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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 officer of Ryan, Beck & Co.
Trading Pit: Will Stocks Go Even Higher in 2004?
No doubt about it, 2003 was a huge year for stocks. The Dow gained 25 percent and the S&P 500 was up 26 percent. But as good as those gains are, it was nothing compared to the Nasdaq, which was up 50 percent! It was the first yearly gains for these three indexes since 1999.
The first day of trading for 2004 rang in on Friday and the market started strong in the morning, but sold off as the day went on.
Joe said that stocks can head even higher in 2004. He thinks the market can return to the “old days” when investors could get a 10 percent return from the Dow and S&P 500, and up to 20 percent from the Nasdaq.
Gary B. charted the Nasdaq’s performance since 1997 and showed that right now it is near its 2002 highs. He explained this means that before the “Nas” can move up, it has to pullback or move sideways
Tobin calls this economy the “do over” economy. He explained that companies that hired too many people in the 90s now get to do it over and hire the right amount. Also, if someone invested too much in some stocks and lost money, they now have a chance to do it over and invest the right amount in the right stocks, not “silly” stocks.
Pat thinks there are very few cheap stocks right now and that the averages have moved up too quickly. He said a recent survey showed 75 percent of investors think 2004 will be better than 2003. Based on that information, he believes it is best to “zig when others zag” and that stocks will, at best, move sideways.
Scott said there was a little pullback for the Nasdaq and he expects one for the Dow too. He explained that in 2003, everything went up. But in 2004, investors will have to find the right sectors and then buy the best stocks in those sectors.
Tobin, Scott, and Pat each picked their top stock for 2004.
Toby chose ChipMOS (IMOS). This company makes the “guts” for LCD screens, which enable people to put their television, computer, and pictures all on one screen. He added that ChipMOS raised its prices 25 percent and its orders are sold out for the next 6 months. He thinks the stock can double by the end of the year. (ChipMOS closed at $8.98 on Friday.) Pat does not like the stock because one company makes up 35 percent of ChipMOS’ sales and is also a large shareholder. Scott thinks this stock is very speculative and recommends AU Optronics (AUO) as the stock that will benefit most from LCD screens.
Scott selected China Petroleum and Chemical (SNP) as the best stock for this year. (This stock is also known as Sinopec.) He said this will be a world-class company because China is manufacturing many things which will be bought from China Petroleum and Chemical. Scott thinks this stock will double. (China Petroleum and Chemical closed on Friday at $49.90.) Tobin likes the stock, but advised to wait for it to pullback a bit before buying. Pat thinks the stock is cheap, but likes PetroChina (PTR) better.
Pat picked iPayment (IPMT) as the stock he likes best in 2004. He explained that the company does credit card processing for smaller businesses and also generates a lot of free cash flow. However, he did say that this is a risky stock, but if it keeps hitting its numbers, the stock will do very well. (iPayment closed on Friday at $32.82.) Tobin likes the stock and added that the company’s costs are fixed so it can become very profitable. Scott said this is highly speculative, but he thinks it is going to be a winner.
Gary B. took on Joe B. this week. Gary B. picked two stocks that were down last year, but he says they’ll be on the plus side next year.
The first 2003 loser that he thinks is about to turn around is First Health Group (FHCC). The stock was down 20 percent in 2003 and closed on Friday at $19.48. Gary B. likes the stock because it didn’t close below $18, even though it had a monster drop late last year. He thinks it is headed to $24. Joe thinks this is a good company and would like the stock at $17.25. He is afraid the stock may suffer another major drop.
The next stock that Gary B. thinks will find good fortune in the new year is Lincare Holding (LNCR). The stock was down 5 percent last year and closed at $30.31 on Friday. He said the stock had a big retreat at the end of 2003. However, Lincare only fell to the uptrend line it established at the end of 2000. Again, Joe said this is a good company, but if it has any misstep, it could suffer a big fall. He would buy it at $20.
Tobin's prediction: Bulls rule this year too! Dow 11,500 & Nas 2,350 in 2004
Gary B's prediction: More mad cow found; McDonald's (MCD) falls 30 percent in '04
Pat's prediction: Bad year leads to heavy drinking; Anheuser-Busch (BUD) up 15 percent in 2004
Scott's prediction: Special delivery! FedEx (FDX) up 20 percent by summer
Cavuto on Business
Neil Cavuto was off this week. Bob Sellers hosted the show and was joined by Jim Rogers, president of JimRogers.com; Ben Stein, author of "Yes, You Can Time the Market"; Meredith Whitney, Fox Business News contributor; Tom Adkins, real estate agent with Remax Services and founder of CommonConservative.com; Dave Nelson, CEO of DC Nelson Asset Management; John Small, founder of SaveMartha.com, and Mike Paul, of MPG and Associates PR.
New Year Bull
Bob Sellers: It's one of the most important questions of the new year, will you make money in the stock market in 2004? We could find out that answer by the end of this month. History pretty much shows that if the market goes up in January, it will end higher for the year. In fact, that's been the case in all but three years since 1950. Meredith, will this January guarantee a bull market in 2004?
Meredith Whitney: I think this January will definitely be up. And I think the year will be up for other factors. This January is the first in three to four years that profit estimates have not been revised downward. Earnings in the fourth quarter are going to look great. And the fundamentals are terrific for 2004.
Jim Rogers: I wish it were that easy. January goes up, we all go to the beach, and we all make a lot of money this year. Remember, they'll be some ups in the market and some downs in the market. By the end of the year it will be flat because we will be looking into the year 2005. And 2005 is not going to be good.
Ben Stein: Overall, I'm optimistic for 2004, but I see three problems looking ahead. One is the possibility of domestic terror, two is a possibility of a quagmire in Iraq, and three is if we have a reviving economy we have reviving interest rates, at which profits would be discounted back to present value. I'm especially worried about this last one.
Bob Sellers: And you think we'll be up in January?
Bob Stein: Yes, but I think it has no future bearing on the market.
Tom Adkins: I agree with Ben regarding the January effects. When you look over history, capitalism always expands. Most months are up and most yields are up.
Ben Stein: With all due respect, capitalism does not always expand. It contracted very greatly from 1929 to 1939.
Tom Adkins: I'm looking at current conditions and here we have the same things that happened in ‘95, '96, and '97. You have tax cuts. You have low rates. Inventories have gone down and all the dog companies are out of the picture now.
Bob Sellers: Do we have a bubble forming again?
Tom Adkins: No. You have true growth creation now.
Ben Stein: Sir, that's exactly what they were saying during the bubble. I don't think there's a bubble on the S&P or the Dow, but the Nasdaq is awfully high.
Meredith Whitney: I think a bubble would presume that fundamentals aren't improving. That's not the case.
Jim Rogers: The market has gone up ever since March, without even a 5 percent reaction. That hardly ever happens in history. The market has gone through the roof because there's been a lot of money from Greenspan and a lot of money from Bush.
Ben Stein: When you have the Nasdaq with its multiple way over a hundred for the tech stocks, certainly that's not considered a conservative evaluation.
Tom Adkins: Tech stocks are usually over-valued, because there's not much brick and mortar involved. It's mostly brains and future growth prospects.
Ben Stein: It's all about earnings and if there's no earnings coming out of the tech sector, there's going to have to be a correction somewhere.
Jim Rogers: There will be corrections this year. There's going to be some big rallies this year but remember 2005 is going to be a bad year for the stock market because there's not gunpowder left to shoot.
Tom Adkins: Ben's right. A lot of times you get those down times but most of those down times are caused by not capitalism, but the stupid political things that Washington does.
Meredith Whitney: I think it will be a great January and a great year because estimates will stay, if not be revised higher. The fundamentals for 2004 are incredible.
More for Your Money: 2004 Winner$!
Bob Sellers: So which stocks will give you a lot more for your money in 2004? Dave, you're up first. What stock are you betting on in 2004?
Dave Nelson: One stock I like and own is Max Re Capital (MXRE). On the surface this stocks looks like a reinsurance company investing in bonds and stocks. But this firm really has a unique approach. They invest in hedge funds and they do this in a very diversified way. They spread the risk amongst 45 different funds. And they consistently beat earnings.
Tom Adkins: If the year does well or the year does poorly, does it make a difference what kind of money the hedge funds make?
Dave Nelson: The hedge funds aren't correlated to each other.
Jim Rogers: Suppose 10 percent of the hedge funds blow up?
Meredith Whitney: Then you have a problem.
Dave Nelson: Suppose 10 percent of your bond portfolio blows up. You have a problem. That's not going to happen with 45 different funds not correlated to each other.
Ben Stein: The stock I like and own is Boeing (BA). It's got a new chief executive and it's pushed a lot of its problems out of the way.
Meredith Whitney: Fifty percent of Boeing's revenue is tied to commercial air and commercial air is having a lot of problems, vis-a-vis heightened security. And only 60 percent of their revenue comes from the defense industry.
Ben Stein: About 30 percent of their revenue comes from defense. And even in this bad commercial air environment, this company has been profitable.
Jim Rogers: I expect inflation to come back this year. And I expect the U.S. dollar to continue to decline. So I would suggest you buy Canadian Government Bonds. I own them.
Meredith Whitney: Advertising spending is going to pick up because of both the summer Olympics and election year. One stock that I think will benefit from increased ad spending is Clear Channel (CCU). It's a cheap stock. I do not own it.
Tom Adkins: I like entertainment stocks but I have the same warning as before. Anytime you have anything attached to anything political, the stock will suffer because of it. That goes for Boeing and companies like Disney (DIS) and Time Warner (TWX).
Dave Nelson: I like Clear Channel. The timing is right. You have a political year coming up and there's going to be a lot of advertising.
Ben Stein: I like Clear Channel a lot as well. I know some of the people that work there and they are extremely competent people.
Bob Sellers: Tom what are you buying?
Tom Adkins: My advice is always buy real estate first. But if you're too chicken to buy real estate, take a look at Toll Brothers (TOL). They have brought the 4000 square foot house to the common man. They have their downside. Their competitors complain that they mass produce things and that their quality is not that great. But they dominate their market. They're great and I own the stock.
Ben Stein: I like Toll Brothers, but I like Ryland Group (RYL) more.
Jim Rogers: I'm short home builders. I'm not short Toll just because I haven't gotten around to it yet.
Meredith Whitney: These stocks trade with interest rates. So if rates rise, home building stocks usually go down.
Head to Head: Will Martha Go to Jail in 2004?
Bob Sellers: Will 2004 be the year Martha Stewart goes to jail? John Small of SaveMartha.com says no jail time for Martha! But Mike Paul of MGP and Associates says she's toast! Martha's obstruction of justice and securities fraud trial kicks off on January 20th and Mike you say she should start packing her toothbrush?
Mike Paul: It doesn't look good for her. Bottom line, this is about lying and I think Martha Stewart lied to prosecutors.
Bob Sellers: Isn't the odd thing here that she was never really charged with insider trading, which was the initial accusation?
John Small: The only issue here in this year and a half investigation is that Martha was not charged with that crime. We have a saying at SaveMartha.com, 'if her stock sale was legit, you must acquit.' If you're stock broker says you better sell your stock, what are you going to do? Martha Stewart has been convicted in the press. She lost half a billion dollars in net worth in her company.
Bob Sellers: There are a lot of stock holders who have lost money as well.
John Small: And stock holders have lost a billion dollars.
Mike Paul: There's a reason why those things have happened and that is because she broke the law.
John Small: In this country, you're innocent until you're proven guilty. 90 percent of Rice University students think Martha is guilty of insider trading and she wasn't charged with insider trading. I think when Martha gets up on that stand and tells her side of the story, a jury will nod and say 'yes, we believe that Martha Stewart didn't do anything wrong.'
Mike Paul: Martha Stewart's 28 year old broker's assistant, Douglas Faneuil is going to get up on the stand and say I did what I was told. I had a choice to make, either lean towards my boss, Martha's broker, who was saying here take this ticket, help me cover this up or lean towards the truth and say I can't tell this lie anymore.
John Small: The one problem with Doug Faneuil is he doesn't have a great magazine. He doesn't have a great line of products.
Mike Paul: What does that have to do with the truth?
Bob Sellers: If you John think this investigation is so ridiculous, why is she so worried?
John Small: I think when you're facing thirty years in jail, you better be worried.
Bob Sellers: Doesn't that seem extreme Mike, when you see what's going on at Enron and WorldCom?
Mike Paul: Those trials are not done yet and you'll see a lot more trials come after Martha's trial. My brother is a police officer and when he decides to stop someone who goes through a red light, that person who is stopped usually says that there are so many other people doing worse things, why are you stopping me? The reason is because it's illegal. And there are consequences for breaking the law.
John Small: But we don't know that Martha has broken any law. Let's have the trial first and then decide.
Bob Sellers: We'll find out on January 20th.
FOX on the Spot
Dave Nelson: Outsmart "smart money" & buy Yellow Roadway (YELL)!
Meredith Whitney: Bush wins by a landslide, stocks jump 15 percent in 2004!
Tom Adkins: GOP wins more seats and fixes social security.
Ben Stein: Bush wins and so does stock market in '04!
Jim Rogers: Bush's double boost; new tax & immigration plan will help market and economy for years.
Bob Sellers: Civil war erupts in Saudi Arabia; oil prices go up!
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: Get ready for a big boom in 2004! The one word that could make many people rich: "nanotechnology." Elizabeth, what is it and how can it make people rich?
Elizabeth Corcoran: David, nanotechnology is a big word, but it talks about things that are very, very small. Think about it this way: the big boom in technology over the past 50 years was taking stuff like vacuum tubes and turning them into computer chips, which made everything really small. Nanotechnology goes another hundred times that. So we’re talking about electronics that could be very, very small. Supercomputers the size of your wrist watch, types of monitors that could monitor the quality of the meat that you buy at the supermarket that would just be in the package, like a barcode. Of all the technologies that I have covered in about 18 years of covering technology, this is probably the most profound that I have seen.
David Asman: All right , Matt, so how do we translate all this into money? What kind of stocks are there that are focusing on nanotech?
Matt Schifrin, senior editor: Well, in any gold rush you want to be involved with the pick and shovel makers, the tool makers. There’s a company called Veeco Instruments (VECO) that’s being recommended by one of our own newsletters, the Forbes/Wolfe Nanotech Report. Veeco makes the atomic-force microscopes that you need to work in nanotechnology.
David Asman: So, in other words, all those nano-factories are going to have to have all this equipment that Veeco makes.
Matt Schifrin: Absolutely. It’s a great company and it’s growing fast.
David Asman: Jim, it’s not just in the new companies though, some old companies can benefit from this too, right?
Jim Michaels, editorial vice president: Well, I think that’s one of the distinguishing things about this coming boom. It may be the large, research-oriented companies in pharmaceuticals, in electronics, in computers that are going to benefit from this, and even the textile industry can benefit from this, because what you can do is take a material, an object, and give it properties that it didn’t previously have. For example, if you go to the LL Bean catalog right now, you can buy cotton trousers that shed water. This is nanotechnology in its early stages.
David Asman: Stain resistant stuff, scratch resistant paint, but what about Hewlett-Packard (HPQ)?
Jim Michaels: Hewlett-Packard and IBM (IBM) are two of the companies that are way into this, and could very well profit from it. It’s one of the reasons why I’m optimistic about the economy over the next ten years, because of new industries like this that are going to create new products, innovations, lower costs.
David Asman: All right, Quentin, you’re in the land of innovation. What do you think?
Quentin Hardy, Silicon Valley bureau chief: I think it’s wonderful, I think it’s an amazing thing, I think it’s all kinds of new science. I don’t see it taking a big step in ’04, I think it’s a little further out than that. Look, nanotechnology is going to change the way you think about biology, physics, and all kinds of basic science down the road. Nanotechnology is like saying “electricity.” It’s going to have applications everywhere. Nanotechnology is pharmaceuticals, it is biology, it is material science, it is all that stuff. But among the big companies, it’s going to be a small part of revenue. Now, where is it going to appear first? I think Jim’s right, probably in material science. Once a big company like a DuPont (DD) or a General Electric (GE) figures out a good way to make stronger buildings, or materials that have a big difference, like something that lights up, I don’t know what. But it’s not going to happen next year.
David Asman: Well, Mike, we’ve heard about Hewlett-Packard. What about IBM?
Mike Ozanian, senior editor: That’s a company that’s making money from it right now, not way out in the future. What IBM does is it actually gives the supercomputers away to, say, Cornell University, which then creates applications that can then be used in nanotechnology. Then someone like the government or Fidelity says ‘we want those applications.’ They then buy the supercomputers from IBM.
David Asman: OK, and Elizabeth, what about pharmaceuticals? This is a really exciting part about this whole thing.
Elizabeth Corcoran: Yeah, I think that pharmaceuticals is one of the areas that we’re really going to see early application of nanotechnology. Bristol-Myers Squibb (BMY), a stock that got beaten up pretty badly, for good reasons this past year, has been doing some very, very interesting deals with small nanotechnology companies. There’s a company called Flamel, which is in France, that has some very interesting pump technology.
David Asman: We just want to give you some more information on this, if you want more on nanotechnology, you can go to http://www.forbesnanotech.com, they’ve got everything you need to know right there.
Makers & Breakers
Jeanette Schwarz-Young, president of JA Schwarz: MAKER
Pfizer’s got a very, very big pipeline of drugs coming on board and it just bought Esperion. It’s got a lot of story to it and a lot of “umph.” And on top of that, you’re getting paid a dividend as well.
David Asman: Now it’s trading at about $36 (Friday’s close: $35.55,) how high do you think it could go?
Jeanette Schwarz-Young: It could go to $42.
Jim Michaels, editorial vice president: MAKER
Well, it’s not my favorite pharmaceutical stock. I like Merck (MRK) and Johnson & Johnson (JNJ) at the moment, but I can’t say “no” to Pfizer. People think of pharmaceuticals as producing products for old people. With Viagra, they’ve broken down into the much younger market.
Pete Newcomb, senior editor: BREAKER
I think every portfolio should have some pharmaceutical stock, I think Pfizer’s a great one. It pays a dividend and spends $7 billion in R&D every year.
David Asman: But what about Viagra? There are all these competitors to Viagra now. Do you think that’s going to bring down the stock?
Jeanette Schwarz-Young: Well, Viagra is not the only product that this company has. They have a great pipeline. They have a lot of drugs coming on board. The newest company, I don’t know if you read the news report on 12/21, when they were talking about Esperion and getting this new factor to reduce cholesterol.
Jeanette Schwarz-Young: MAKER
I like AT&T because nobody likes it. Everybody hates it. It’s a horror. It’s my speculation for the year, and yes, I’m going to buy it.
David Asman: It’s now trading at about $21 (Friday’s close: $20.87), how high do you think it can go?
Jeanette Schwarz-Young: It could go to $24. You’re being paid for waiting. Also, by the way, in case anyone should ever like this company again.
Pete Newcomb: BREAKER
You know, Jim’s training me to be a contrarian, so I should probably like this stock. However with old copper wires, cutthroat competition, and shrinking margins, you should stay away.
Jim Michaels: BREAKER
I don’t buy a horseshoe stock once the automobile has been invented. This is a horseshoe stock. I can’t put my money on it.
Jeanette Schwarz-Young: I don’t have a problem. I mean, everybody’s got to hate something, and that’s why I picked it. Actually, you’re being paid a 5 percent dividend while you’re waiting. You can sell calls against the situation. And I do think that communications is not out of business.
Stock Smarts: No Terror, No Bear!
Close to one million people rang in the New Year in New York City’s Times Square – terror free. And despite all the “chatter” from groups like Al Qaeda, there have been no terrorist attacks on U.S. soil since 9/11.
So was the terror-free New Year celebration a buy-sign for the market?
Charles Payne of Wall Street Strategies says last year we saw the economy explode, and the intangible factor was that we didn’t have a terrorist attack – something that economists can’t figure into their equations, but something that certainly mattered. And it mattered to the stock market too, in that investors are now focused on the fundamentals of the market, as opposed to investing on fears. We are in a nice bull market right now, and you shouldn’t base your investments on the threat of terrorism.
Harvey Kushner, author of the “Encyclopedia of Terrorism” says the market doesn’t like uncertainty, and because we didn’t have an attack, investors felt more secure in the market. But if we do have an attack, it would certainly hurt the market. He doesn’t think that we are much better off in terms of security. He is surprised that we haven’t been hit (since 9/11), and suspects that we would get an attack when our threat level is down. Over the long run, fundamentals will drive the market, not terrorism. You shouldn’t buy airlines and shipping stocks, and stay away from companies that have positions in shopping malls. And we shouldn’t overreact – very little keeps him up late at night in terms of fearing an attack, but he is concerned about an attack on a small target (something in middle-American as opposed to another attack on New York City or another large target).
Dagen McDowell of Fox Business News thinks that investors seem to be living with this false sense of security, and that is careless. If we do get another attack, stocks will get “whacked” harder than before. And Dagen thinks you can adapt your investment strategy to the threat of terrorism by staying away from “ridiculously expensive” stocks that would fall big-time on an attack.
Gary Kaltbaum of Kaltbaum & Associates says that the bottom line is that if we get hit, the market will get hit. The terrorists will not plan an attack to coincide with a holiday (like New Years); they will wait for when we are not expecting something. Let the market be your guide; market internals are still in good shape. If we are in a bear market and the terrorists attack, then stocks will get hurt. But if we are still in a bull move and an attack comes, the market will be able to recover quickly. He’s a little worried about the Nasdaq and semiconductor stocks right now.
Jonas Max Ferris of Maxfunds.com is surprised the market didn’t react negatively to the raised terror threat alert – stocks pretty much shrugged that off. Even if there isn’t a terrorist attack, the economy is going to suffer long-term because we are spending so much money on fighting a war on terrorism; the costs to fight terror are totally real. Stock valuations are stretched right now.
Jonathan Hoenig of Capitalistpig Asset Management says that he is making money in some of the countries that are most susceptible in terms of terrorism (Israel and Turkey he mentions specifically). He is also still investing in European companies. Everything is a risk – there have been only two market crashes in 100 years. If you are worries about stocks, then put more money in cash on the sidelines. But you shouldn’t fight stocks right now.
Be$t Bet: More In 2004?
Will the Dow leaders of 2003 have a repeat performance in 2004? Our crew weighed in.
• Intel (INTC)
Up 107 percent in 2003
Friday's close (1-2-04): $32.16
Gary says the New York Giants have a better chance of winning the Super Bowl (they didn’t even make the playoffs!) then Intel has of doubling again. Intel can go higher, but not much more. Charles says the semiconductors are always a volatile group. But he thinks that IT spending will pick up in 2004, and if you are long Intel, there is no reason to sell he. He wouldn’t short the stock, but he wouldn’t put new money to work. For Jonathan, Intel is not his top choice.
• Caterpillar (CAT)
Up 86 percent in 2003
Friday's close (1-2-04): $82.65
Charles says 2003 was a great year for farmers, and he thinks that Caterpillar will have another strong year – maybe not an 86 percent gain, but certainly a double-digit move. It’s also a play on the global economy, which should improve. Jonathan says this is a hot stock right now, playing off of his weak U.S. dollar theme. Gray wouldn’t own the stock right now – had he bought it six months ago, he would be selling it.
• Alcoa (AA)
Up 71 percent in 2003
Friday's close (1-2-03): $37.55
Jonathan says that commodities were a big story in 2003 – and base metals were also strong. He wouldn’t fight this trend. Gary is amazed that the metals have been so strong. He isn’t sure if he would buy right now; maybe wait for a pullback. Charles also thinks the stock will continue to do well.
Stock of the Week
Last week’s pick was from Dave Nelson: Kodak (EK)
It was up 1.8 percent from December 29, 2003 – January 2, 2004.
And since we are celebrating the New Year, we had Charles pick us a Stock of the Year. He went with Corvis (CORV), saying this stock could triple by the end of 2004. This is an optical networking company, it’s extremely cheap – the stock has some negatives and it is very risky, but there is a lot of room to the upside. Jonas doesn’t think this stock will be one of the turnaround stories of 2004. Jonathan says this is a former high flyer, and this is one of these “lottery ticket” type stocks. But it doesn’t tap in to what he is look at right now
Charles, Jonathan and Dagen answered some of your questions.
Question: “What is happening with Ken Lay? Is he going to be brought up on charges for the lives he destroyed?”
Dagen says you could still see charges brought up on Ken Lay, but she also says that many of these high level executives are often insulted by layers of employees, so prosecutors have to work on the underlings first. Charles says the SEC subpoenaed Ken Lay for his personal records back in September, and if they get those records, it could be huge. Jonathan says the law of the land still rules, and Ken Lay will get what he deserves.
Question: “What does the crew think about the biotech sector in 2004?”
Jonathan says he has always badmouthed stocks like Pfizer (PFE) and Merck (MRK), but truth be told he owns a number of biotech stocks – all international plays: Skyepharma (SKYE), Novo Nordisk (NVO), Bayer (BAY), Novartis (NVS), Shire (SHPGY). He also has a position in the Israeli company Teva (TEVA). Charles thinks that the biotech sector will be helped from acquisitions made by the larger pharmaceutical companies. Dagen says you can always buy a biotech mutual fund, like the Fidelity Select Biotech Fund (FBIOX). Charles says a good one to play this year might be Schering-Plough (SGP)
Question: “Will Sirius Satellite Radio (SIRI) stock benefit from the company's new deal with the NFL?”
Charles wouldn’t talk anyone from getting into this stock, but he likes XM Satellite (XMSR) better. He says this is a great deal for the NFL, but Sirius just hasn’t executed well overall. Charles recommended SIRI to his clients at $0.51, and they took profits at $1.000, and he was happy. Dagen says this is a dangerous stock.