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
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 Bob Olstein, president of The Olstein Funds.
The images of a captured Saddam Hussein rocked the world. And on Wall Street there were predictions of a giant Saddam rally. BUT it didn't exactly work out that way.
However Toby thinks the capture of Saddam is going to be something that will boost this market over the long haul. He said Saddam’s capture adds certainty that we are not going to spend over $84 billion to get him. Also, this encourages other countries to join the United States and will help take some of the bad news out of the papers.
Gary B. charted the S&P 500 and thinks the rally is running on fumes. He admits we may have some more upside, but the market will probably head down in January.
Bob thinks that in general, stocks’ prices have exceeded their earnings. This means that investors have to become stock pickers and pick the best-valued stocks.
Pat said there is still a lot of uncertainty out there. For example, the president of Pakistan was almost assassinated and Al Qaeda cells popped up in Saudi Arabia. He added that the situation in Iraq is far from pacified and that the capture of Saddam does not erase everything.
Scott said the market viewed Saddam’s capture as a nonevent. However, Saddam’s capture will increase the market’s confidence going forward.
Tobin, Pat and Scott each chose a stock that is set to soar now that Saddam is captured.
With the image of Saddam’s beard in mind, Tobin chose Gillette (G). He said its Mach 3 Turbo razor is flying off shelves and these sales are going to boost the company’s bottom line. Scott said the stock hasn’t gone anywhere for years, but it has finally broken out and will hit the low $40s. (Gillette closed on Friday at $35.98.) Pat said Gillette is a wonderful company, but Schick is going to offer up some competition.
Pat picked TransCanada (TRP), which is the main pipeline operator for natural gas coming through Canada to the United States. He likes this company because pipelines are a great business and there is not much competition. (TransCanada closed on Friday at $20.73.) Toby likes pipeline companies, but prefers ones based in the U.S., rather than Canada. Scott likes this stock.
Scott chose International Speedway (ISCA), because now people are really going to start going to the races and ballparks. This company is the largest speedway company in the country and is devouring the competition. He said NASCAR’s television business is huge and getting bigger. He thinks this stock get above $50. (International Speedway closed on Friday at $43.53.) Toby agreed and also thinks this stock is going to go through the roof. Pat said this is a great company, but he doesn’t like that one family controls everything and minority shareholders have no say.
Gary B. faced Bob head on, for the ultimate Chartman showdown! Bob picked two stocks he owns in his fund. He says they're so good even someone like Gary B. should see their value.
Bob’s first stock was Interpublic Group of Companies (IPG), a group of advertising and marketing agencies. He admitted IPG got into some trouble when it got into businesses it knew nothing about. But now the company is back on track and moving in the right direction. Bob thinks it’s now worth $20. (Interpublic Group of Companies closed on Friday at $15.45.) Gary B. said IPG was about the same price a year ago. He said investors should wait for the stock to close above $16, because then it would have shown some strength.
Bob’s next stock was Tenet Healthcare (THC). It’s another company that’s had some problems, but he said it is capable of generating good profit margins. He likes the pessimism surrounding this stock and thinks it can go above $20. (Tenet Healthcare closed on Friday at $15.18.) Gary B. charted Tenet and said it has created a nice base, but it is still trending down. He said wait for it to show signs of life and to close above its current downtrend line (around $16).
Tobin's prediction: Usama's a goner by Easter! Dow up 200 points the day it happens
Pat's prediction: Wal-Mart (WMT) is itself a bargain! Up 20 percent in 2 years
Gary B's prediction: "Return of the King" helps Time Warner (TWX) double by June
Scott's prediction: Motorola (MOT) motors! Up 50 percent in 1 year
Bob's prediction: Want a healthy bottom line? Buy Oxford Health (OHP)
Cavuto on Business
Neil Cavuto was joined by Gregg Hymowitz, founder of Entrust Capital; Ben Stein, author of Yes, You Can Time the Market!; Jim Rogers, president of JimRogers.com; Price Headley, investment strategist at BigTrends.com; Monica Crowley; FNC political analyst; Adam Lashinsky, senior writer at Fortune magazine; and Nancy Skinner, radio talk show host and Democratic candidate for U.S. Senate in Illinois.
Do the Bulls Want Bin Laden?
Neil Cavuto: Saddam is in the slammer. Now the target for America and Wall Street is Usama bin Laden. The images of Saddam in U.S. custody represented a major victory for America and an historic moment for the people of Iraq. But the Saddam rally petered out Monday, leaving some to ask do the bulls really want bin Laden, the man responsible for 9/11?
Monica Crowley: Bin Laden is still the number one target for U.S. troops. Getting Saddam was strategically and psychologically important. But Usama is still the big fish and would have a huge effect economically and politically.
Jim Rogers: I'm delighted we captured Saddam Hussein but it really didn't have any effect on the market. And if we capture Usama bin Laden, we might see an effect for a day or two but the markets really don't care.
Gregg Hymowitz: It's not the capture of Saddam Hussein that's important, it's what it means to our stay in Iraq. Can we shorten our stay there? Can we hand over the power to the Iraqis? Does it cost the government less money, thereby effecting many many things in the economy. Finding Usama would be a tremendous positive to the market. First, it would show that we are winning the war on terror. And second, you take off the head of these terror organizations and that really stops them in their tracks.
Price Headley: The problem I have with that is that Al Qaeda is not a country and therefore we can't bomb al Qaeda. This is going to be an on going effort on the war on terror for decades. As Jim said, the effects on the market will be very short term on the positive side.
Ben Stein: It's called a market where you buy future flows of earnings. It is not a place where you buy political news and gossip. Unless it has any effect on earnings, it is not going to have any effect on the markets.
Gregg Hymowitz: It does have an effect on earnings and I'll tell you how. Yes, we buy earnings but how do we buy earnings. We apply a discount rate to those earnings to figure out what the value is. That discount rate is measured by risk. If you take out Usama bin Laden and Saddam Hussein that lowers the risk premium that people are willing to pay.
Monica Crowley: I watch you guys every week and the one thing you guys pound into our heads is that the market hates uncertainty. If Usama bin Laden is taken out, that huge part of the uncertainty is taken out. If you get the big guy, that psychological response on the market will be huge.
Ben Stein: The equity risk premium has nothing to do with the capture of terrorists.
Neil Cavuto: I disagree. I think Gregg's point is sound. And to get Usama would remove a great risk premium from this market.
Ben Stein: You think capturing Usama will have an effect on the earnings of S&P 500?
Neil Cavuto: I think it will have an effect on the investors who were nervous about not knowing where the heck this Usama is.
Head to Head
Neil Cavuto: $87 billion dollars, that's what taxpayers are shelling out for our war on terror! I say it's money well spent so far. Nancy Skinner says much of that $87 billion is money wasted.
Nancy Skinner: This was a Merry Christmas for Halliburton. They were one of the companies that made out like bandits. The American people however did not. Did this war make us more secure? No. It did not.
Neil Cavuto: How do you know that?
Nancy Skinner: They lied to us about going to war. There are no weapons of mass destruction. Now the CIA says we've recruited even more terrorists around the world because of this war.
Neil Cavuto: If those terrorists are fighting it out in Iraq, that's a hell of a lot better place for them to be fighting than the streets of New York or Washington, right?
Nancy Skinner: But that's not what they said.
Neil Cavuto: I don't care about what they said. I care about what's going on right now. The price of security is well worth it when now we have Saddam Hussein. Don't you feel more secure knowing that that butcher is behind bars.
Nancy Skinner: That Saddam Hussein is behind bars, yes. But this war has created even more terrorists. Usama bin Laden is still out and Afghanistan is a mess. What about North Korea?
Neil Cavuto: What will you say when we get Usama bin Laden?
Nancy Skinner: We should get Usama. Then we would be more secure because Usama bin Laden is the one who attacked us on 9-11. Meanwhile, we've ignored North Korea. They've become a nuclear power under this President's watch.
Neil Cavuto: So all the democratic candidates and the critics who said the war on terror was a waste of money and the war in Iraq was a waste of money. They said we'd never get Saddam Hussein. Will you not admit that getting Saddam was a major step in the right direction?
Nancy Skinner: In terms of freeing the Iraqi people, yes. In terms of the war on terror, no, because Saddam Hussein did not have weapons of mass destruction.
Neil Cavuto: How do you know that?
Nancy Skinner: Because our guys have given up Neil. And yet we know that Al Qaeda is still developing. And in terms of Homeland Security, I would rather see that money spent here. President Bush started the Homeland Security department, a bureaucracy and yet 300,000 ports go unprotected and nuclear power plants go unprotected.
Neil Cavuto: So you will not give any credit to the fact that since 9-11 there have not been any attacks on U.S. soil? And in that course of time we've liberated a country and kicked al Qaeda out of Afghanistan.
Nancy Skinner: How do you know that they're out of Afghanistan? I am happy for the people of Iraq who have survived this war. They don't have a dictator anymore, but that was not the U.S. national security interest. Bush said his goal was weapons of mass destruction and imminent threat. Those things aren't there and there are more terrorists than there were before. Even our friends and allies don't like us.
More for Your Money
Neil Cavuto: Tech was by far the best bet for 2003! But will it get you more for your money next year?
Price Headley: This Nasdaq out performance of the Dow this past is a very bullish phenomenon. In 2004, we've got an election year and I think the market continues to head higher. And the Nasdaq should continue to lead it.
Adam Lashinsky: I'm torn, because tech spending is going to pick up in 2004. But there's no reason to believe that tech is going to get the disproportionate share of the gains next year that it got this year. You had your chance to buy tech when it had been given up for dead. It's not given up for dead anymore. It's expected to do well. But not double the Dow like this year.
Gregg Hymowitz: I agree with Adam. The fact of the matter is you're bumping up against really high valuations. And I think ultimately that will put a lid on price performance.
Price Headley: It goes back to earnings. We're looking at a big earnings turn around. This has been a great year for tech. But I do think it will continue to lead next year.
Gregg Hymowitz: Everybody knows already that there's going to be a lot of tech spending and that the earnings are going to be improving so a lot of that is already priced into the market.
Price Headley: If the Dow goes to 11,000, I think the Nasdaq goes to about 2300. So what's going to drive us? I think tech is going to drive us.
Ben Stein: I think tech is wildly over-priced. I've had disastrous results trying to pick tech stocks and so I don't know about tech stocks. The bubble could get bigger and bigger and bigger and it could crash again.
Adam Lashinsky: There are going to be a lot of tech IPOs next year and they'll probably get to market and do just fine. But that's going to add a lot of supply to soak up what tech demand there is right now.
Neil Cavuto: So Price, give us a pick in this environment.
Price Headley: I have two picks. The first one is eBay (EBAY). I think eBay is really going to benefit from this Christmas season. eBay keeps growing. About 86 percent growth is projected in 2004.
Gregg Hymowitz: It's at 50 times free cash flow. That's a monster valuation and just too espensive.
Adam Lashinsky: If you're going to buy tech, eBay is not what you want own. eBay the stock does well when the rest of tech isn't doing well because it's an earnings engine. It just keeps going.
Neil Cavuto: Ok, so give us another name that they might not trash you on.
Price Headley: Another name is OmniVision Technology (OVTI). This is a leading chip maker for videophones. They just came out with quadruple earnings growth. It's up 300 percent on earnings. In Japan, there estimating 45 million videophones. And 4 million videophones here this year, going to 15 million in the U.S. next year.
Gregg Hymowitz: The problem with this company is if you would've gotten in early you would've been able to get all this appreciation when they controlled most of the market. Now, there's going to be competition and they're going to lose market share. When Wall Street gets wind that they're losing market share, the stock is going to come down hard.
Adam Lashinsky: I visited them recently and they're a very interesting company, but people have discovered them already. Gregg is right.
Ben Stein: Every bit of optimism about this stock is already in the price. All that's left is downside.
Price Headley: People said the same thing about Microsoft and Intel when they first emerged. This company will continue growing and making profits for investors.
FOX on the Spot
Adam Lashinsky: Great stock-ing stuffer: Nordstrom (JWN). Retail sales will be robust and Nordstrom gets most its sales in the West, so it won't be hurt as much by the snowstorms in the Northeast.
Gregg Hymowitz: "Santa Rally" is for real! Stocks head higher, maybe up to 5 percent, into the New Year!
Monica Crowley: Cyber shoppers click away to record sales this year.
Price Headley: Capture this stock! Oil Services Holders (OIH) up 30 percent by June. Oil stocks were suppose to fall when Saddam was caputred, but they did not. Add that to a cold winter, and I think the sector is set to rally.
Ben Stein: Start saving now for your retirement! And adopt a pet!
Neil Cavuto: Shoppers will shop 'till they drop. I know we've heard a lot about weather and other things hurting holiday sales, but I'm still confident we'll end the year with a bang.
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: It's the one thing that could take all the money out of this bull market and there's nothing you can do to stop it! So how can you protect your money from inflation?
Steve Forbes, editor-in-chief: It’s going to be. The Fed is printing too much money, it’s gone from stalling the economic engine to flooding it. The Fed is doing to the dollar what Clinton did to the presidency: debasing it. And we’re going to pay the price 12 months down the road.
David Asman: So, Mike, when you print more money that means every dollar you have is worth less.
Mike Ozanian, senior editor: Steve’s too gloomy. His Yankees lost in the World Series, he just lost his best pitcher, Andy Petit. There is not going to be an increase in prices. What I would do is, I would still buy stocks, I’d put all my money there. And what money I had left over, I’d use to pay off my high-interest credit card debt.
David Asman: Well, Rich, you don’t care about the Yankees, so what’s your opinion?
Rich Karlgaard, publisher: Two things going on. Products are going down in price; China’s going to come out with a $5,000 car next year or the year after. But services, real estate and commodities are going to go up for the reasons that Steve mentioned.
David Asman: All right, well Jim, is there anyway that we can know how inflation’s going up?
Jim Michaels, editorial vice president: No, but I’m looking at the price of gold. Gold is the canary in a mineshaft. When the little bird croaks, you know there are noxious gases. This bird has croaked. Gold has broken out of a multi-year range, and it’s up 30 percent in a year. I smell gas.
David Asman: But Steve, gold has been going up for a while, and apparently we don’t have much inflation right now.
Steve Forbes: Well, all those indices on inflation are a lagging indicator. What you want is a forward indicator. Gold breaching $400, 20 percent higher than it’s been at 10 year average, the dollar plunging against other currencies, investors should look not to the present but to the future. Be forewarned, the Fed is mussing up.
David Asman: So Mike, are you saying that gold isn’t important at all? It’s a bad indicator?
Mike Ozanian: I think gold is a lagging indicator. I like looking at long-term interest rates, because that tells you what the cost of money is. Long-term interest rates have hardly moved, in fact, they’re beginning to inch down.
David Asman: Rich, what about the spending spree that the guys inside the Beltway are involved in. They’re spending money like crazy. In the old days they used to pay for all that spending by printing more cash, which meant higher inflation. Can’t the same thing happen now?
Rich Karlgaard: Exactly. The same thing is going to happen. Steve is precisely right about that. The turkey is going to come home to roost in about 12 months. But from now until then, the stock market is a good investment.
David Asman: And you also say, Steve, that the problem is that the dollar is going down. That means that foreign stuff costs more money, right?
Steve Forbes: That’s right. It is going to increase the cost. But even more than particular prices, when you debase the currency, you get higher interest rates, not immediately, but long-term. So, yes. Certain stocks will do well. Stocks of oil companies will do well, hard assets will do well, but for innovators. Inflation’s the enemy of innovation.
David Asman: None of this is convincing you, you still think inflation is dead?
Mike Ozanian: I think the market’s going to hit 12,000 at the end of next year and interest rates are going to stay low.
Makers and Breakers
• Best Buy (BBY)
Marilyn Holt-Smith, managing director of Holt-Smith and Yates: MAKER
We love Best Buy. We think people are selling it short by just focusing on this Christmas season. It is the consumer electronics store of today, tomorrow and next year. It’s in the sweet spot.
David Asman: It’s selling now in the low $50’s (Friday’s close: $51.62), how high do you think it could go?
Marilyn Holt-Smith: We think it could go at least to $65 with the fundamentals coming through.
Jim Michaels, editorial vice president: BREAKER
I’m going to be the contrarian here. I know it’s got a lot going for it right now, but this is the most cutthroat business in the world. People buy on price. They’re competing with everybody from Amazon.com (AMZN) to Wal-Mart (WMT) and everything in between. I wouldn’t buy it.
Pete Newcomb, senior editor: BREAKER
Well, I kind of like it. My problem too is that DVD players are now a commodity item. You can go get one at Wal-Mart for $29, like Jim said. However, there are all new sorts of products on the line; digital cameras and these flat-screen TVs are coming down in price. The consumer’s going to run to Best Buy.
• Fiserv (FISV)
Marilyn Holt-Smith: MAKER
Fiserv is a data-processing company that specializes in providing processing of transactions for financial institutions, like check processing and electronic processing. We’re expecting them to grow 18 percent per year. They’ve got a fabulous future in front of them. They are based in Wisconsin, which is where we are as well. We’re looking for them to grow 18 percent per year. They’re selling at a PEG ratio, which is something that we monitor closely, which is price earnings divided by growth, of 110, makes them very cheap.
David Asman: And you think it can go up to what? What’s the target price?
Marilyn Holt-Smith: They’re selling around $38 (Friday’s close: $38.28), it can go up to about $50.
Pete Newcomb: MAKER
You know, it’s not the sexiest company out there, I never really heard of them. They have a $7 billion market cap, however, for the last 10 years they have assembled 10 straight years of solid earnings growth, you’ve got to like it.
Jim Michaels: MAKER
Marilyn, I’m not going to be a Scrooge this Christmas. I like this stock too. It’s the ultimate outsourcing stock. Outsourcing is the way to go. I like this stock.
David Asman: Well, you’ve got everyone liking it, but I have to ask one question. It’s a part of NASDAQ, isn’t it? Is that a problem, because the NASDAQ has gone up so high?
Marilyn Holt-Smith: No. This stock has a long way to go.
Stock Smarts: Does the Market Want Saddam Dead?
Mike Norman of The Economic Contrarian Update says the market trades upward with each success in the War on Terror, and we should return Saddam Hussein to the Iraqi people who have said he will likely be put to death. He says that will send the message that if you are involved in terror, you will be caught and executed. He believes that message will strengthen confidence in America and its economy and bring greater investor confidence to the stock market.
Wayne Rogers of Wayne Rogers and Company says we should hold onto Saddam and squeeze every bit of information out of him that we can.
Major Bob Bevelacqua, Fox News Military Analyst, says the Iraqi’s want to be in charge of Saddam Hussein’s fate, and he agrees that the former dictator should be turned over to the Iraqi’s, but only after he has been thoroughly interrogated by the United States. He says Saddam Hussein is a bully, and most bullies roll over quickly, and he thinks U.S. interrogators will be able to extract useful information from Saddam before turning him over to the Iraqi people.
Dagen McDowell says executing Saddam too soon will send the wrong message to the world. She says we need other countries to help us rebuild Iraq, and we cannot afford any missteps in dealing with its former dictator.
Greg Werlinich of Werlinich Asset Management says the idea that Saddam Hussein is going to tell us all his secrets is ridiculous; we should get rid of him as soon as possible, and not allow him to be put on trial in a way that will give him a public forum.
Jonathan Hoenig of Capitalistpig Asset Management says no matter how we deal with Saddam Hussein the U.S. market is not the place to invest right now. He says Europe and the emerging markets are better places to buy stocks.
Best Bet$: Little Known Stocks; Big Returns!
Stocks you probably never heard of that our crew says are poised for big returns. Here are their best bets:
Jonathan’s Little Known Stock: Turkcell (TKC)
Friday's close: $23.72
Jonathan likes emerging markets, and Turkey got its best trading day in three years on Saddam’s capture, so he’s looking to take what he calls a “smart risk” there. Right now this Turkish wireless provider is Jonathan’s favorite stock in the region. He owns shares in Turkcell. Greg says Jonathan has a good point about owning foreign stocks like Turkcell, but he says many (including this one) have become too pricey to buy now. Wayne loves this stock. He says the stock has a “great chart, earnings are up, sales are up, and Turkey is one of our best allies in the War on Terror.” He likes Turkcell.
Greg’s Little Known Stock: Whole Foods (WFMI)
Friday's close: $65.73
Greg says this is the largest growing retailer in the organic and health food segment. He says the company is very profitable and growing its margins. He holds the stock in his clients’ portfolios. Wayne loves the stores, but he is concerned about the price of this stock. He thinks it’s fully priced right now. Jonathan likes the store, and thinks the stock is a good stock, but he prefers to own foreign food companies right now.
Wayne’s Little-Known Stocks: Philippine Long Distance (PHI)
Friday's close: $16.49
Wayne calls this foreign phone company: “A terrific buy.” He owns the shares in the stock. Greg is concerned that there is not enough of this stock trading for small investors to buy. Jonathan loves the stock.
Stock of the Week
Mike Norman says Rite-Aid (RAD) is the stock to own this week. Jonas Max Ferris says Rite-Aid is the wrong stock to buy this week or any other week.
Mike says all of the bad news is behind this stock, and it’s a great turnaround play. Jonas says many of this company’s former executives are going to jail for cooking the books, and you should avoid any stock that has been embroiled in that type of scandal.
We’ll post the week’s return here next Saturday.
Last Week’s Stock of the Week
Gary Kaltbaum picked Viacom (VIA) -- up 1.9 percent Last Week
Cashin’ In Challenge
To find out who’s ahead in the $10,000 “Cashin’ In Challenge”, check out the Web site at: www.foxnews.com/challenge