years.
 
What can jumpstart the stock market and economy? Tobin, Gary B, Pat, Scott, Joe and Bob all had their own opinions.

Tobin does not think that Christmas spending will help, because durable goods orders and consumer spending are down in the fourth quarter.

Joe says that a resolution to the problems with Iraq and a tax package will help get the market back on track.

Bob is more concerned as to when capital spending will pick up.  He believes that spending on information technology needs to go up…and soon.  Bob thinks IT spending will pickup in the middle of 2003.

Scott agrees with Bob that businesses will start spending, especially on computer upgrades.

Gary B. charted the Nasdaq's movement since July because he considers the index the "mood ring of the market."  He said the annual “Christmas Rally” was early this year and was more like a Chanukah rally.

Pat agreed with Bob and Scott that real issue is business spending, which will kick the economy into gear. He says that fears concerning consumers are overblown. 

Scott believes that the situation with Iraq presents some uncertainty.  Successes in the war on terror and against Iraq will result in better consumer confidence and possibly a market rally.  Tobin believes that when the war is over, gas prices will go lower, and save money from the U.S. budget.

Joe feels that economy could see a turnaround as early as February.  With a war with Iraq as a catalyst, the President will issue a healthy economic package causing the turnaround.

But Bob doesn't see the war with Iraq as an economic solution.  For that he believes we need to see more I-T spending.

It’s been almost a year and a half since the attacks of September 11th. And while America has rebounded, the stock market hasn't come back, down over one thousand points from where the Dow stood the day before the attacks.  So how do you invest in this new market reacting to this New World?  Tobin, Scott, Gary B, Pat, Adam and Mike all had their answers.

Mike feels that while there is a definite concern regarding the war on terror, he does not believe that the fear has elevated to the point where we would necessarily have a new market.  He believes that the biggest concerns for the market are tax increases and budget cuts.  He thinks unless an economic stimulus package is put in place, the economy is in big trouble.

Tobin said the government will come through with that stimulus package.

Adam believes that we are in a new market, when compared to the 1990's.  And he said investors have to use a more cautious strategy instead of the gambling one used in the '90s.

Charting the Dow since September 11, 2001, Gary B. points out that the U.S. was in a bear market then, is still in one, and is likely to continue to be in one.

Scott and Pat agree with Adam investors should be very cautious in this new market.

Tobin thinks that companies that pay dividends are the way to go.

Secret Santa Stock X-Change

It was time for the Bulls & Bears to play Santa and give each other a stock gift.

Mike picked World Wrestling Entertainment (WWE) for Joe.  Mike joked that he would like to see Joe wrestle the WWE's Big Show.  As for Joe’s opinion of the stock…he said his mother always told him to always be gracious when accepting gifts.

Joe gifted Mike with Placer Dome (PDG).  He kidded Mike that a gold stock is the perfect thing for a guy who's waiting for the world to end.  Mike accepted the stock.

Tobin presented Adam with Garmin (GRMN).  Tobin said that Garmin’s business is sure to grow because the tracking system it makes is going into cars and motorcycles in the next year. Adam said that he would accept the stock through mid-January, because it will get a boost from the Consumer Electronics Show.  But after that show, he’d drop the stock because it's overvalued.

Adam returned the favor to Tobin with chipmaker, Intersil (ISIL).  Adam said the stock will is due to explode because it enables internet connections and other wireless networks in coffee shops.  Tobin gladly accepted.

Bob loves inexpensive stocks in beaten-down areas, so Scott presented Bob with travel company, Sabre Holdings (TSG). Bob accepted the gift, but joked that there would be no airlines left for the company to reserve tickets on.

Bob's gift to Scott was Goldman Sachs (GS).  Bob argued that it is a cheap company that you could identify immediately.  Scott accepted the stock, but feels that the stock still has more pain in its future.

Chartman

Gary B. and Pat returned to look at the stocks of stores that many are spending money at this holiday season.

First up, Wal-Mart (WMT).  Gary B. likes the stock because it is now at a logical buying point.  He warned to sell the stock if it dropped before $49.  It closed Tuesday at $49.70.  Pat thinks that the stock is just too expensive and wouldn’t buy it until its price falls to the low forties. 

Next, Tiffany & Co. (TIF).  Gary B. likens Tiffany's chart to Wal-Mart's.  If it closes below $24, the Chartman says sell.  It finished Tuesday at $24.29.  Pat says that the company is too dependent on the economy and that with a bad economy, no one buys expensive jewelry.  He would wait for Tiffany’s to close below $20.

It isn’t Christmas without toys, so the duo examined Toys 'R Us (TOY).  Gary B. says $11 is the magic number.  A solid close above $11 is a buy, below is a sell.  (TOY closed Tuesday at $10.48.)  Pat does not like Toys 'R Us, because it hasn’t turned around and has had multiple failed restructuring efforts.  Also, Target (TGT) and Wal-Mart (WMT) are taking a large chunk of its business.

Amazon.com (AMZN) also a hit with Gary B.  Similar to the previous three stocks, he would buy it now, but sell if it drops below $21.  Amazon.com closed Tuesday at $21.88.  Pat says that while the company is doing a lot right, the stock is overpriced and there is just too much debt to make it a buy.

Home for the Holidays

Home may be where the heart is, but right now homes are where the money is.  The housing market is through the roof.  But if the housing bubble bursts, does the stock market suffer or surge?

Bob doesn't believe that we are in a housing bubble and thinks that it is an overblown concern.  Mike disagrees.  He said declining interest rates, decreasing equity in homes, weak economy in terms of employment and rising property taxes as evidence of the bubble.

Tobin thinks the lack of investors buying stocks has nothing to do with a housing bubble.

Joe feels that now is the best time to look at real estate investment trusts (REITs) because you can get low cost permanent financing to buy properties.

Adam advises, as a home hunter right now, that people view their home as an investment, not a trade.

Gary B. charted Toll Brothers (TOL) as a proxy for the housing stocks.  With the stock off 30% from its high, the Chartman believes that the bubble has already burst and that Toll Brothers could drop another 25%.

Predictions

Tobin: Lucent (LU) goes bankrupt in 2003; sell now!

Joe: Economy & markets up; Fed boosts interest rates!

Bob: Higher premiums make some insurance stocks a buy!

Pat: Home Depot (HD) poised to go 20% higher in 2003

Gary B: Dow does not make new high until 2015!

Scott: Tech mergers send Nasdaq to 2003 on 2003!

Adam: In 2003 your money is better in a CD than Nasdaq

Mike: Tax cuts in 2003 spur a big market rally!