DISCLAIMER: THE FOLLOWING "Cost of Freedom Recap" CONTAINS STRONG OPINIONS WHICH ARE NOT A REFLECTION OF THE OPINIONS OF FOX NEWS AND SHOULD NOT BE RELIED UPON AS INVESTMENT ADVICE WHEN MAKING PERSONAL INVESTMENT DECISIONS. IT IS FOX NEWS' POLICY THAT CONTRIBUTORS DISCLOSE POSITIONS THEY HOLD IN STOCKS THEY DISCUSS, THOUGH POSITIONS MAY CHANGE. READERS OF "Cost of Freedom Recap" MUST TAKE RESPONSIBILITY FOR THEIR OWN INVESTMENT DECISIONS.

Bulls & Bears | Cavuto on Business | Forbes on Fox | Cashin' In

Bulls & Bears

Brenda 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 Joe Battipaglia, chief investment strategist at Ryan, Beck & Company.

Trading Pit

It's been called "Rock"-tober and "Shock"-tober. The biggest one day disasters in stock market (search) history have all hit in October-which begins Wednesday.

Gary B. is scared of October because the market has run up so far so fast. He said we're due for a pullback and things are lining up for it. He charted the Dow and showed the uptrend it has been in for most of the year. But last week, the Dow broke below 9350, which was below that uptrend line. Due to this, he thinks we're going to have another ugly October.

Joe thinks we could pullback 3-7 percent, but the fundamentals surrounding the market are positive. Interest rates have backed off towards 4 percent, the economy continues to defy the odds, and analysts are raising expectations. He added that although the first week of October could be weak, he thinks the third quarter will have positive surprises and this will make stocks stronger going into November.

Tobin believes the market is going to pullback. He thinks traders can make money by shorting overvalued stocks, but this is the hardest time for investors because they must wait for stocks to come down before buying them. He advised investors to buy stocks, but don't chase them.

Scott is glad that last week was a weak one for stocks. He explained that the market had been only going up and it needed to cool down. Small cap stocks, which had been leading the rally, were hit especially hard. He advised investors to buy stocks on this pullback.

Pat said the market has had positive news, but it is not enough to sustain the gains we have made. In fact, he thinks it will be much worse than a 5 percent pullback. He said companies in Asia that manufacture semiconductors for other firms, are saying that their clients are way too optimistic. There is not going to be as much growth as is predicted in the chip sector. This will have a negative impact on the Nasdaq and will bleed into the broader market.

Chartman

Gary B. and Pat each picked a very widely held stock each thinks you should sell Monday morning.

Gary chose Verizon (VZ). He said it had been in an uptrend since last September, but just broke below it. He wouldn't look at the stock until it goes to the mid $20s. But Pat didn't agree. In fact, he said the stock is a keeper just due to its dividend. The company won regulatory approval to offer long-distance services in every state it serves. Its wireless unit is growing nicely. Now Pat did admit the stock has some risk, but it's not enough to make him sell it.

Pat's stock to sell was Intel (INTC). He said the personal computer market is mature, and this will make the company grow slowly. On top of that, Intel's other units are losing cash and its third quarter estimates are too optimistic. Pat expects the stock to drop 30 percent. Gary B. said to short Intel a couple weeks ago, but he's not as negative on the stock now. On its chart, the stock has gone nowhere for the past month. But to be safe, Gary B. advised not to sell the stock unless it breaks the uptrend it has been in since the start of the year.

Stock X-Change

Joe, Tobin, and Scott all came back to look at three stocks that Joe says are big-time buys!

Joe first picked Intel. He disagreed with Pat's points from the Chartman segment. Joe thinks the stock is a play on the economic recovery. Also, Intel went through a tough time, but survived it, and now should be bought. He thinks it's going to the $40s and could double in 3 years. (Intel closed at $27.27 on Friday.) Toby and Scott both think the stock is too expensive.

Another favorite stock of Joe's is Sovereign Bancorp (SOV). It acquired some assets and is making loans. Also, it is benefiting from a rising economy and the troubles of Fleet (FBF) and Wachovia (WB). Tobin likes the stock because it owns variable rate mortgages, so as interest rates rise, it makes money. Scott would rather own a regional bank that pays a 3 percent dividend yield. (Sovereign Bancorp closed at $17.95 on Friday.)

Joe is also a big bull on pharmaceutical giant, Amgen (AMGN). He said it has made giant gains in revenue and earnings. Also there is a huge demand for pharmaceutical products and it is a leader in the pharmaceutical business. Toby likes the stock, but said Amgen needs to make some acquisitions and get its new arthritis drug approved. Scott said Amgen is a great company and stock, but wait for it to pullback $5 before buying. (Amgen closed at $65.15 on Friday.)

Predictions

Scott's prediction: Mortgage rates fall again! 30 yr. going back to about 5 percent

Joe's prediction: Still time to buy iShares Dow Jones U.S. Real Estate (IYR)

Pat's prediction: Cash in your chips; semiconductors tank 20 percent by year-end

Gary B's prediction: Party is over for high-flying Chinese internet stocks (Gary specifically mentioned chinadotcom-CHINA & SINA-SINA.)

Tobin's prediction: Nasdaq falls another 100 points next week

Bulls & Bears | Cavuto on Business | Forbes on Fox | Cashin' In

Cavuto on Business

Neil Cavuto was joined by Bernard Kerik, former NYC Police Commissioner; Rep. David Dreier, D-Calif.; Gregg Hymowitz, founder of Entrust Capital; Jim Rogers, president of JimRogers.com; Meredith Whitney, Fox Business News contributor; Dave Nelson, CEO of DC Nelson Asset Management; and Rep. Harold Ford, Jr., D-Tenn.

France: Enemy of the State?

Neil Cavuto: Is France (search) now enemy number one to America and our stock market? President Bush extends an olive branch at the U.N. last week and while the French say they're willing to work with us, Jacques Chirac's speech was more an attack on us, and our efforts in Iraq. Bernie Kerik, France seems unwilling to help with the enormous costs of Iraq unless we do it entirely their way.

Bernard Kerik: We have to get courage. France didn't have enough courage to stand up to Saddam Hussein (search). They didn't have courage to move forward knowing that Saddam just ignored one resolution after another. They know it was the right thing to do even though they don't like to acknowledge it in public.

Neil Cavuto: Congressman Drier, do you worry that because they didn't take our olive branch and go with the program that this could be a problem for us going forward?

Congressman Drier: I'm a half glass full kind of guy. I think the meeting the President had with Jacques Chirac coupled with the speech is a beginning. It was easy for us to bash the French because they gave us a lot of reason to. But we have much more in agreement with France and Western Europe than we do in disagreement. We're the largest trading partner France has outside of the European Union. The economic relationship transcends any of these political bumps in the road.

Meredith Whitney: I think a way of describing the French is N.A.F.T.A, Not A Factor To Anyone. I think they're flexing their muscle because they know they have much less political strength than they ever have before. Chirac doesn't have a lot of courage because he's got a lot of Muslims living in his country.

Jim Rogers: This is politics. Chirac is playing to his voters like everyone in politics plays to their voters. This is not going to affect our economy or our stock market.

Gregg Hymowitz: 52 percent of Americans feel a little troubled right now about spending $87 billion in Iraq. I think the language is a little inflammatory when we say the French have no courage. Many Americans are now looking back at why we went to war and are now very uncomfortable with it. The French are taking a position that is very similar to many Americans right now.

Meredith Whitney: The United States represents over 60 percent of the worldwide GDP. So they can complain but no one can really afford to go against the United States here. I think that as a result you'll see a lot of cooperation with Europe in the future.

Neil Cavuto: But you Mr. Kerik say that the French are getting it wrong. That there is a great deal of good news coming out of Iraq but it's just not being reported.

Bernard Kerik: There's an enormous amount of good things going on in Iraq. The economy is coming back. The infrastructure is being built, not rebuilt. It's being built because the infrastructure was so deteriorated.

Gregg Hymowitz: But how does us building railroads in Iraq protect American citizens?

Bernard Kerik: Protecting our citizens on a daily basis is essential. We have to secure the country of Iraq and the Iraqi people have to do that.

Gregg Hymowitz: Why? What's the connection between 9-11 and Iraq?

Bernard Kerik: You have to take away the threat in Iraq and every country around Iraq. You have to take out Saddam. That's what's being done and that's what's been done.

Jim Rogers: But he's gone. Why do we still spend hundreds of billions of dollars. Why don't we come home?

Neil Cavuto: Are you assuming that everything is hunky dory now and we can just come home?

Bernard Kerik: If we come home tomorrow, Saddam is back in a week. That's why.

Congressman Drier: Well, I'm the only person here who is actually going to have a vote in the $87 billion. There is a recognition that we got into this and for us to now withdraw would be wrong. I know the argument is being made, why are we doing these things in Iraq that we could be doing here at home. I think we need to realize that, as the President has said, there is not a direct correlation with 9-11 and Saddam Hussein. We do know that there are forces within Iraq that would love to do in the United States.

More for Your Money

Neil Cavuto: There may be new proof the stock market is the best place to get more for your money. Investors are embracing the brand new stocks hitting wall street this year. The average initial public offering -- commonly called "IPO" is up 35 percent. That's way above the overall market and much better than last year. Dave, what do you think this means?

Dave Nelson: I think it certainly means that investors have an appetite for risk. But it's backward looking. It tells us where we've been, not where we're going. In terms of its predicting power, I'm not sure.

Jim Rogers: It could be a negative because usually by the time people get the confidence to start buying again, they should really be selling.

Gregg Hymowitz: Investors are obviously willing to take a lot more risks now. My contacts are telling me that the pipelines in investment banks are only increasing. It shows that the capital markets are more liquid. Spreads have narrowed. I think in general that's a positive.

Dave Nelson: Back in 2000, the IPO market was flying. I mean you couldn't have gotten any better. So how predictive was that?

Jim Rogers: We're talking about what you should be doing now. You should've been buying back in the summer of 2002. To say that you're going to buy now is complete madness.

Gregg Hymowitz: I agree the IPO market, with 10 new IPOs every day, stocks going up 20, 30 points represented the beginning or the end of the bubble. We're not talking about that. We're talking about a few IPOs, with a pipeline building. Investors willing to look at new companies.

Neil Cavuto: That's a good point. Let's take a look at some of these companies. Meredith, which one do you like?

Meredith Whitney: I think it's really about supply and demand. In the past 2 years you've had no IPOs in the month of September. So far you have about a billion and five for the month of September. But on a year over year basis, you're still down versus last year. I like Google. It hasn't filed yet because it has a billion in revenue. Microsoft has expressed an interest in buying them. It's a great search engine.

Neil Cavuto: How about you Dave Nelson?

Dave Nelson: One that we like that did come out is Molina Healthcare (MOH). It's a small health care provider that has HMO status. I don't care about the fundamentals in this but Molina Healthcare owns about 60 percent of the float and they're going to sell out at much higher prices.

Jim Rogers: You don't care about the fundamentals?

Dave Nelson: I shouldn't have said that. I do care but it's not the driving criteria.

Jim Rogers: The same thing with Meredith. What are the fundamentals with Google? Is it an expensive stock?

Meredith Whitney: We don't know yet. It has priced yet.

Jim Rogers: Well then don't say to me "buy it" if you don't even know the price.

Meredith Whitney: If you look at the IPO market over the past month or so you have deals that are pricing historically below market and that's when investors have the great upside.

Neil Cavuto: And here's what I don't see. I don't see just the blip screen of offerings that we got at the height of the market last time. While it's certainly up from where it was, it was up from zero. So Gregg what do you make of that?

Gregg Hymowitz: That was the point I was trying to make. As companies are able to raise more capital it will have ripple effects throughout the economy. I see that as a positive.

Head to Head

Neil Cavuto: Congressman Harold Ford Jr., says rich Americans should give back their tax cut to help pay for rebuilding Iraq. Mr. Ford, you've got to be kidding me.

Harold Ford, Jr.: No, I'm not. $87 billion, anyone should be willing to help with that. The dividend tax cut, the marginal tax rate reduction on the highest tax bracket, if we suspended it for one year and call on us to sacrifice like the troops are sacrificing for us. I think it's fair and I think it's the American thing to do.

Neil Cavuto: I think if you're going to talk about sacrifice you should talk about sacrificing a lot of the spending in Congress. Why go after people who've given a lot of money to the government to pay for the programs you hold dear to make some patriotic statement when the patriotic statement should be made by you folks.

Harold Ford, Jr.: I'm in full support of that and will find ways to cut fraud and cut abuse and cut spending.

Neil Cavuto: Cut it now. Why go after people who pay their hard earned money into taxes? Why go after them?

Harold Ford, Jr.: If we cut the entire discretionary budget, that means for education, transportation, healthcare, housing. If we zeroed it out, we'd still run a $100 billion deficit and a projected $150 billion deficit next year. I'm in support of eliminating fraud and abuse too.

Neil Cavuto: But Congressman you're not. Rather than make the debate about giving people their money back, what about the money that the government is still keeping from them.

Harold Ford, Jr.: I like you want a lower tax burden as possible. I like you want to see success in Iraq. I like you want our schools to work well. And I like you want our markets to be transparent and productive. Unfortunately, it takes money to do these things. And after a while there are some painful decisions we'll have to make. I'd be willing to give up a little bit of my tax cut. Think about all families that had to send their wife, their daughter, their son, their father off to Iraq. It's the least we can do.

Neil Cavuto: People have to make sacrifices. But you're saying the people who already have to give close to 35 percent of their income to the government don't make a sacrifice enough? You've got to be kidding. You honestly think that if you take a tax cut back, you're going to give it back a year later?

Harold Ford, Jr.: I take my job seriously as a trustee of this government. I don't know how else we pay for it. If we froze all discretionary spending like veterans healthcare and education we'd still have a deficit and couldn't pay for all of these things. I say for one year, let us make a sacrifice.

FOX on the Spot

David Nelson: Hillary Clinton runs for president and stocks fall as a result!

Jim Rogers: Someone goes to jail over NYSE scandal.

Gregg Hymowitz: Economy gets a boost from weak dollar.

Meredith Whitney: Strong dollar hurts multinational stocks. Stay away from stocks like Citigroup (C), Coca-Cola (KO), American Express (AXP), and Procter & Gamble (PG)

Neil Cavuto: The U.N. is showing more support for sharing the burden in Iraq, likely calming things down there and lifting the market here. President Bush will get just what he wants from the U.N. after all.

Bulls & Bears | Cavuto on Business | Forbes on Fox | Cashin' In

Forbes on Fox

Our panelists give you the scoop on all the inside business information before you hear it anywhere else in The Informer segment:

David Asman: Victoria, tell us about Tiffany (TIF).

Victoria Murphy, senior reporter: I think now is the time to look at Tiffany (search). Their jewelry is expensive, but the stock isn’t right now. It’s relatively cheap right now at 22 times forward earnings. And as the US economy picks up, as well as Japan’s, where Tiffany gets nearly a third of their sales, people are going to buy more luxury items, and as many of us have learned the hard way, some of the best things in life aren’t free, they come in a little blue box with a white ribbon around it. So, I like Tiffany right now.

Pete Newcomb, senior editor: I actually like it, and here’s why: You know, Forbes just did a cover story recently on a billionaire who’s breaking the diamond cartel. He’s extracting huge diamonds, which the women love, and Tiffany is the place to buy them.

David Asman: And one of the ways you might be able to afford one of those baubles is by winning at the casinos, but casinos have been going through some tough times. However you’ve found one that’s a winner. Tell us about it.

Pete Newcomb: It’s one that you’ve never heard of before. It’s called Station Casinos (STN).

David Asman: Why haven’t we heard of Station?

Pete Newcomb: Well, they run about a dozen or so small casinos outside the strip. They don’t cater to tourists; they cater to the local crowd. Vegas is a city growing by about 60,000 or so a year, and they really cater to the local crowd.

Bill Baldwin, editor: Well, the motto of the casino industry is, “Never give a sucker an even break,” so I definitely would, if I were into crapshoots, speculate on that one.

David Asman: All right, two winners for Station Casinos. Now Bill, DaimlerChrysler (DCX): Everybody was really excited about DaimlerChrysler, when they got together, but now they’re thinking about splitting?

Bill Baldwin: Well, I think it would be a great little stock if you could erase the second half of the name. It would be as simple as this.

David Asman: Get rid of Chrysler? What would Lee Iacoca do?

Bill Baldwin: Wait a minute now. You’d have the Germans back in Germany with a superb brand name, Mercedes Benz. And you could declare victory in the United States and go home. Just spin it off to shareholders.

Victoria Murphy: I think the split would be a great idea, especially for Daimler, but I would avoid all US automakers right now, simply because of the labor contracts that they’re under. Japanese automakers have at least a $1,000 cost advantage going into every car. And they’ve got 60 percent of the US market, so I don’t like any of those guys.

Bill Baldwin: Very legitimate with regard to Chrysler, which I’m not sure I would want to own after the split off, but back in Germany you’ve got $70,000 cars, labor is not as big an issue.

David Asman: Pete, which would you rather have, a Chrysler or a Mercedes?

Pete Newcomb: I actually like the Chrysler Pacifica, but, you know what? Every analyst report I’ve read does not expect these guys to be making any money over the next year or two. I’d just stay away.

Makers & Breakers

Lennar (LEN)

Sam Lieber, portfolio manager of the Alpine US Real Estate Equity Fund: MAKER

Lennar is the dominant homebuilder in its industry. This is an industry which has been growing, in part, through market share gains, consolidation of the industry of which Lennar has been, arguably, the best consolidator in the whole game.

David Asman: And they’ve been doing extremely well, but have they climbed too high?

Sam Lieber: Not at all. Their stock is trading at a low P/E ratio, seven-and-a-half times, a fraction of what they used to trade at ten years ago.

Mike Ozanian, senior editor: BREAKER

It’s an attractive stock, but I’m a breaker, simply on principle. The family that runs this company controls pretty much all of the voting shares. If I buy the stock, I get no vote. I don’t want to buy anything that I get no say in.

Pete Newcomb, senior editor: MAKER

My colleague here is turning into a shareholder activist. You know what? To hell with the shareholders! This company is really well run, there’s a lot of growth left, I like it.

Ryland Group (RYL)

Sam Lieber: MAKER

Ryland has grown in a different way. Not through acquisitions, but Ryland has actually gone out and organically growth their business. They’ve improved their margins, it’s just a great business, in general. Nationwide, they’ve had fifty-odd percent earnings growth in the last five years, per year. That’s phenomenal.

David Asman: Now, if Lennar is the leader, why chose Ryland at all?

Sam Lieber: Because Ryland is an acquisition target. They could be a target for Lennar in several years.

David Asman: And when something’s an acquisition target it means the price might go way up. Do you think it might double?

Sam Lieber: Double may be tough, but fifty percent?

Pete Newcomb: MAKER

You know what? I like this one too. Earnings are up 55 percent, it’s a takeover candidate, and, you know, they’re buying back shares. The balance sheet is really strong here.

David Asman: Who’s thinking of taking it over?

Pete Newcomb: People like Lennar, and maybe Pulte Homes (PHM).

Mike Ozanian: MAKER

I’m a maker on this one, because their earnings growth has been coming, largely, from an increase in volume. They haven’t had to raise prices very much to boost earnings, which is great because, unfortunately, at this point in the expansion, incomes aren’t rising yet. So I think that’s a very bullish sign.

David Asman: Now the problem with both of these, although it may not be a problem, is that it’s a volatile market. A lot of people say that real estate has gone up about as far as it’s going to go. If interest rates go up, as some people say they might, what happens to these stocks.

Sam Lieber: Well, I’ll tell you. Everybody’s been saying for five years that these stocks have gone as good as they can be, and for five years they’ve had record sales growth. So right now, we just had a record in existing home sales, just yesterday announced. I think this is a great story.

David Asman: But, Mike, for five years we’ve had interest rates going down. If, in fact, they do go up, what happens to these stocks?

Mike Ozanian: If interest rates go up, they won’t do as well, but I think they’ll still do well, and this is why: It’s not like the old days where they kept a ton of land on their books. Their inventories are a lot leaner than they used to be.

Bulls & Bears | Cavuto on Business | Forbes on Fox | Cashin' In

Cashin' In

Stock Smarts: One Last Hurdle?

On Friday, the Dow (search) closed at 9,313, a long way from a low of 7,286 a year ago, but still way below the all-time high of 11,723 set in January 2000. So, what’s the one big hurdle the economy needs to make before the Dow gets back to that number?

Hilary Kramer of A&G Capital says jobs or the lack of them right now is what is standing in the way of a new high for the stock market. She says a poor job market is stifling investor confidence and keeping stocks in a trading range.

Jonas Max Ferris of Maxfunds.com disagrees that more jobs are the answer to new market highs. He says companies are showing better profits because of leaner payrolls and better productivity, and hiring more people will cut into that profit and hurt stocks.

Gary Kaltbaum of Kaltbaum & Associates says the Dow itself is what is standing in the way of new highs. He says some of the companies in the Dow are slow growing, poor performers that are holding back the index like SBC Communications (SBC) and Eastman Kodak (EK), which he says is at a multi-year low.

Adam Lashinsky of Fortune magazine agrees with Gary. He says the “jobless” recovery is moving along and what we really need for the Dow to reach new highs is for Dow components to stop announcing that they are cutting dividends and getting out of their main businesses.

Jonathan Hoenig of Capitalistpig Asset Management agrees with Gary and Adam that the Dow’s got a lot of “soggy old” companies in it that aren’t performing well.

Be$t Bets: Tag Team Stocks

Two heads are better than one, so tag team stock picking might be your best bet.

Gary and Jonathan make up the first team. They say a stock’s trading pattern tells the story, so they don’t even worry about a company’s business or its management.

Taking them on is Hilary and Adam. They want to buy cheap stocks, and they look closely at who is running the place before they pull the trigger.

Adam & Hilary’s Tag Team Stocks…
Liberty Media (L)
Friday's close: $10.11

Adam says Liberty Media is a good value in part because investors have a hard time figuring out what it’s worth since half of its assets are private, and he and Hilary think it’s worth more than what it’s selling for now. Jonathan says we’ve been hearing that for years and yet the stock has done nothing. Gary agrees with Jonathan. He doesn’t see any reason to buy this stock.

Tyco (TYC)
Friday's close: $20.82

Hilary says the days of abusive personal spending by Tyco executives is over and this company is back on track and will start to show enormous profit. She calls it a “gold mine.” Jonathan says that conglomerates like Tyco are acting well in the stock market, and Gary says Tyco insiders are buying. They both like the stock. Adam says there is still a “taint” discount on Tyco and if the taint is removed the stock moves higher.

Jonathan & Gary’s Tag Team Stocks…
Occidental Petroleum
(OXY)
Friday's close: $35.12

Gary & Jonathan say in the last few months oil services stocks have been acting terribly and yet Occidental Petroleum refused to go down. They believe the stock is at a near-term low and will lead the oil services pack up when oil prices start to rise again. Hilary says there’s too much other oil out there competing with OPEC and that should keep downward pressure on prices which will hurt this stock. Adam agrees; he doesn’t like the stock. Jonathan says the issue here is that while commodity prices are up across the board, oil’s still relatively cheap and Occidental is in a great way to play that.

Newmont Mining (NEM)
Friday’s close: $38.91

Jonathan says gold is at a 7-year high, and gold stocks are on fire. He prefers Newmont right now. Hilary doesn’t trust the trend in gold prices; she thinks they will fall, and so she would not buy this stock right now. Adam says chartists like to “buy high and sell low,” and the fact that gold is at a 7-year high is exactly why he thinks it’s a bad idea to buy this stock now. Gary says mutual funds prefer Newmont Mining so it’s the stock to buy in a bull market for gold, and he says we’re in a bull market for gold, and he doesn’t see that slowing down anytime soon so buy Newmont.

Mutual Fund Face-Off: High Risk Funds

Jonas: Artisan International Small Cap Fund (ARTJX
Year-to-date (as of 9-26-03): UP 40.5 percent
Minimum Investment: $1,000
Expenses: $17.70 for every $1,000 invested.

Dagen: T. Rowe Price Total Market Equity Fund (POMIX)
Year-to-date (as of 9-26-03): UP 20.8 percent
Minimum Investment: $2,500
Expenses: $4.00 for every $1,000 invested

Money Mail

Gary, Jonathan and Dagen answered some of your questions.

We took a quick look at winners and losers in the $10,000 Cashin’ In Challenge. To find out who’s ahead, check out the website at: www.foxnews.com/challenge

Question: “Wayne once recommended Nortel (NT). I bought it at $1.83 and now it's over $4.00. Should I hold or take the profit?”

Gary K. says forget that this is Nortel -- which he thinks is a laggard in its group -- and just start managing the money you have made. He says take some profit off the table and put in a stop loss order so that the market takes you out of the rest if the stock begins to fall. Dagen pointed out that she had said last spring not to buy this stock, and she admits was wrong, but now she thinks it’s wildly expensive and she recommends you take your profit and run.

Question: “Are mortgage stocks done for, or is there any potential upside for Freddie Mac (FRE) and Fannie Mae (FNM)?”

Dagen says higher interest rates could slow profits in these companies. She also points out that the government is tightening oversight of this industry and that could hurt profits too; plus she says that nobody really understands their derivative businesses, and these are all good reasons to avoid these stocks. Jonathan says interest rates are actually creeping a little lower, not higher, right now, but the he agrees with Dagen that the regulatory environment around these companies makes them a poor choice for your money right now.

Question: “Is it smart to hold on to my Boeing (BA) stock?”

Jonathan says when it comes to selling a stock, you should put stop loss orders in and let the market take you out. He thinks the glory days for Boeing are over. Gary agrees with Jonathan. He says Boeing is just not growing enough anymore to be a buy.

Question: “Why are gold stocks and gold bullion doing so well? What is driving the interest in it?”

Jonathan says a weak dollar and strength in commodity prices – which is inflationary – are two reasons gold is on the rise. Gary agrees. He says there is a direct correlation between a weak dollar and higher gold prices.