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; Mike Norman, founder of The Economic Contrarian Update.
In November, it could be Kerry versus Bush, unless something dramatic and unexpected occurs. The market hates uncertainty. What would a close race mean to stocks for the next nine months?
Mike said a close race would not be good for stocks. He thinks that as Kerry becomes a definitive candidate, the Democrats will start to turn their message against President Bush and against the policies that were used, which were positive for the economy. The idea that Bush was a shoe-in was built into the market. He said if the election is close, Bush might have to give up a little more on those policies. This would mean cutting back on government and deficit spending, which would be bad for the stock market and the economy.
Gary B. said as long as the Republicans remain the majority in Congress, the market likes the uncertainty. He pointed out that as soon as Kerry jumped into the lead, the market did sell off. He charted the Nasdaq and said that just when everyone got bullish, it dropped straight down. But he doesn’t think the bull is dead yet and said we are still in good shape.
Tobin said it will be a close election, but it will go to the Republicans. He thinks if the Republicans win, the market goes well, and if the Democrats win, the market will have a problem. He added that we could amply pay our deficit if we have growth, and this growth will come from the current tax structure.
Scott thinks there’s going to be a lot of volatility in the market in the next six months, as the election gets down to the wire. He said it is going to be a great trading market.
Pat said, ultimately the biggest economic factor in the election will be the deficit. This is why this election may be a little different than others. Republicans are running up a pretty huge deficit, and depending where Kerry comes down on things, the markets may not sell off too much if the Democrats do well.
It’s time for the Scoreboard again. First the good calls.
Last Halloween, Tobin said Nortel Networks (NT) would double by next Halloween. Since then, Nortel is up 77 percent. He owns Nortel and still thinks it is going higher. (Nortel Networks closed on Friday at $7.88.)
In February 2003, Pat said AVX Corp. (AVX) would double. It had by January 2004 when it peaked at $19.12. It’s come back a bit since then and is now higher by 90 percent. Now, Pat says the stock is fairly valued and not as expensive as other chip stocks, but he thinks investors should sell. (AVX Corp. closed on Friday at $17.76.)
A year ago Gary said “Buy American International Group (AIG).” Since then, it is up 55 percent. He says the move is not over yet. He said hold on because it could go to $90 over the next few months. (AIG closed on Friday at $72.18.)
Last September, Scott said Centex (CTX) is going up 25 percent. Since then, it is up 45 percent. Now, he says it still has 15-20 percent upside to it. (Centex closed on Friday at $98.91.)
In May 2003, Mike said to buy Disney (DIS). Since then, Disney is up 25 percent. Now, Mike says it may have a little more upside, but he said he would take profits here. (Disney closed on Friday at $23.35.)
Next we looked at the bad calls.
Last February, Scott said stay away from McDonald’s (MCD). Since then, McDonald’s is up 99 percent. Now, he says this was a missed opportunity. Translation: “I was wrong!” (McDonald’s closed on Friday at $27.16.)
In October 2003, Mike said don’t buy Halliburton (HAL). Since then, it is up 20 percent. Now, he says he’s sticking with his call. He’s not a bull in the oil sector and thinks many of the energy stocks are overdone. (Halliburton closed on Friday at $29.65.)
Just after Christmas, Gary said AMR (AMR) was going to fall 30 percent. Since then, AMR is up 25 percent. Now, he thinks the stock looks great and it should hit $20. (AMR closed on Friday at $16.05.)
Last December, Toby said SanDisk (SNDK) was set to double. Since then, it is down 17 percent. Now, he says he would buy Lexar (LEXR), SanDisk’s competitor because it is in a better position to move up. (SanDisk closed on Friday at $53.12.)
In September 2003, Pat said Juniper (JNPR) was going to fall 40 percent. Since then, Juniper is up 69 percent. Now, he said the company has grown faster than he expected, but he said he would still sell it now. (Juniper closed on Friday at $29.47.)
Scott's prediction: Guilty or not - Martha’s stock (MSO) goes down 30 percent after the verdict
Gary B. prediction: Forget “Jackson” debacles on CBS; Viacom (VIA.B) up 15 percent by July
Mike’s prediction: Congress takes knife to Bush’s budget; sends stocks down in ‘04
Pat's prediction: Iron Mountain (IRM) climbs 20 percent within a year
Tobin's prediction: Buy Petrofund Energy Trust (PTF); big upside & big dividend!
Cavuto on Business
Neil Cavuto was joined by Brit Hume, host of Fox News' "Special Report"; Jack Welch, former CEO of General Electric; Ben Stein, author of "Yes, You Can Time The Market!"; Charles Payne, CEO of Wall Street Strategies; Meredith Whitney, Fox News Business contributor; and Jack Bogle, founder of the Vanguard Group.
Could WMD Investigation Help Stocks?
Neil Cavuto: A politically charged investigation that could charge up the bull market! Someone here says the commission into our intelligence about Iraq's weapons of mass destruction just may help the White House and Wall Street! Brit Hume, this WMD news, when it first came out, hit stocks severely. Do you think it will continue?
Brit Hume: I think a lot of it is dying down. The CIA Director, George Tenet, on Thursday made a strong defense of himself and the agency. And much of what former U.S. weapons inspector, David Kay, said that was positive for the administration and the market has been largely ignored in the media.
Neil Cavuto: Jack, some think the worse things look for President Bush, the worse things look for the market. Do you buy that?
Jack Welch: I absolutely buy that. You look at the tax proposals by the Democratic candidates and the dividends are gone. Capital gains are gone. I agree with Brit that a lot of what David Kay said was buried in a lot of the papers. But I don't think that's a market issue. I think that's a political issue.
Neil Cavuto: Meredith, the argument has always been that the economy would be less and less of an issue for the Democrats because of the jobless recovery. The fact of the matter is, most of the economy is looking better. So they're going to come back to Iraq and the WMD and it's going to be a drip, drip, drip for the White House and the markets. What do you think?
Meredith Whitney: I think the initial David Kay headline really resonated, but when you read into the finer print you saw that he was much more in the White House camp. The belief that Saddam Hussein had WMD was a universal belief. So, the fact that there's a question period now going against the White House is probably felt by the market to the extent that it was already in line for a consolidation and this is just sort of a natural progression.
Ben Stein: If Bush is defeated then we're going to see a worse tax treatment for dividends and capital gains. It won't be a bargain anymore. If the Democrats get in, it will be better to get out of the market at least for a while.
Neil Cavuto: Brit, is there a sense in Washington that this WMD is an issue with legs?
Brit Hume: Well, there is a sense or at least a hope within Democrats that this will have legs. And of course, the portions of the David Kay comments that have gotten the most air play are the ones most advantageous to the Democrats. Even though some of them, when this WMD news was coming out, were saying exactly the same thing that the administration was. Let me make an additional point. This is not out of touch with what is going on in the election campaign right now. John Kerry is getting a "post convention bounce." I've rarely seen anything to this magnitude, perhaps Gary Hart in 1984 but this has been something we've never seen before. And Kerry has immediately jumped on the Kay statements and worked them into his pattern. The President has been battered in the last several weeks, uninterrupted, and he has chosen to hold off his fire and his campaign's fire for the time being.
Neil Cavuto: Are some Republicans on capitol hill nervous that he hasn't started yet?
Brit Hume: Many of them wish he would. Many will be running with him on that ticket. Obviously, they don't like it when his numbers dip and they have dipped. All of this is a snapshot of a moment that will not last long.
Neil Cavuto: Jack, I talk to a lot of CEOs and money types that say we don't think John Kerry is another Michael Dukakis or a Walter Mondale. They think he could be a very competitive candidate. Do you think that's legitimate?
Jack Welch: He's very articulate. He's attractive and he's able to make a case. But he's got a 20 year record. This election will be very clear about one thing. We know what Bush and the administration believes and we know what John Kerry has believed for 20 years. So, the country is going to have a clear cut choice.
Ben Stein: Bush is a resolute leader and he's waging a campaign that has become a smear campaign. This latest business about smearing President Bush's military record is disgraceful. It's saying that unless you've had combat experience you're not worthy to be President. So I guess F.D.R. wasn't worthy to be president and neither was Carter.
Neil Cavuto: Brit, a Wall Street friend of mine wanted me to pass this question along to you. If John Kerry becomes president, he's still dealing with a republican Congress. How likely is it for him to remove any of President Bush's tax cuts.
Brit Hume: Talk about the ones President Bush wants to make permanent. If that hasn't happened by the time this year ends and a Democrat gets control of the White House, that would be an affirmative step that Congress would have to take. A republican Congress might pass that but Kerry wouldn't sign it. Beyond that though, I don't think he could reverse the course of this nation on issues from taxing to regulation.
More for Your Money: Are Mutual Funds a Bargain?
Neil Cavuto: Jack Bogle, after all the scandals, you're still saying buy mutual funds? It doesn't make sense to a lot of people.
Jack Bogle: I'm saying buy mutual funds but I think you have to be more selective than ever. I think the number is now $1.8 trillion of the industry's asset managers is run by firms that have been tarred by these scandals. That's something like a quarter of all the money in this business. That's pretty disgraceful, but that still leaves you about three quarters that have not been scandalized.
Neil Cavuto: Charles, you're arguing that the whole fund thing is a waste of time.
Charles Payne: Jack alluded to the fact that you can't buy mutual funds without doing your homework. If you are going to do your homework, buy specific stocks. You can do a lot better as an individual stock investor. An example is in 1995, with the advent of the internet, individual investors sort of had an awakening. They started buying individual stocks and realized, single digit returns aren't the way to go. If you really want to benefit, don't buy mutual funds. Buy the companies that will really do well. One stock I like, but do not own, is T. Rowe Price (TROW).
Ben Stein: The data is so overwhelming and it's gone on for so many decades. If you go with anything other than an index, it seems to be fool hearted. I normally recommend the Dow Diamonds, but I'm worried about the Diamonds because they're not divided up equally. They're heavily weighted towards Procter & Gamble and sadly weighted away from General Electric. I like and own a fund called, Rydex S&P ETF (RSP), which is and exchange traded fund that is equally weighted towards every stock in the S&P 500.
Meredith Whitney: So much has changed now so that it benefits the individual investor. There is so much information on the internet and at the Library for the individual investor to do their own research. I like the funds that have always operated well, with low cost like Vanguard 500 (VFINX). I do not own it.
Jack Bogle: This argument about individual stocks and mutual funds shouldn't preoccupy us from knowing that owning stocks and mutual funds, because of the costs involved, is a loser's game. You should own an all market index fund like the Vanguard Total Market (VTSMX). I own it and if you can find a lower cost total all market index fund, please buy it.
Head to Head: Winning!
Neil Cavuto: Winning! It's almost always the side you want to be on: whether you're at work, at home or investing. And what better way to get the keys to winning than unlocking the wisdom inside Jack Welch's head, who's here with his fiancée Suzy Wetlaufer, who is assisting him in writing his new book. A lot of people feel they have a tough time even surviving. So how do you reach out to them?
Suzy Wetlaufer: Even when you're surviving and just trying to keep your head above water, you still want to know about the basic principles and mechanics of competing. Competing the right way in any competitive environment. So this book will deal with any economic situation, competing to win. In good and bad times, those principles and mechanics are the same.
Neil Cavuto: I'm thinking of Tom Peters and a lot of the companies he wrote about came and went, though they were winners at the time. You seem to be looking at something more philosophical.
Jack Welch: This is more about principles than picking a company. We've talked to literally hundreds of thousands of people. We've been on the road and we know what bugs people. For a while, the economy was bugging people, the global economy. The same thing was true for Australia. One of the things that bugged people from the first book was the vitality curve. How do you put it in? How do you really face into a situation?
Neil Cavuto: This is as much a book about being blunt, right?
Suzy Wetlaufer: Absolutely. How to be blunt. How to be straight. And to bake that into the culture of a company, that people are straight with each other. Not hurtful, but honest. That was a problem that we heard in every country that we visited.
Jack Welch: And if I wrote the book, I'd write about what to do before you put in the vitality curve in. Another big thing is mergers. I'm not talking about the CEOs. I'm talking about the people at every level, like co-heads and what they mean to places versus putting somebody in charge. Putting somebody in charge fast and putting somebody in charge slow. I have some experience in that, in saying which way you should go.
FOX on the Spot
Meredith Whitney: Make mucho dinero on new Latin explosion. New banking deal in Mexico is a sign of new Latin wave taking place. Thirteen percent of U.S. population is Hispanic and more than 25 percent of it is "unbanked." More than half of Mexican population is "unbanked." Stocks that benefit from tapping into that market are: Citigroup (C), which owns Banamex; First Data Corp (FDC), which owns Western Union; and Univision (UVN), which owns Spanish speaking TV. I own Citigroup, but not FDC or Univision.
Charles Payne: Make real money with Vornado Realty (VNO). Stock benefits from strong economy with low interest rates. I do not own it.
Jack Welch: Charles is right! Economy remains strong, and it won't overheat which will allow Federal Reserve NOT hike rates in 2004.
Jack Bogle: Stock and bond markets are volatile all year long. Buy stocks for the long-term and diversify, diversify, diversify!
Ben Stein: Polls are full of bull! Bush would beat Kerry.
Neil Cavuto: Tax cut talk will backfire on those opposing cuts. I think most Americans like them and won't appreciate those bashing them.
Forbes on Fox
David Asman: What goes up must come down, so is the market boom about to go bust?
Quentin Hardy, Silicon Valley bureau chief: You’d be a fool to try and time the market, but you’d also be a fool to ignore history. Right now, stocks have only been higher valued twice in 120 years. Those two dates are 2000 and 1929. This week on Forbes.com, we interviewed John Templeton, the famous mutual fund legend. He hates this market. He says it will take years to fix. He particularly hates the NASDAQ, and says stay away and do government bonds.
Steve Forbes, editor-in-chief: I’m delighted that Quentin is still a bear, because bull markets, as the cliché goes, ‘climb walls of worry.’ Only big turkeys listen to chicken littles. Quentin’s right that you can’t time the market, but stay with it. You’re going to end with an up year.
Rich Karlgaard, publisher: This is a mid-term correction. Quentin is so smart that his IQ can boil water, but he sees bubbles everywhere. This is not a bubble. George Bush had a bad month, people trimmed a little out of their portfolios to buy a big screen TV watch Janet Jackson, who knows? This is going to go for another six months.
Jim Michaels, editorial vice president: I don’t want to pile on Quentin, but if he had turned optimistic, then I would start to worry. He’s been a good contrary indicator for very many months now. But seriously, even if there is a bump in the market ahead, and there probably is, you don’t make money playing these little squiggles. You make money by getting with the long trends and staying with them. If you try to time these ups and downs you’re going to make your broker rich, you’re going to make the tax collector rich, and you’re not going to get back in on time.
Mike Ozanian, senior editor: One of the biggest killers of bull markets throughout the years has been inflation. What I love about this market is something that a lot of people have been complaining about, and that is ‘outsourcing.’ Companies are outsourcing, which is keeping prices down, no signs of inflation, as long as the Fed doesn’t have to tighten radically, which I don’t think it will, stock prices are going to keep going up.
Quentin Hardy: Look, companies did really well in outsourcing, it saved their tax bills wonderfully, it’s a one-time thing. You can call it a squiggle, but the fact remains on four different counts, this market is overvalued.
Mike Ozanian: It’s not a one-time thing. Outsourcing is a part of the new global economy. This is something that is going to keep going for a long time, Quentin. It’s not a one-time phenomenon.
Quentin Hardy: The tax benefit is a one-time thing, Mike.
Mike Ozanian: The marginal cut in taxes is not a one-time thing. What that does is that it encourages incentive to invest and create business. So it’s a long-term thing.
Steve Forbes: Personal incomes are up. Profits are up. Capital spending is up. Productivity is up. What more do you want?
Jim Michaels: Even the worries you have, have a silver lining. If we’re going to have inflation a couple of years out, you forget that in the early stages of inflation, it’s good for the stock market. It’s only when inflation gets to 10-15 percent that you have troubles.
Steve Forbes: The Fed making noise that it’s going to tighten a little bit, will prevent inflation next year, which means the expansion has more legs.
Rich Karlgaard: In 2003, good tech stocks doubled and really flaky ones quadrupled. Now is the time to trim your portfolio, don’t pull back from tech, but get out of some of those flaky ‘net stocks’ that might have quadrupled. Netflix (NFLX) went up seven times in 2003. Take that money, if you were lucky enough to get in, and go into Intel (INTC) and Cisco Systems (CSCO). I’m hanging in until NASDAQ 2500.
Quentin Hardy: Massive insider selling in Netflix in the last quarter. Now one of you guys, please speak to these valuations. When they were this high in ’29 and 2000, people said “forget the past, history doesn’t matter,” they were wrong. Why doesn’t history matter this time?
Mike Ozanian: If you had looked at valuations, you would have missed three out of the last five bull markets. P/E ratios, especially when you are looking backwards, don’t matter. Another big thing is you’re always complaining about debt. Right now, total government debt as a percent of the economy is only 36 percent. Forty years ago it was 43 percent. At the end of World War II it was 100 percent.
Steve Forbes: You have to look forward. Profits are going up. Companies have gotten their acts together, so the P/Es are a lagging indicator.
Quentin Hardy: I wasn’t talking about P/Es. All sorts of other valuations are pointing at this being too high. Templeton’s a smart guy. I want to side with him.
Jim Michaels: I think you’re always looking at what you own. You own it for a reason. Has that reason changed? Is it not valid anymore? I don’t think that you’re trying to time the market. You’re constantly examining your assumptions. That makes sense, but that’s not the same thing as trying to get out because you think there’s going to be a 10 percent bump in the market.
Quentin Hardy: It’s not about a 10 percent bump. It’s about the playing out of the biggest bubble in history.
David Asman: An investigation into American intelligence on weapons of mass destruction is nothing but a waste of time and money?
Jim Michaels: If you want to investigate what’s wrong with the Central Intelligence Agency, you can go back to when the liberals in congress, led by the liberal hero Senator Frank Church virtually destroyed the CIA back in the ‘70’s. But there’s no point into digging back into all that history. The point is to fix the situation. You don’t fix it by having a circus that allows a lot of politicians to get up there and posture and try to make politics out of it, which is what these investigations turn into. Let’s fix the situation and let’s get on with it.
Lea Goldman, senior reporter: I say ‘bring on the investigation.’ We have wasted, in the past, far greater time and far greater taxpayer dollars investigating lesser matters. $50 million looking at Whitewater for six years, $6 million looking into Lewinsky’s closet, we’re a nation at war. 500+ dead so far, taxpayer money is not an issue.
Steve Forbes: We know what’s wrong with the intelligence; it’s the fact that we don’t have enough humans in the field. We need more spies, we need more analysts, we need more experts, and we need more interrogators. And, by the way, in terms of Iraq itself, no one could have discovered that mass deception. They’re all deluded. Saddam Hussein thought he had weapons of mass destruction, his generals thought they had the stuff.
Victoria Murphy, staff writer: Look, sources are saying all different things. The picture still isn’t clear, and I’m so shocked that my fellow journalists who have insatiable curiosities, as we do in this profession, don’t want to know what went wrong. We’ve had massive intelligence failures. We failed to prevent 9/11, we failed to accurately assess Saddam’s arsenal. The only way to figure out why we failed is to look at this agency which is fighting the cold war. It’s totally outdated.
Quentin Hardy: If, on the first day, the commission sets aside weapons of mass destruction and looks at the following, I’ll be interested: They missed Libya having a nuclear program, they found out about North Korea’s bomb when North Korea called us up and told us. We bombed the Chinese embassy in Belgrade. We missed 9/11. Before the Church Committee, we got into the Bay of Pigs. Any other part of the government, you would just shut this down. There’s something fundamentally wrong here. I’m with Steve, only even further. This thing needs a total re-think.
Steve Forbes: We should have had an investigation after 9/11 just as we did after Pearl Harbor, which gave us the CIA after World War II. We know what needs to be done. Do it. And, by the way, why are we overlooking the successes that these agencies have had. We just look at failures.
Quentin Hardy: You know what the astonishing thing is that no one has mentioned? The sanctions worked. He had weapons of mass destruction in ’91, he doesn’t now. Why don’t we draw that lesson from this?
Lea Goldman: Most Americans boil this down to a very simple issue. There’s a total disconnect between what the President compelled the Americans to believe his reasons was for going to war, and what his own people are saying as an actual matter of fact. I think that merits a little investigation.
Victoria Murphy: Let’s de-politicize it. Given the timing, the results aren’t going to come out until after the election, so I don’t think this is a hugely political issue.
Makers and Breakers
• Citigroup (C)
Ted Parrish, co-portfolio manager of the Henssler Equity Fund: MAKER
I think that it’s a financial services company that has a great exposure overseas and domestically. I think that the company is really leveraged to all the sectors in the economy that are improving and I think that it’s going to be good going forward. The valuation’s compelling and it’s a nice, solid, stable dividend.
David Asman: It’s now at about $49, (Friday’s close: $49.31), you think it can go up to what?
Ted Parrish: $58.
Mike Ozanian, senior editor: BREAKER
I know it’s a great brand, but I’m a little nervous about the balance sheet. Overseas, they lent $300 million to Parmalat (PARAF.PK), the Italian dairy company with the phony bookkeeping. I’m a breaker on it.
Pete Newcomb, senior editor: MAKER
I like it. You want to own these giant monopolies. This is a huge financial services company, I think at 13 times earnings it’s a good deal.
• Johnson & Johnson (JNJ)
Ted Parrish: MAKER
It’s the first company in healthcare that I suggest any investor own. They’re in pharmaceuticals. They’re in medical devices, which is the fastest growing segment in healthcare, and they’re also in consumer products. The company has a solid balance sheet, triple-A rated, and I think it’s going to grow more than the market thinks.
David Asman: It’s now at $54, (Friday’s close: $54.15), you think it can go up to what?
Ted Parrish: $62.
Pete Newcomb: MAKER
I like this one too. They’ve got a new drug coated stent called CYPHER. Analysts expect it to raise their top line by about 15 percent this year. I think it’s a good buy.
Mike Ozanian: MAKER
I like it too. They’ve got some new drugs in the pipeline for arthritis and heart problems. I think you’re going to look at some explosive earnings growth next year.
David Asman: I have to throw in a caveat here. Healthcare is so volatile, it’s all tied in politics. Is that a problem?
Ted Parrish: There’s going to be some political window dressing going forward this year, but I can guarantee that after the election is over with, you’re not going to hear any more political rhetoric.
David Asman: Will the Super Bowl half-time "peep show" help or hurt media stocks?
Steve Forbes: Well, we have a case of a boob who exposed a boob on the boob tube. Rich Karlgaard is right. In the next issue of Forbes, he argues ‘why not have these networks pay for the airwaves?’ That’s absolutely right on. Why should a “G-rated” show have this kind of stuff? There’s a place for that, and it’s not in prime time.
David Asman: Well, Pete, is this going to hurt Viacom (VIA), the people who produced this?
Pete Newcomb: I don’t think this is going to hurt Viacom, and don’t blame the media companies. Blame the stars. We live in a time now where popular stars whore themselves out on the Internet, they molest kids, and now they expose themselves on national television. Don’t blame the messenger.
Victoria Murphy: Sadly, you can never overestimate the poor taste of our fellow countrymen. Sumner Redstone (chairman and CEO of Viacom) has made a fortune racing things to the bottom, and I don’t think this is any different. I think Viacom is a buy, if anything.
Rich Karlgaard: Lost in all of this discussion is that it was a great game. Nearly 100 million people were watching it when the field goal was kicked. So CBS (owned by Viacom) is not going to have to discount any of those ads sold. You also had 35 million people going in to “Survivor.” So they will get a short-term bump, but in the long term, I think that ad zappers like TiVo really kill these kinds of stocks.
Steve Forbes: The idea that size is going to create creativity is a false one. We’ve seen that with Time Warner (TWX). Some of their mergers didn’t work out very well. You’ve got to put on stuff that people want to watch. Part of the problem with prime time is that thanks to cable and these other segmentations, you can get what you want without going to the big media companies.
Pete Newcomb: You know what we’re not talking about too, are the real losers here. Where are those advertisers who spent $2-3 million making and airing this commercial, and they were totally upstaged by this.
Victoria Murphy: The fact that some of the advertisers want their money back makes for good copy, but I think that the reality is that they weren’t upstaged. People’s eyes were glued to the screen and I don’t think that next year’s going to be any different. I think that people are going to tune in because they want to find out what’s going to happen on that half-time show. Maybe we can get Britney Spears and Madonna on. I don’t know.
Rich Karlgaard: We are in a race to the bottom, but even as you’re bouncing down the stairs there are occasional bounces up.
Stock Smarts: Would John Kerry Be a Disaster for the Stock Market?
Jonathan Hoenig of CapitalistPig Asset Management says New York Attorney General Eliot Spitzer is the enemy of free markets and he endorses Kerry. That alone is proof enough for Jonathan that Kerry will be bad news for stocks. But his “proof” doesn’t stop there. Jonathan says the heart of John Kerry’s economic plan is what really makes him an enemy of the free market. He says Kerry plans to raise money by raising taxes on people making more than $200,000 a year. In addition to putting an unfair tax burden on the top earners in the country, Jonathan says Kerry’s plan is not a sound approach to lowering the country’s deficit and keeping interest rates down, and he thinks the market will hate it.
Susan Estrich, Fox News political analyst, says she thinks Eliot Spitzer is far from an enemy of free markets; she thinks of him as a “great protector of the people.” As for John Kerry she calls him a responsible, prudent spender who would reduce the deficit and be good for the market.
Gregg Hymowitz of EnTrust Capital agrees with Susan. He says John Kerry would lower the deficit, and keep interest rates low. He says it’s President Bush’s planned budget that would be a disaster for the market because the combination of increased spending and low taxes would raise the deficit and force interest rates higher. He believes Wall Street is supporting Kerry.
Wayne Rogers of Wayne Rogers & Company says he doesn’t see Wall Street supporting John Kerry, but he doesn’t see Kerry as any more of a disaster for the market than Bush. He is concerned about spending from both camps. He says Kerry’s got some good ideas, but they are vague and the “devil will be in the details.” Kerry provides no specifics on how he plans to cut the deficit, and that’s what weighs on the minds of those on Wall Street who will be watching the future course of interest rates. He says it makes little difference who gets elected president though because ultimately it will be a Republican Congress who gets to decide what money is spent and which taxes are raised or lowered.
Jonas Max Ferris of MAXfunds.com says the only difference between John Kerry’s spending and President Bush’s spending is the “stuff” they plan to spend money on. Neither seems to have any real plan to reduce the deficit to levels that will keep interest rates low, and he thinks Wall Street has concerns about both.
Dagen McDowell of Fox Business News says President Clinton raised taxes on the wealthy and the market soared for years. She does not support Jonathan’s idea that Kerry would be a disaster for stocks.
Best Bets: Bush Buys!
Which stocks will get a boost from President Bush’s proposed $2.4 trillion 2005 budget?
Jonas says Anthem (ATH)
Friday's close: $83.29
Jonas says President Bush’s budget plan will fatten the coffers of health insurers because there is money to subsidize premiums so that more people can get access to medical insurance and companies like Athem will benefit as a result. Wayne likes the way the stock has been trading. He sees it going to $90. Jonathan agrees; he says insurance is a very strong sector right now.
Jonathan says ING Prime Rate Trust (PPR)
Friday’s close: $8.04
Jonathan owns shares in PPR. It’s a play on higher interest rates, which he says he believes will be the ultimate result of President Bush’s deficit spending. Jonas says this fund has high fees and is highly leveraged -- making it more like a junk bond play -- and if credit starts to go bad as rates rise it could tank. Wayne says he would use a stop under this position to protect himself from the volatility this fund could see.
Wayne Rogers says InVision (INVN)
Friday’s close: $38.82
Homeland security is a priority in President Bush’s 2005 budget, and Wayne says InVision, which makes explosive detection devices, is well positioned to benefit. He says the stock is relatively cheap right now. Jonas agrees the stock is cheap. Jonathan says this stock has momentum and he wouldn’t fight it.
Stock of the Week
Last week’s pick was Scor (SCO) made by Jonas Max Ferris. For the week of January 30 through February 6, it was DOWN 2 percent
This week Gregg Hymowitz says he thinks Comcast (CMCSA) will pop. The company is due to report earnings on Wednesday, and he thinks good news will drive the stock higher. He’s anticipating an upside surprise in its cable modem business. He owns shares in the company.
Jonas says the company cannot grow its subscriber base and can only make so much money out of exiting customers, and he thinks the stock is already overpriced. He believes there is a greater chance Comcast stock will fall next week rather than rise after it reports earnings. He says there’s a lot more room to disappoint than there is to excite when it reports.
The 2004 Cashin’ In Challenge is underway. For an update of who’s hot and who’s not so far, check out the Web site at: www.foxnews.com/challenge
Wayne, Jonathan and Dagen answered some of your questions.
Question: Will Pengrowth Energy (PGH) turn around?
Wayne says he owns the stock for the income stream it provides (it has a 14 percent dividend). But he does not see the price moving much higher from here. He says the company revalued its reserves, which is what caused its stock price to fall recently, but he would hold onto the stock as long as it remained above $10. Jonathan says it’s a loser, lose it!
Question: When airlines cancel flights because of terror threats, who pays – passengers, the U.S. government or shareholders? And how are these cancellations affecting airline stocks?
Dagen says passengers may have to cover hotel rooms if their flight cancellations keep them overnight, since airlines are only required to cover the cost of a new flight. The airlines say the cost of cancellations is minimal and will not affect business as long as passengers don’t start canceling travel plans as a result of the fear and inconvenience of continued terror threats. So far, only British Airways (BAB) has blamed these threats for a drop-off in future bookings. The government does not cover the cost of any of these cancellations.
Question: Could the “bird flu” give companies that make medical masks like Cardinal Health (CAH) a boost?
Wayne says he likes Cardinal Health, but he wouldn’t buy it based on the bird flu headlines.
Question: Is Ryan’s Family Steakhouse (RYAN) a good buy?
Jonathan says this is strong stock in a strong group; put a stop loss in under any purchase and ride the strength. Wayne agrees. Dagen says these “faddish” restaurants can be very dangerous investments.
Question: Is it time to take profits in Teva Pharmaceuticals (TEVA)?
Dagen says hold onto this generic drug maker because generic drugs will keep on selling for years. Wayne agrees. He owns the stock himself. Jonathan says the sector’s hot! Hold onto this winner.