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 Gary Kaltbaum, president of Kaltbaum & Associates.
Trading Pit: What a Year!
It’s been a bumpy couple of weeks for stocks.
But just one year ago, on March 1, 2003, when war was imminent with Iraq, the Dow was at 7,891 and the Nasdaq was at 1,337.
But now one year later, the Dow is at 10,583 and the Nasdaq is at 2,029. Those are huge gains for stocks.
Tobin said by March 2005, the Nasdaq will be higher by 10-15 percent and the Dow will be up 10-12 percent. The economy continues to surprise people in how strong it is and Toby thinks it is only going to get stronger. He advised investors to buy stocks, not index funds.
Scott said the stock market must deal with the upcoming election and that means the next couple of months will be tough. He thinks the Dow will stay in a range between the low to mid 10,000. But this is a good thing because it allows the individual investor to come back into the market and invest in stocks.
Even though things have slowed down, Gary K. does not think we are nearing a bear market. He said any of the recent damage has been limited to the Nasdaq; the Dow and S&P 500 haven’t budged. Right now, he does not like Nasdaq stocks, but does like homebuilders, restaurants, and miscellaneous retailers. He believes 2004 will produce modest gains, and investors will have to pick their stocks much better.
Gary B. looked at a chart of the Nasdaq over the past year. He is bullish even though it has gained 50 percent over the past 12 months. He showed the index has pulled back a little bit, but it has stayed above the 2,000 mark. Unless it breaks below 2K, he will remain bullish. However, if the Nas breaks below 2K — especially with a massive crackdown — sell!
Pat believes there is no way the market will come close to 2003’s performance. He said forecasts and expectations are way too high — especially for Nasdaq stocks. Even if these tech stocks pull back, Pat still wouldn’t consider them a bargain.
Scott, Pat and Gary K. each picked the best stocks to own until next March 1.
Pat chose Viad (VVI), a company that provides services like check cashing. Its crown jewel is MoneyGram, a payment services company, which Viad is going to soon spin off to its shareholders. The company also has some interest rate hedges set to expire this year, which is going to make it much more profitable. Pat thinks it will hit $35 next year. (Viad closed on Friday at $24.45.) Gary K. thinks the stock is just ok, and would like to see it generate more revenue growth. Scott said the stock, “is a dog.”
Scott picked UnitedGlobalCom (UCOMA), a cable and broadband company operating in Europe, Latin America and the Asia/Pacific region. Liberty Media (L) and its chairman, John Malone, own 55 percent of the company. Scott thinks it is an undervalued company and could potentially double. He thinks by next year it will hit $15. (UnitedGlobalCom closed on Friday at $9.49.) Pat does not like UnitedGlobalCom and thinks if investors want a John Malone stock, buy Liberty Media. Gary K. likes UnitedGlobalCom as long as it stays above $8.
Gary K. selected Lucent Technologies (LU). He said it’s perfect right now, with accelerating earnings and revenues, plus company insiders are buying the stock. He thinks the stock will at least get to $6. Pat doesn’t like this stock at all. He said Lucent has four times more retirees than active employees and just lost a gigantic contract for Verizon (VZ) to Nortel (NT). Scott also does not like the stock and said it’s damaged goods. (Lucent Technologies closed on Friday at $4.19.)
It was time for the “Smith” Brothers to mix it up again. Toby shared one of the biggest holdings in his fund and Gary B. picked a stock he said Toby should have in his fund.
Toby owns and loves Teva Pharmaceuticals (TEVA), a leading maker of generic drugs. He said it’s the growth company of the 21st century and will do very well with the new Medicare bill. It also recently made two acquisitions, which are going to add to its earnings growth. Teva is undervalued compared to its peers and soon will be able to make generic biotech drugs. Gary said Teva has had a terrific run, but has just fallen below an uptrend it has been in since early this year. He added this is a bad sign and usually means that the next major move is further down. He recommended for Toby to take his profits now. (Teva Pharmaceuticals closed on Friday at $65.09.)
Gary chose Media General (MEG) as a stock Toby should own in his fund. Media General burst through a downtrend it had been in since October 2003, and now is at the perfect spot to buy. However, he said to sell if it fell below $62. (Media General closed on Friday at $64.80.) Toby said Media General is a communications company that owns television stations, newspapers and other publications and it’s earnings keep going down. He doesn’t like the stock and added that the company hasn’t grown in 5 years.
Gary B.: I underestimated just how innocent Martha is; (MSO) up 40 percent from here
Scott: Censorship fears hurt Clear Channel (CCU); down 20 percent this year
Gary K.: Michael Eisner-You're fired! Disney (DIS) goes up 10 percent
Tobin: The drugs are kicking in! Genentech (DNA) up 40 percent by next year
Pat: Barra (BARZ) is a big bargain! Bounces up 30 percent in 1 year
Cavuto on Business
Neil Cavuto was joined by Jim Rogers, president of JimRogers.com; Charles Payne, CEO of Wall Strategies; Meredith Whitney, Fox News business contributor; Susan Estrich, Fox News political analyst and Democratic strategist; Rob Stein, managing director of Astor Asset Management; Tom O'Neil, senior editor of In Touch Weekly.
Neil Cavuto: Will Super Tuesday be the beginning of a super run for stocks? This Tuesday's slew of primaries could very well decide who the Democratic nominee will be. But who is Wall street voting for: John Kerry, or John Edwards? Susan, who do you think Wall Street is rooting for?
Susan Estrich: Kerry would be my best guess. The one issue right now that separates them is trade. That's the one thing that would frighten them about John Edwards is the idea of protectionism.
Jim Rogers: Doesn't it worry you too, Susan, what Edwards is saying about trade?
Susan Estrich: No it doesn't.
Meredith Whitney: Edwards is the ultimate political hypocrite. He has a million-dollar vacation home, but yet he says he's a man of the people.
Neil Cavuto: You're not saying that wealthy people can't relate to people who aren't as rich, are you?
Meredith Whitney: I'm saying, don't be a hypocrite. He's part of the establishment and he admits that.
Rob Stein: Another big issue is the large deficit. It appears that Kerry will be a bit more fiscally responsible.
Susan Estrich: How can you be more fiscally irresponsible than this crowd, the Bush administration? Second, I don't think there's any hypocrisy in John Edwards. A big part of the American dream is the dream of getting rich, as Ronald Reagan proved.
Neil Cavuto: I want to talk about who Wall Street would root for. Jim, does Wall Street have a preferred candidate?
Jim Rogers: Edwards has said, I'm going to have trade wars. Therefore I think Wall Street would be rooting for Kerry. The trade war caused the depression. I'm old enough to remember that. Wall street remembers that too.
Neil Cavuto: You think that being against NAFTA and some of these other groups would trigger a trade war?
Jim Rogers: If we start a trade war, we're the ones who are going to lose. The foreigners will win and Wall Street will lose.
Neil Cavuto: One of things that comes into play is whether wall street performs better under a split government. We've had very good years under a scenario like that. I'm wondering if that is what the markets are signaling.
Susan Estrich: I think that's the idea of stability. To the idea of a trade war though I don't think an Edwards administration would cause a trade war.
Rob Stein: There isn't much of a difference between Kerry and Edwards. The big difference is if a Republican or Democrat wins in November.
More for Your Money
Neil Cavuto: Put on your Armani tux or your Versace gown! It's time for our stock Oscars to get you more for your money. Charles, what's your stock Oscar?
Charles Payne: I like Regal Entertainment (RGC). The movie business is really tough. Every year, whether there's good movies or bad, the receipts are going higher and higher. Regal is the largest movie chain in the nation.
Jim Rogers: Don't people stay home now though? Don't they get DVDs and movies on demand now?
Charles Payne: There are billion-dollar enterprises like “The Lord of the Rings” out there. People love going to the movies.
Meredith Whitney: This isn't a sector I'm crazy about. Regal has been a slow and steady name.
Rob Stein: This is an incredibly competitive field. The Regal theatres don't really have the pizzazz that you see in a lot of theatres now. I like Pixar (PIXR). With the Oscars coming up, I think you'll hear a lot about "Finding Nemo" and I think Pixar will really benefit from that. It's run by some very smart people and I think there's going to be more demand for that type of animation.
Jim Rogers: But "Finding Nemo" is old news already, isn't it?
Rob Stein: It is, but you're still going to have children who want to buy it and parents who want another copy of it. Now you're going to see distribution occur.
Neil Cavuto: This is all based on one movie?
Rob Stein: No, Pixar has a long list of great movies. There's "Finding Nemo" and "Toy Story". I'm saying that this genre is becoming more popular.
Jim Rogers: I would buy Disney (DIS) because someone is going to take over Disney. They are going to get rid of the guys running this company because people are angry.
Rob Stein: Disney's already factored in to be taken over. Who can figure out how much it's worth too? I think there's too much risk.
Meredith Whitney: I would stay away from media stocks. I like Wells Fargo (WFC) and think that it will be the next big player.
Charles Payne: Wells Fargo said they want to be a big player in the banking industry. I think to do that they're going to have to over pay for another bank. And that's going to probably hurt this stock.
Head to Head
Neil Cavuto: What's the real reason for all this passion about the film "Passion”? From Los Angeles, Tom O'Neil, senior editor of In Touch Weekly. Some are saying Mel Gibson's movie is anti-Semitic and they're taking it out on him by saying they're not putting him in movies down the road. And I think it's getting crazy.
Tom O'Neil: I think they're mad at him for other reasons. The biggest problem with this movie is that a lot of the violence in this movie is not supported by biblical text.
Neil Cavuto: That's wrong. Biblical text does support quite a lot of the violence. The last time I checked, Jesus Christ was crucified horribly. What about other movies that were also quite violent like "Natural Born Killers," "Pulp Fiction," or "Kill Bill." These movies Hollywood loved and praised. But when something concerns Jesus Christ and has a religious message, now hells ablaze.
Tom O'Neil: I think in this case we have a right to be suspicious. This is an extraordinary movie. According to all four Gospels, Jesus is "led" by soldiers to town. But in Mel's movie Jesus is beaten and pummeled.
Neil Cavuto: But where were you when these other movies had the same kind of violence? The truth is it's not the violence. Why doesn't Hollywood just admit Mel Gibson went out on its own and did this movie and the subject matter is something that a lot of people in Hollywood just don't want to touch.
Tom O'Neil: That is the issue. Hollywood is full of hypocrites, of course, and when they do religious movies they have no guts at all. And Mel certainly took a big chance on this movie. This guy's history though is violent films as a star in movies like "Lethal Weapon" and "Mad Max." And violent movies when he turned to directing like "Braveheart." And now in "Passion," he adds violence when it's not really there.
Neil Cavuto: But for Hollywood to judge Gibson for making movies that are too violent is a kin to me walking into a bake shop and telling someone to not pick up the Napoleon.
Tom O'Neil: But what if he made the movie especially violent because he wanted his $30 million back?
Neil Cavuto: Having seen this movie, I don't see the anti-Semitism that some were talking about. But I think that now people are going to step back from this movie and penalize Mel Gibson. I think though people are voting with their tickets now also. And sending a message to Hollywood.
Tom O'Neil: I think you're right. Americans love this guy so much that just last year he won best actor of the year at the People's Choice Awards. And he didn't even have a movie out last year.
FOX on the Spot
Charles Payne: Stocks head higher on news 150k workers were hired.
Rob Stein: The bear is back! Dow falls 10 percent before year-end!
Jim Rogers: Arnold's honeymoon is over! CA's $15 billion rescue plan fails.
Neil Cavuto: Mel Gibson's movie will be big and will re-define movies. It will take in at least $100 million this weekend.
Forbes on Fox
How are politics and global events affecting your wallet? We’ll put the story In Focus and give you the bottom line.
David Asman: Social Security takes a lot of your money, but the pay-off is lousy. So why not get rid of it altogether?
Dennis Kneale, managing editor: You know, this week Alan Greenspan finally allowed us to start talking realistically about this. Let’s admit it. Social Security is a big lie. It’s a ‘Ponzi scheme.’ A ‘Ponzi scheme’ is where you get these new investors that come in, and you promise them a lot of money. Then, you go out and get more, and you pay the first investors with the money you got from the second set. That’s what we’re doing in Social Security. Now, here’s the bad part. In 25 years the number of people receiving money from Social Security will double to 70 million people. And yet the number of workers paying in will go up 16 percent. We’re in deep trouble and that means that in 20 years, when I want to retire, I’m going to get nothing. What I want the government to do is call off the lie, give me the $5,000 that I put into Social Security now, and let me invest it myself.
Elizabeth MacDonald, senior editor: I’m thinking ‘what’s the way to fix the system?’ Why don’t we just cut the benefits for all those congressional leeches who use Social Security to fund their pork-bearer projects to get re-elected. This is a ‘tax and spend Ponzi scheme.’ Let the taxpayers own their benefits, let them put two percentage points of their Social Security taxes toward their own accounts so they can own government bonds that bring 5 percent, 6 percent, 7 percent, not the 2 percent that you’re getting on Social Security right now.
David Asman: Steve, two percent seems so small.
Steve Forbes, editor-in-chief: It is. You can do eight-out-of-the-twelve instead of two-out-of-the-twelve or even more. That’s why we have to get away from this discussion of either the little payroll accounts or raising taxes or cutting ages. Privatize it. Give workers a choice. If you want to do it, you can. If you don’t, you don’t have to, but this $12 trillion deficit will disappear in 30 years.
Victoria Murphy, staff writer: I think there are a lot of writs associated with that choice, because if we are in a sustained economic downturn, which is totally possible, you get a double whammy. Retirees can’t fund their lifestyles and the government, to bail them out, would have to do it at the worst possible time. They’d have to raise taxes or take out loans at the worst possible time – during an economic downturn. I think that’s risky.
Jim Michaels, editorial vice president: In the first place, they are pushing up the retirement age, and I think that as life expectancy increases, they’re going to have to push it up further. Retiring early is bad for people, anyway. The real solution to this problem is economic growth. If we have real economic growth, it will take care of the Medicare problem and it will take care of the pension problem. The first thing Congress should do is make President Bush’s tax cuts permanent. That will give a boost to the economy. If we can get 4 percent annual growth for ten years, which we have now, that will solve all our problems.
Steve Forbes: As economic growth and incomes go up, Social Security obligations go up with it, and that’s part of the problem. Why not turn a liability into an asset? By private accounts, you will get that stronger economy. You’ll own it, not the politicians.
Dennis Kneale: The reason why we haven’t solved this problem is because we keep hoping we can grow our way out of it. Think of these numbers: in 1960, there were six workers for every one person on Social Security, but in 25 years it’s going to be less than three workers for every person on Social Security. That’s not enough. They need to cut way back, they need to make us realize that we’re never going to have it, and they need to let us invest it ourselves.
Elizabeth MacDonald: I just worry that all the baby boomers are really getting it in the neck, because we’re going to see higher taxes to pay for Medicare expansion, and to pay for the Social Security benefits. I am worried about privatizing the system. There are huge transitional costs there.
Steve Forbes: Transitional costs are less than the liabilities that Social Security has, the way it’s constructed today.
Victoria Murphy: I think privatizing is really risky. Personally, I’m going to move to France so I don’t have to work for Forbes until I’m 101 years old. I think we can get a lot of the slack by increasing the retirement age, and we should do it gradually. That’s a way to solve part of the problem. The other way to solve it is by spending less.
David Asman: Let’s just talk about what might happen to the stock market if just part of that money goes into the stock market. There will be a boom, right Steve?
Steve Forbes: Over time there certainly will be. You’ll have a stronger economy, the market will go up, and you’ll have a virtuous circle. Galveston, Texas withdrew from Social Security, 20 years ago and the workers put their money, not in the stock market, but in bonds and interest rate securities. They have 50-200 percent more benefits today, without taking any risks.
Elizabeth MacDonald: The studies that I have seen that are talking about Social Security going bankrupt, have really conservative growth rates on the economy, on the order of 2-2.5 percent. We’re seeing growth rates in the economy of 3-4 percent. So you’ve got to wonder what the assumptions are first, before you go fixing something.
Dennis Kneale: We just finished a decade of the highest economic growth in our history, and we face a Social Security crisis. That’s proof that it will not work.
Tired of hearing the same investing advice from every side? We’ll give you the contrarian approach to investing in our Flipside segment.
David Asman: You think you've got a great rate on your mortgage? Well, if you're paying a fixed rate, you're getting ripped off!
Pete Newcomb, senior editor: Seven years ago, my wife and I refinanced our modest house in New Jersey. We took an adjustable rate mortgage fixed to COFI (the Cost of Funds Index). It adjusts once a year. Right now, we’re paying 4 5/8 percent. It’s been five years now. At it’s peak, we paid 7 ¼ percent, so I think we’re saving all kinds of money. We also got 40,000 miles from American Airlines (AMR), so I flew the family to the Caribbean for free.
Jim Michaels, editorial vice president: You guys can play the yield curve if you want, it’s too complicated for me. If I can lend at under 40 and could borrow for 30 years at 5 percent, people take it. You’re only really paying 3 ½ percent because you got a tax reduction on the interest, which you don’t have on the principal repayment. Secondly, as those years wear on, that payment is going to decline in real dollars. The last five years you’re paying $500-600 a month in real dollars, when you may have started off paying $1,500.
David Asman: So, Steve, what is it? Adjustable or fixed?
Steve Forbes, editor-in-chief: It should be fixed. Pete’s been in a period where interest rates have gone down. I’m old enough to remember periods in the 1970s and ‘80s when rates shot up and homeowners got squeezed with those kinds of mortgages. If you have a fixed-rate mortgage, after a year or two you can have it refinanced anyway if rates come tumbling down.
Bill Baldwin, editor: My answer is that we have to have all of the benefits of an adjustable-rate mortgage, with none of the risk that your monthly payments are going to get out of control. The answer is to have an adjustable interest rate but a variable length. If interest rates stay low, your 30-year mortgage gets paid off in less than 30 years. If they go up, it might last for 33 years. It could even come down in 20 years. You need to know that the $1,500 won’t go to $3,000 next year. You can’t afford that.
David Asman: Alan Greenspan said that rates are bound to go up because the government has been spending so much money and this is the only way that they’re going to pay for it. If rates go up, what happens to your adjustable?
Pete Newcomb: Mine has a cap. It can only go up two points a year. That means that next year, if rates soar, next year I’ll be paying 6 5/8 percent instead of 4 5/8 percent.
Jim Michaels: With a 30-year fixed, at the end of it, it is paid off. You have a retirement fund. You own your home outright. With Bill’s system, if we run into a patch of high interest rates, at the end of 30 years you’re still going to owe a lot of money.
Steve Forbes: I have a fixed rate. After five years, it’s adjustable, in which case, I’ll refinance it.
David Asman: That’s what’s called a 5/1? That means that it’s fixed for five years, and then whatever the market’s got, you’ve got?
Steve Forbes: That’s right.
Jim Michaels: Even if you can afford to pay it off, you’re borrowing at 3 ½ percent for 30 years. That’s a hell of a bargain.
Martha Stewart: The Heat Is On
David Asman: A huge win for Martha Stewart yesterday, as the biggest charge against her, securities fraud, was dropped! Do prosecutors still have a leg to stand on or is this case over?
Bill Baldwin, editor: The remaining charges are still preposterous. Basically, Martha was arrested for resisting arrest. She’s charged with obstructing an investigation into her obstruction case. She’s charged with conspiring to commit conspiracy. These are absurd. I’m not saying the charges will be dropped. She might get convicted. On appeal they will be thrown out.
Dennis Kneale, managing editor: Well, they’d better not drop these charges. Prosecutors have spent millions of dollars on this case. It was a ridiculous case from the start, and now I want to see that jury rule because Martha is going to walk. And then, I want there to be an investigation by Congress into possible prosecutorial misconduct. I want to see the prosecutors e-mails, how they discussed Martha and what they called her. I really think this was a persecution and not a prosecution.
Steve Forbes, editor-in-chief: Well, if that’s the case, they should just drop it and stop wasting our money, stop wasting her money, so she can get back to running her company. The charges are preposterous, they should be dropped, the sooner the better. They went after her because she was Martha, not because of the charges themselves.
Elizabeth MacDonald, senior editor: They absolutely wanted a celebrity scalp. I really want to see what the jury has to say after all this waste of taxpayer dollars. I want to see what Bob Morvillo (Martha Stewart’s attorney) has to say in his summation. If she does get convicted of anything, it will be fought on appeal and she will win.
Dennis Kneale: I do want to make one thing clear. I am not saying that Martha is innocent. I think she fibbed. I think she panicked and I think she misled investigators. I don’t think they can convict her of that because there is so much room for doubt.
David Asman: But, it is still illegal to lie to Federal investigators in a case like this.
Elizabeth MacDonald: Absolutely it is, but in this situation, anytime they are accusing you of insider trading, they get not one but three government investigators on the phone to catch you in a lie. This case is basically about mistakes. Yes, she probably did lie. But look, it was brought in the context of the summer of 2002 when you had people like Ken Lay (former Enron CEO) and Jeff Skilling (former Enron president and COO) and Bernie Ebbers (former WorldCom CEO) lying to Congress. Congress was all head up in an orgy of self-righteousness, which was quite tedious.
Steve Forbes: The danger is that if she is convicted by this jury, she could lose her company, the company could be destroyed, so why destroy something that doesn’t have to be destroyed?
Bill Baldwin: I totally agree with Steve. This is a waste of money by the prosecutors. Hey, let’s come up with a novel charge. How about securities fraud? It lowers the value of my treasury securities to have my taxpayer funds wasted.
Elizabeth MacDonald: Right. And that fraud charge was brought just to create victims for the jury. She’s being prosecuted for something that the government can’t claim she did in court. It’s absurd.
David Asman: If she gets off, Steve, is the IRS waiting in the wings with some kind of charge of their own?
Steve Forbes: No. I think the Securities and Exchange Commission will be tempted, but I think that if she gets cleared, the SEC will realize that bringing a civil suit is a waste of time and a waste of money.
Dennis Kneale: You know, I think that Martha did fib. It’s just that in so many other cases of this size, they just say ‘neither admit nor deny guilt. Just promise you won’t do it again. We’ll smack you on the wrist.’ But this time they tried to hang her and this time they’re not going to be able to.
Our panelists give you the scoop on all the inside business information before you hear it anywhere else in The Informer segment:
David Asman: Forbes is rolling out their latest list of billionaires and the companies some of these guys run could make you lots of money!
Pete Newcomb, senior editor: There’s a company owned by two billionaires on our list, it’s Clear Channel Communications (CCU). They’ve been in the news this week because six of their stations dropped the Howard Stern show. They have 1,100 radio stations out there; it’s really not a big deal. This stock is fifty points below its high from a couple of years ago, the feds have been trying to attack them over monopoly concerns, but I still like it. I think it’s got plenty of upward momentum.
Dennis Kneale, managing editor: Clear Channel is a killer. I love them. They’ve got about 1,500 radio stations, but that’s barely a third of the market share, so they’re not anti-monopolist. They’re pretty smart. People decry them and hate them, and any time you see everybody ganging up on somebody, that’s a time when, as an investor, I try to look at the upside and side with them.
Lea Goldman, senior reporter: William France, a Florida billionaire worth $1.2 billion operates International Speedway (ISCA). He operates a dozen racetracks for NASCAR, and his son Brian is totally taking over NASCAR, redoing everything and retiring smaller venues. They’re putting their studly drivers on MTV [owned by Viacom (VIA)], drawing viewers like me.
Dennis Kneale, managing editor: I actually think that that is a really smart pick. My pick is a company called American Pharmaceutical Partners (APPX). It’s controlled by Dr. Patrick Soon-Shiong (president, chairman and CEO). Everyone has been betting for ten years that this guy would fail. It now looks like he is about to succeed. He’s got this little sleeve that you put a cancer drug inside so that twice as much of the potency of the drug can get to the target of the cancer that you are trying to kill. He’s got some good data, he’s about to win an approval, then he could try this approach with other kinds of drugs. It’s a risky stock, it goes up and down a lot, but that’s because people hate this guy. I think it’s worth looking at.
Pete Newcomb: That’s why I like it. I can’t talk about the drugs like Dennis can, but this guy is a scrapper. People do hate him, he’s been under attack. He’s very resilient, I like him.
StockSmarts: What Does President Bush’s Offensive Mean to Stocks?
President Bush is not going to take in anymore. His campaign is about to launch a big offensive with a re-election advertising blitz, set to begin on Thursday, March 4.
Now that he is taking the handcuffs off and jumping into the campaign, what will it mean to stocks?
Stuart Varney of Fox Business News says that throughout the month of February, the Democrats ‘hogged” the news and really talked down the economy, and that weighed on consumer confidence and the market. Now president Bush will counter that negativism with his re-election ad campaign, which will outline strengths in the economy, and I think that will stop the market’s downward slide, and help it to move up modestly. He is also likely to send a message of support for free trade – something the market wants to hear.
Democratic Strategist Bob Beckel says there’s no good news to boost the market despite what President Bush says in his ad campaign. And he says many people in middle America are unemployed and will not respond with confidence to President Bush’s message no matter what he says in his ad blitz.
Jonas Max Ferris of MAXfunds.com says if President Bush launches and ad campaign that convinces Americans that the economy is in better shape now than it was four years ago, he can boost consumer confidence and that could help stocks.
Wayne Rogers of Wayne Rogers & Co. says we already know what President Bush is going to say and that’s already in the market. Bush’s ad campaign is not going to drive the market – earnings drive the market.
Adam Lashinsky of Fortune Magazine says there is a subtle opportunity for the President and for the market with this early ad campaign blitz. He’ll be sending a positive message and while we don’t know exactly what he will say, the chances are he will draw a contrast between himself and the Democrats on the issue of free trade. John Kerry and especially John Edwards support protectionist policies and the President will come out in favor of free trade. If the market likes what he has to say about the global economy it could rally.
Jonathan Hoenig of Capitalistpig Asset Management says he’s not convinced Bush’s campaign message can lift stocks because both President Bush and John Kerry ultimately see government as a bigger part of our lives and that’s a problem for the market. He says, “Kerry wants our pocketbook and Bush wants our minds, and we need to get back to the principals upon which this country was founded: limited government, free markets, laissez-faire capitalism – that’s going to be good for rich and poor.”
Stocks on the comeback trail – will they make great buys?
Adam's Comeback Stock: Nokia (NOK)
1-yr. price target: $27.00
Friday's close (2-27-04): $21.77
Adam says Nokia is the best cell phone hand set maker in the world. He says the stock has been depressed because growth has been slow, but “the next big thing” is called “3G” third generation phone services, and it will help drive Nokia’s stock price. Wayne points out that Nokia’s already had a good run, but he says it’s a terrific company, and he owns shares. Jonathan says Nokia’s a strong stock that he wouldn’t bet against.
Jon's Comeback Stock: Equity Residential (EQR)
1-yr. price target: $36.00
Friday's close (2-27-04): $29.75
Jonathan says REITs are hot, and EQR has lagged the group a bit, but when the big funds start moving in he thinks this will be among the companies they buy. Adam is somewhat concerned that this stock could be on the wrong side of a possible “housing bubble.” He’d avoid it. Wayne likes Sam Zell who heads up this company. He points out that the stock has been flat for about 9 months, but it has had good volume lately, and it has a good dividend, and he likes it.
Wayne's Comeback Stock: PetroChina (PTR)
1-yr. price target: $60.00
Friday's close (2-27-04): $53.36
Wayne owns shares in PetroChina. He thinks the company is great, and he thinks China is an up and coming economy, and this is a major player there. Jonathan visited in China in 2001, and he says since then the Chinese airlines and some of the energy companies have become very hot, and while he doesn’t own any, he wouldn’t bet against them. Adam says he’s very concerned about a China stock “bubble.” He wouldn’t bet on PTR.
Stock of the Week
Last week’s pick was Untied Technologies (UTX), made by Gary Kaltbaum. For the week of February 20-27, it was DOWN 4.7 percent
This week’s pick from Adam Lashinsky is Sepracor (SEPR). As of Friday’s close the company was anticipating a nod from the FDA on an important insomnia drug, and Adam believed the stock could double if it gets the go ahead. Jonas pointed out that the stock could be severely punished ala ImClone (IMCL) if its drug does not get approval since investors were already betting it would. (Sepracor’s drug received tentative approval Saturday morning).
Cashin’ In Challenge
The 2004 Cashin’ In Challenge. 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 Adam answered some of your questions.
Question: “Can you ever go wrong investing in Microsoft (MSFT)?”
Wayne says Microsoft is a great company, but there’s no such thing as a sure thing. Though, he says, if you buy Microsoft, and hold onto it, eventually you should see a reward, just not necessarily in the short-term. Adam agrees with what Wayne says, and he adds that there is not a lot of risk to this stock. It is a dominant player in its field. Jonathan says Microsoft has been dead money for three years, and he wouldn’t bet on it.
Question: “I own $25,000 worth of SanDisk (SNDK). What do you think?”
Adam says the flash memory card maker has done really well because of the popularity of digital cameras and cell phones with digital cameras, but he doesn’t think it’s a great buy now. He thinks SNDK’s best run is behind it. Wayne agrees. He says the stock has broken its 50 and 100 day moving averages, and it’s not a buy now. Jonathan says you should have stop-losses at 5 to 10 percent below this stock to protect yourself on the downside.
Question: “Would you buy Disney (DIS) stock now, or wait until Michael Eisner leaves?”
Wayne says not only would he not buy it; if he had a big position in it, he’d sell some. He says he’s concerned about Disney because it’s a complicated situation making it very difficult to analyze what’s going on with the company, and the market hates that kind of uncertainty. Jonathan says he’d stay away from Disney. Adam likes Disney.