Brenda Buttner and was joined by: Gary B. Smith, RealMoney.com columnist; Pat Dorsey, director of stock research at Morningstar.com; Tobin Smith, founder and chairman of ChangeWave Research; Scott Bleier, president of HybridInvestors.com; and Brian Finnerty, senior vice president of Melhado, Flynn & Associates.
Trading Pit
America is back on high alert. An unnerving tape from a top aide of Usama bin Laden has al Qaeda rattling Americans and impacting investors.
Despite a tax cut that puts money in the pockets of Americans, stocks were just never able to overcome all the terror talk, and the Dow finished down 78 points.
Brian thinks terrorism was playing a part earlier, but not as much now. He thinks investors are making their decisions not based on terrorism, but on what’s going on in the post war economy. But if terrorism hits American soil, it’s a different story.
Tobin said if America were hit by another terrorist attack, it would surely affect the market. He thinks terrorism is something investors must consider when buying stocks. He now sees a lot of energy stocks that are undervalued.
Gary B. is bearish on the market. He charted the 3-month performance of the Wilshire 5000 Total Market Index and said that in May it fell through an uptrend it had been in since April. It then recently moved sideways and the result of that movement is usually down.
Scott does not think about terrorism when investing. He said the threat of a terrorist attack was an excuse this week for the market to take a rest after its extended run up.
Pat is seeing fewer cheap stocks. He said that prices of stocks are getting more expensive and are ahead of the fundamentals. He added that investors should be more careful about the stocks they buy.
Scoreboard
It’s that time again! Time to looks at the Bulls & Bears best and worst calls. First we took a look at their shining moments.
Toby led things off. At the end of January, when the Dow was around 8,000, he said Iraq would send it down to 7,500, but then it would bounce back to 8,500. And it did that exactly. Dropping to 75-hundred on March 11th and then bouncing to 8,500 on March 21st. He hopes the Dow pulls back just a little to 8,200 and then he thinks it can run up to 9,500.
Next it was Pat’s turn. In the middle of January, he said McDonald's (MCD) was his favorite Dow stock. And it was up over 20 percent from the time, but then reports of mad cow disease in Canada surfaced on Tuesday hurting the stock. Pat thinks in the short term, McDonald's has some risk and may head lower, but is still a good stock to buy and hold.
On the first day of March, Home Depot (HD) was trading in the low $20s. Scott said it would be at 30-dollars in 6 months. It got there and even quicker than in the six months, Scott predicted. He advised investors not to get greedy and to take their profits and run.
Also on March first, the Chartman said to be bullish on American Tower (AMT). And it was a huge winner-almost doubling. And he thinks it can even go higher! He’s bullish on the stock until it closes below the $6 area.
And then it was Brian’s turn. In early February, he said Motorola (MOT) was the stock at the top of his shopping list. And in a little over 3 months, this stock, which was once pummeled, made a nice gain. Brian still likes the stock. If it breaks above $9, he predicted it could head to $13. (Motorola closed on Friday at $8.49.)
That was the good. Now for the bad... and the ugly.
Brian said in the middle of September of last year that there would be tough times for the market through October-but then it would be off to the races! The Dow was at 8,300 then and went lower after that. Now it's only slightly higher than when he made that call nine months ago. Brian said he now thinks the Dow will have a short term pull back, but then will rally and have a good summer.
In the middle of January Gary B. said that the Nasdaq would drop to 1,000 by the end of the year. The Nasdaq was at 1,376 then, and is now higher in the 1,500 range. But he is still bearish and said his charts are telling him it still could go down to 1,000.
Pat took a chance on Tyco about a year ago and got burned. Despite the company’s troubles he said it would be up 30 percent in a year. Instead, it went in the other direction, and headed lower. Pat said that Tyco’s troubles were worse than he expected and he sees the stock going down further from here.
At the end of last November Scott said that Electronics Boutique (ELBO) would be up 30 percent by May. But unfortunately it got hammered-down over 30-percent! He admitted it was just a bad call, and advised investors not to buy it now.
On the same day that Toby made that great Dow call, he also said Sony (SNE) was a stock that was heading up. But unfortunately for Toby, this stock's gone the other way. Losing almost 40 percent since his pick. Toby said Sony cannot come back and that investors should not buy it.
Predictions
Gary B's Prediction: If al Qaeda hits U.S. Dow falls 500 pts immediately
Tobin's Prediction: Tax cut is a big gain for Dominion Resources (D)
Scott's Prediction: Mad cow is bull! Wendy's (WEN) now a buy
Brian's Prediction: U.S. Steel (X) won't be a boring stock when it rises 45 percent!
Pat's Prediction: Computer Associates (CA) way overpriced; about to fall hard
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