DISCLAIMER: THE FOLLOWING "Bulls & Bears 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 "Bulls & Bears Recap" MUST TAKE RESPONSIBILITY FOR THEIR OWN INVESTMENT DECISIONS.
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; and Scott Bleier, president of HybridInvestors.com; and Tom Dorsey, president of Dorsey, Wright & Associates.
Quite simply, the market has been on fire! A year ago, the Dow was at 8,322 and the Nasdaq was at 1,287. On Friday, the Dow closed at 9,721 and the Nasdaq ended the trading day at 1,912. Those are gains of 17 percent and 49 percent respectively. The bull market has now celebrated its first birthday.
Tom thinks the Dow will keep heading higher and go to 11,000. He said stocks have gone from being oversold to being overbought. Even though he admitted that good things usually don’t happen when this occurs, he believes the current conditions will push stocks higher.
Pat has a similar view, but different outlook on the market. He also believes that stocks are overbought, but he thinks expectations have gotten too high and that stocks will head lower before moving higher.
Tobin is bullish! He said earnings and GDP numbers are going to grow nicely in the 3rd and 4th quarters. This means you don’t want to own bonds, because this growth will make interest rates go up, but you do want to own companies whose earnings start to grow when the economy takes off.
Scott said the market anticipates what is going to happen to the economy six months from now. He believes the market is vulnerable, overextended and like Pat, that expectations are too high across the board. He predicts we will dip until December and then investors should start buying again.
Gary B. charted the S&P 500’s performance over the past several years. He thinks it’s likely to get back to its 2002 highs, which was just over 1170. However, he predicts the market will have an ugly January.
Scott, Tobin and Tom each picked their biggest bargain stock.
Tobin chose ASML Holding (ASML). He said that if the Dow goes to 11,000 and the Nasdaq gets to 2,500, semiconductor equipment stocks will be part of that move. Also, he likes that it is significantly cheaper than its competitors. (ASML Holding closed on Friday at $15.71.) Tom also likes this stock and added that semiconductor stocks in general, look very good. Scott thinks this stock is expensive and investors should wait for it to pullback 20 percent before buying it.
Scott picked Delphi (DPH), the largest automotive parts supplier in the nation. He admitted that Delphi has a troubled balance sheet and has lagged the market, but when it reported a loss for the third quarter, the stock didn’t go down. He thinks all the bad news has been washed out and it can gain 30 percent. (Delphi closed on Friday at $9.04.) Tom and Toby both like this stock.
Tom likes Calpine (CPN), a California power and electricity company. He said it has a great looking chart and now that Arnold Schwarzenegger is the governor of California, things are going to change. Tobin thinks Calpine is too little risky, and prefers its royalty trust, which is listed on Toronto’s stock exchange, Calpine Natural Gas Trust (CXT_u.TO). Scott wouldn’t buy the stock, but said it may head a little higher. (Calpine closed on Friday at $4.97.)
Gary and Pat played in their own “Stock” World Series. Each picked a company that is based in the city of a World Series team.
Gary was the American League guy and he chose New York based, MetLife (MET). Gary said, like the Yankees, MetLife is showing signs of a champion and looks to be headed to its 2002 highs, near $34. (MetLife closed on Friday at $30.98.) Pat said MetLife is the cream of the crop as far as life insurance. Also, the company made a very smart decision to license Snoopy as its mascot. MetLife does big business selling insurance to companies, which is good, but generally, life insurance is a bad business. Additionally, the company has to contend with asbestos lawsuits. Pat said he wouldn’t buy the stock.
Pat went with the National League. He is based in Chicago, and even though his heart was broken over the Cubs’ loss, he went with the Florida Marlins. He chose Florida-based Carnival Cruise Lines (CCL). He thinks the company has made some very smart moves, but a big question is whether the demand will increase enough. He said Carnival is fairly valued right now, but if it pulled back to $25, he’d buy it in a heartbeat. (Carnival closed on Friday at $34.04.) Gary said Carnival has a pretty good chart. He said like the Marlins, this stock might surprise people. Gary said buy now, but bail if it closes below $33.
Tobin's prediction: Big earnings surprise from Microsoft (MSFT); going up 20 percent
Gary B's prediction: Nasdaq drops 5 percent in the next two weeks
Pat's prediction: Buy the "Sysco (SYY) Kid"; stock shoots up 20 percent in a year!
Scott's prediction: I'm high on GlaxoSmithKline (GSK); up 15 percent by year end
(On the show, Scott said one of the reasons he likes the stock is because the FDA just approved the company’s drug, Paxil to treat social anxiety disorder. In fact, the drug the FDA approved on Friday, October 17, 2003 for social anxiety disorder, is Paxil CR. Paxil had already been approved by the FDA for social anxiety disorder. This distinction will also be mentioned on Bulls & Bears next week.)
Tom's prediction: Japan is the place to be! Buy iShares S&P/TOPIX 150 Index (ITF)