Brenda was joined by: John “Bradshaw” Layfield, WWE Superstar and author of Have More Money Now; Charles Payne, CEO Wall Street Strategies; Gary B. Smith, RealMoney.com columnist; Pat Dorsey, director of stock research at Morningstar.com; Tobin Smith, founder and chairman of ChangeWave Research; and Scott Bleier, president of HybridInvestors.com.
Trading Pit
Last week stocks were hit by terror on tape. On Wednesday, Usama bin Laden (search) appeared on a videotape. And then on Friday, an alleged 9/11 hijacker videotape surfaced. Each time a tape hit, stocks got hit. But overall for the week, the market didn't do much.
Tobin advised investors to buy stocks if they fall due to threats of terror. He said investors who bought stocks when they fell due to the terror tapes, made money. Toby concluded with a bit of advice. If you’re scared about terrorism, don’t buy stocks. We are going to beat the terrorists. But when buying stocks, look further out than a day. You have to look six-nine months down the road. We’re winning, the terrorists are losing, and you want to own stocks.
Bradshaw agreed with Toby and said investors should buy stocks when they fall due to terror. He said the videotapes prove that the terrorists have no recourse. If they could attack us, they would, but they’re sending out videotapes, because it’s the best they can do. As for the $87 billion President Bush wants to spend to get bin Laden and others like him, Bradshaw said a price tag cannot be placed on peace and security. Also, this sends a great message to the market because it says we are not going to tolerate terror and it will not happen to us again.
Gary B. charted the Nasdaq’s performance since 9/11/01. He said that we’re above the lows set after that date, but not quite back to the highs. However, all things considered, this is an incredible performance. He doesn’t think it’s a good idea to buy on every dip, but if you have a longer time horizon, like 6 months or a year, buy stocks.
Charles said when President Bush asked for the $87 billion, it got a yawn from Wall Street, because Wall Street doesn’t care how much it costs. Also, on the days that the terror tapes were released, there was some negative fundamental news-reports that consumer confidence is waning and retail sales were weaker than expected-which hurt stocks. Charles said these numbers and terror are all tied in because they won’t improve until Americans feel safer.
Always the fundamentalist, Pat said that economic news is affecting stocks. He said a softer retail demand affected stocks on Friday. However, he admitted that a terrorist tape is sexier than economic news, so that will grab people’s immediate attention. But over the long haul, fundamentals do matter, and economy is looking better, so buy stocks when the market pulls back.
Scott is impressed with the resiliency of the market. Investors are buying stocks. The economy is coming back. He thinks there is a growth phase in the market and the economy, and both are indicating that things are really going to take off.
Stock X-Change
A Lightning Round! The Bulls & Bears looked at four of the most popular stocks -- the ones that you almost certainly own. But their comments had to be quick because each stock was given one minute. Here’s what they had to say.
AOL Time Warner (AOL)
Friday’s Close: $16.07
Bradshaw: Bear. The company’s turnaround potential doesn’t pay the rent and their DSL (digital subscriber line) pricing is down. I would go with another company like Fox (FOX) or Viacom (VIA).
Gary: Bull. This stock is stronger than Bradshaw. Buy on any close over $17.
Tobin: Bear. Their DSL is killing them.
Charles: Bull. All the bad news is in the past. Expectations are lower than ever and a lot of upside surprises are on the way.
Pat: Bear. Debt is still high. The company lost 800,000 subscribers in the second quarter and it is selling really good assets too cheap to pay off the debt.
Scott: Bull. Looks good technically. It’s still the most hated stock in the country, but the bad news is behind them.
Microsoft (MSFT)
Friday’s Close: $28.34
Charles: Bull. The stock is one of the best risk avoiders, has very little downside and a lot of money. It just increased its dividend. Microsoft is not going to outperform a lot of other stocks, but it’s not going to go down.
Gary: Bull. It’s the world’s biggest monopoly. I would buy on every dip.
Bradshaw: Bull. It has enough money to air condition hell and the smartest guy in the class is running the ship. It’s bound to dip, but I would definitely buy it.
Scott: Bull. Can you say $50 billion? Soon it will be maximizing shareholder value.
Tobin: Bull. You never go against Microsoft. It has an upgrade cycle. This is the Smackdown of the software business right now.
Pat: Bear. All the wonderful things everyone has said are true because it is a mature slow-growth company, but you have to be careful when you pay.
Boeing (BA)
Friday’s Close: $35.66
Gary: Bull. I think the time to sell Boeing is when people stop flying and that is not going to stop any time soon. I think the stock makes a new high within six months.
Scott: Bull. Two words: defense spending.
Bradshaw: Bear. Only 26 percent of its profits are from military spending, while 50 percent comes from commercial spending. Every carrier is bankrupt or going bankrupt except for just a few like Southwest Airlines (LUV). I would stay away from the stock.
Pat: Bear. Defense is fine, but the rest of the business is commercial aircraft. Forget about it.
(The bell rang and the minute was up before Toby and Charles got their turn.)
ExxonMobil (XOM)
Friday’s Close: $37.73
Tobin: Bull. Love it! This stock is going to fly farther than Bradshaw did when he wrestled the Rock. It is going up because both gas and oil prices are going to stay high. The problem is it has too much cash.
Gary: Bear. Big oil is in big trouble. It’s at resistance. I would definitely sell.
Charles: Bear. It’s had a pretty good move already and the stock is probably going to pullback.
Pat: Bear. Like Microsoft and the Nasdaq, but matured. It is important to be careful about what you pay. I’d buy it at $31.
Scott: Bull. Price gouging. It is going to have a great third quarter because of all the inflated gas prices.
Bradshaw: Bradshaw: Bear. I beat the Rock the last time I wrestled him! The company cannot control the political and economic problems. I’d stay away from it.
Predictions
Tobin's Prediction: The Dow gains 500 points by the end of the month!
Bradshaw's Prediction: I love drugs...and you should too! (He specifically recommended Merck-MRK, Eli Lilly-LLY, and Schering-Plough-SGP.)
Pat's Prediction: Taxing times for H&R Block (HRB); falls 30 percent by end of year
Gary B's Prediction: The chips are down on chipmakers; short Intel (INTC)
Charles' Prediction: Lucent (LU), JDS Uniphase (JDSU), and Nortel (NT) are back!
Scott's Prediction: Macrovision (MVSN) makes music pirates walk the plank; up 50 percent
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