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.

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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 Gary Kaltbaum, president of Kaltbaum & Associates.

Trading Pit: Who Does Wall Street Think Won Round No. 2 of the Presidential Debates?

Gary Kaltbaum: Wall Street knows Bush clearly won. He completely separated himself from the policies of John Kerry. Kerry said he’s for tort reform but has voted against it for years. And he’ll raise taxes for the middle class.

Tobin Smith: Kerry won. Bush needs to learn to make an argument without yelling. But Kerry wants to micromanage the economy and that doesn’t work. Wall Street wanted to see Bush stand up to Kerry, and he did, but not as well as they wanted to see.

Gary B. Smith: Wall Street and businesses want the candidate that will help them make money. This means they want the guy who will support lower taxes, and this was Bush. He clearly showed that he’s the lower tax guy. Also Bush pointed out that Kerry voted 98 times to raise taxes and said Kerry will have big government take over health care. The President made the better pro business/Wall Street argument.

Scott Bleier: Wall Street has already voted for Bush. He won this debate, but he has to learn how to finish better. To put it simply, Bush did much better this time, he took Round No. 2, and Wall Street will like it.

Pat Dorsey: Neither won the debate from Wall Street’s perspective. With either, we’re going to have larger deficits, which means higher interest rates and higher inflation. That’s bad for stocks.

Stock X-Change

During the Presidential debate last Friday night John Kerry said, “One percent of America, the highest one percent of income earners in America, got $89 billion of tax cuts last year. One percent of America got more than the 80 percent of America that earned from $100,000 down.”

But where would America be without those top earners?

Tobin: The top earners pay 20 percent of their income in taxes, but that amount equals 40 percent of all the taxes paid.

Gary K.: The top 50 percent of income earners pay 96 percent of taxes, and the bottom 50 percent pay only 4 percent. We shouldn’t penalize success. This country is based on a person’s dream to be great, work hard and earn a lot of money. And Kerry wants to take that all away.

Pat: The fact that Kerry hates rich people is a bit of an overstatement. The issue is who pays the most in taxes. Right now the rich people are certainly paying a larger share of their income and that’s how it should be. However, there shouldn’t be a 70 percent marginal bracket.

Gary B.: I agree with Gary K. When the government taxes the top 1 percent, it’s not just rich people sitting around eating cucumber sandwiches; it’s also the owners of small businesses who worked hard to get where they are. These people create almost 70 percent of jobs in the U.S. and provide most of the investment capital for new businesses. These taxes are really taking away the incentive to get to that 1 percent. Once people reach that point, it is a great boost to the economy.

Scott: Kerry said he was not a panderer, but he is pandering to everyone who makes under $200,000 a year.

The town hall debate was a big deal, but it was nothing compared to our own Town Hall Stock X-Change!

Tobin chose Sirius Satellite Radio (SIRI). He said there is going to be a big change in radio now that Howard Stern is moving over to satellite radio. Plus, by the end of this decade he thinks it will have 10 million subscribers and a ton of cash. (Sirius closed on Friday at $3.70.) Gary B. said this is an interesting pick, but it’s already had a huge run up in the last month and ran into resistance around $4. He would wait for it to clear $4 again before buying.

Pat picked Diageo (DEO), a British company that owns the top liquor brands in the world, such as Guinness, Smirnoff and Johnnie Walker. He said it has been using exclusive distributors, the same system that made Budweiser successful. Pat also likes that it’s cheap, pays dividends, and will be growing for years to come. (Diageo closed on Friday at $51.19.) Gary K. said this stock is all right, but said its growth is very slow.

Gary B. selected Starbucks (SBUX), a consistent performer all year. It has gone up throughout 2004 and just broke to a new high. Scott said Starbucks is too expensive, is fully valued, and can’t go anywhere from here. (Starbucks closed on Friday at $47.39.)

Scott recommended Pioneer Electronics (PIO), which makes car audio and video products. He said it’s very cheap, but warned it is a very thinly traded stock. Pat said consumer electronics is a tough business and Pioneer hardly makes any money. He also does not like that the company’s returns on capital are terrible and warned investors to be careful about thinly traded stocks. (Pioneer closed on Friday at $21.40.)

Gary K. picked Costco (COST), the largest wholesale club in the U.S. He said it has fabulous earnings, a great chart, and thinks there is a lot of growth ahead. (Costco closed on Friday at $44.69.) Tobin said this stock has gone up way too much and is played out.

Predictions

Gary B's prediction: Bush rallies but stocks don't until after the 3rd debate

Tobin's prediction: Bush doesn't own a lumber company but you should! Buy Plum Creek (PCL)

Pat's prediction: Both want to spend too much; buy foreign stocks like Lloyd's (LYG)

Scott's prediction: Both showed their need for an energy plan; buy Massey Energy (MEE)

Gary K's prediction: Bush keeps winning & so do his pro biz policies; buy Marriott (MAR

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Cavuto on Business

Neil Cavuto was off Saturday. Stuart Varney was joined by Jim Rogers, president of JimRogers.com; Gregg Hymowitz, founder of Entrust Capital; Charles Payne, CEO of Wall Street Strategies; Nancy Skinner, radio talk show host; Barbara Corcoran, founder of the Corcoran Group; Chris Lahiji, president of DailyTrends.com; Phil Singer, Kerry national spokesperson; Mark Wallace, President Bush's deputy communications director.

Bottom Line

Stuart Varney: Who's going to put more money back in your pocket, George Bush or John Kerry? Twelve hours ago, round two of the presidential debates drew to a close. Taxes, of course, was a major talking point. So, who's tax plan will be better for you and for America? Let's get the bottom line.

Jim Rogers: There's no question that Bush is much better for America, as far as taxes are concerned. He's trying to encourage saving and investing. We in the U.S. have a savings rate of 2 percent. In China, they save and invest over 35 percent. Bush is trying to do something about that. I'm afraid Kerry is not.

Gregg Hymowitz: Bush has a record. Let's look at the record. Since he's become president the stock market is down 12 percent. Since he's become president we've had the worst job growth since the Great Depression. And if you count all the people who've left the job market, 250,000 alone in September, we have basically 10 million people unemployed. If you count those people, the unemployment rate would be at 6.2 percent. Kerry is going to roll the tax cuts back on 1 percent of the population.

Stuart Varney: Gregg, I've rarely seen Charles Payne seethe, but he's seething right now.

Charles Payne: Gregg, I cannot believe what you're saying. Of course Bush's tax plans have put America back on track. People talk about yesterday's (Friday) numbers, 96,000 jobs, as being not a lot. But that's a good number considering where we're coming from. When I was watching those debates I wasn't watching Kerry, I was watching Santa Claus. This guy made so many promises he's going to need an army of elves to make it come true.

Nancy Skinner: We're fighting over cookies in the cookie jar. And this president has already mortgaged this cookie jar. It's about to be repossessed. The debt is so large I don't even know why we're talking about tax cuts. By 2009 the interest on the debt will be so large it will eclipse all discretionary spending all put together. So why are we talking about tax cuts? We need to put people back to work and pay down this debt.

Chris Lahiji: I agree with Charles and Jim. I agree that tax cuts always help invigorate businesses. Federal spending always helps fuel the economy. Keep in mind, Bush has a plan for small businesses; 80 percent of businesses out there are small. I think Bush is going to do just fine.

Barbara Corcoran: Kerry is offering a bundle of goodies that's very appealing to people. But I don't think it amounts to anything. Bush however loves business and business is the only thing that ever creates jobs. I believe in Bush, in this regard only.

Stuart Varney: Gregg, according to Mr. Kerry's website, he would raise the top two tax brackets, which would snare a lot of people who make a great deal less than $200,000.

Gregg Hymowitz: No, Stuart. He's talking about raising the tax on the top 1 percent. I don't understand Chris's view. Chris's view is let's just cut taxes, increase spending, and we'll just let the party go on. There's no conservative notion here to their economic policies. I appreciate Charles's position if he was a true conservative, but Bush is not a true conservative.

Charles Payne: He's a president that had to do certain things for the times. So of course he didn't fit the absolute conservative mold.

Jim Rogers: I hate to agree with Gregg and Nancy, but they are right about the deficit. The answer is to cut spending, not to raise taxes.

Nancy Skinner: Fiscal conservatism under this president has become an oxymoron. What Kerry is saying is, let's make a choice. Let's roll back the tax cuts on the top 1 percent and put it directly to providing health care for almost all Americans.

Gregg Hymowitz: Charles, I want to ask you a question. Four thousand dollars for a college education, money for health insurance, or tax cuts for the wealthy? You choose, what do you think is best?

Charles Payne: That four thousand dollars is a farce anyway.

Gregg Hymowitz: Just choose. Just choose.

Charles Payne: For someone who's really poor, four thousand is not enough anyway. It's a gimmick to make people vote for Kerry.

Barbara Corcoran: I think people are going to fall for that gimmick unfortunately. I wholeheartedly agree with you, it's not going to work.

Chris Lahiji: The market likes tax cuts. I like Bush.

More for Your Money

Stuart Varney: Which presidential candidate will do more to protect our borders, which in turn should get us all more for our money! Nancy, a lot questions about America's security in last night's debate. Who's the man to protect our borders?

Nancy Skinner: Considering that President Bush invaded Iraq and now we know there wasn't as much as a butter knife there in Iraq, I'm thinking that John Kerry has a much better plan. Time magazine just recently profiled border patrol and found that in Mexico, President Bush's temporary worker program set off a great sucking sound of Mexicans across the Arizona border because they believe once they get into the United States, they're home free. So he caused this rush of immigration. And he's doing very little to stop it.

Barbara Corcoran: Kerry is a clear communicator on this one subject. He says that if you've worked in this country for 5-6 years and you have no criminal record, you get to be a citizen. What's wrong with Bush is you get this ambiguity where at the end you kind of get to be a visitor worker.

Stuart Varney: Does anyone think that either candidate would close the borders?

Charles Payne: Absolutely not. Immigration is a two-prong issue; it's national security and it's economic. We need immigration and immigrants to fill the void.

Jim Rogers: I agree with Charles. We have a demographic problem in the U.S. Bush is certainly doing a better job at attracting legal immigrants to America.

Gregg Hymowitz: If the issue with border control is how do we protect America and how do we prevent terrorism in America, I think you have to look at what's going on in the world. Today 3 percent of Saudi Arabians think highly of America. 13 percent of Egypt thinks highly of America. We are at all-time lows. There's no way we're ever going to be able to control such porous borders.

Chris Lahiji: I'm with Kerry on this one. I don't know why anyone would give illegal immigrants driver's licenses. It's a privilege to have a license, not a right. I think Bush is just trying to get the Latino vote out on this one.

Gregg Hymowitz: We have to invest money in intelligence. We're spending billions of dollars on star wars.

Charles Payne: Gregg, you're saying that the world hates America and at the same time we have porous borders. That doesn't jive. Also, you're echoing the same thing that's on Kerry's website when he talks about Iraq and national security.

Nancy Skinner: We spend only $11 billion on protecting our borders. $200 billion is being spent in Iraq but only $11 billion on our own borders. Kerry talks a lot about how few of our ports are inspected, less than 5 percent.

Head to Head

Stuart Varney: Who made a better case last night to lead America and its economy? Time to go head to head. From President Bush's camp, Mark Wallace, Deputy Communications Director. And joining us from Senator Kerry's team, Phil Singer, National Spokesperson. Last night Kerry came out on the side of soaking the rich to fund government programs. Do you think class warfare is good leadership for the economy?

Phil Singer: I don't think that was class warfare. I think that was laying out the plan to get this country back in a positive direction. What John Kerry was talking about last night was how to improve our health care system, how to give tax cuts to the middle class, laying out an agenda that has been largely been absent for the last four years. We have yet to see a single net new job created under this president. And what John Kerry was talking about last night was how we're going to get America back on track.

Stuart Varney: All right. Mark, the president wants tax cuts for all, plus massive deficit spending. Is that good economic leadership?

Mark Wallace: The president said that we're at deficit spending right now because we're at war. Discretionary spending that's not war related is less than 1 percent. You won't hear Kerry or any of his spokespeople say anything related to Kerry's 19 years in the Senate. Senator Kerry didn't see a spending program or a tax that he wouldn't vote for. You never hear them talk about that record, and I wonder why?

Phil Singer: Frankly I'm surprised the Bush campaign wants to talk about Senator Kerry's record. Do you really want to talk about how Senator Kerry helped put 100,000 cops on the street? And how George Bush is working to take them off the street? Do they really want to talk about how Senator Kerry helped put balanced budgets into place? And how George Bush has undone balanced budgets? If you look at the last 4 years, Bush has managed to undo all of the advances we've made over the last decade.

Mark Wallace: Well, I think you have to work really hard to be rated the #1 most liberal member of the United States Senate by the National Journal. That means he was the biggest tax and spender in the United States Senate. And I think he should be proud of that record.

Phil Singer: John Kerry has a great record in the Senate. The real issue in this election is George Bush and why he's not pursuing policies that are for the "every man." Why he's taking us in the wrong direction. Why he has yet to create a new job. And why he's pursued a "go-it-alone" strategy in Iraq that made America less safe.

FOX on the Spot

Gregg Hymowitz: Debate No. 3 a Kerry hat trick; Bush is done!

Chris Lahiji: Kerry wins; the Dow, Nasdaq, & S&P 500 lose!

Barbara Corcoran: Bush wins; Patriot Act replaces the Constitution.

Jim Rogers: EU resumes arms sales to China; buy EU defense companies.

Charles Payne: No cure for drug stocks; losers no matter who wins!

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Forbes on FOX

In Focus

From Friday Night's Presidential Debate:

(BEGIN VIDEO CLIP)

Audience Member: Would you be willing to look directly into the camera, and using simple and unequivocal language, give the American people your solemn pledge not to sign any legislation that will increase the tax burden on families earning less than $200,000 a year during your first term?

Senator John Kerry: Absolutely, yes. Right into the camera, yes.

President George W. Bush: Of course he’s gonna raise your taxes. You see, he’s proposed $2.2 trillion of new spending.

(END VIDEO CLIP)

David Asman: Can anyone out there say ‘read my lips?’ Will John Kerry keep his promise not to hike middle class tax rates if he's elected?

Jim Michaels, Editorial Vice President: John Kerry also said right into the camera: I'll give you free medical care; I'll spend more money on the military; I'm going to cut the budget deficit in half; and I'm going to cut your own taxes. And we're going to make the rich fat cats pay for it. If you do what John Kerry says and roll back the tax cuts for the upper income people, you will get maybe $40 billion a year. The spending is going to be several times that. He knows in his heart that one way or another, he is going to have to raise taxes on the great middle class because that's where the money is.

David Asman: This is a bottom line issue. There is not going to be enough revenue coming in to pay for all of his spending.

Mike Maiello, Staff Writer: No, Kerry is going to keep his promise. And he will have to because he will have to grow the economy in order to get us out of this hole that Bush has spent us into.

David Asman: How does do it?

Mike Maiello: The consumer is the one that's held up this economy for three years and that's the great middle. He can't afford to raise taxes on them and thus he won't.

David Asman: Chris, there is demand and also supply. The folks out there making stuff have been working pretty hard, too.

Chris Buckley, “Forbes FYI” Editor: I thought it was incredibly bold of Senator Kerry to pledge, on the eve of the election, not to raise the taxes on the middle class. I don't think we've seen that kind of political courage in many, many years.

David Asman: Are you serious? It's hard to tell, Chris. That's why I’m asking.

Chris Buckley: No, I'm not serious. It made me yearn for Walter Mondale in 1984, frankly, when, during one of his debates with Reagan, he said ‘I'm going to raise your taxes. He is not going to tell you that, but I will.’

David Asman: He won't tell you that because this would lose the election if he did.

Chris Buckley: It lost Mondale the election. But I had to say I had a sneaking scintilla of admiration for someone who would actually say that. Kerry sounded like Molly Bloom in the last scene of "Ulysses." "Yes, yes," he said, “yes, yes.” Maybe I've been watching this campaign for too long. But I’ve ceased believing a single thing either of them says. Sorry. I've had enough.

Elizabeth MacDonald, Senior Editor: I have to agree with Chris. You get to the point where ‘come on, knock it off already.’ But I think that Kerry is going to try, but he can't. Look, David Stockman, Reagan's budget director, once said that if the Securities and Exchange Commission had jurisdiction over the administration and the congress when it comes to the deficit, they would all be in jail. This president has never vetoed a spending bill, the worst record since James Garfield, who was shot the first year in office. And he is finding bold new ways to be compassionate with taxpayers' money. The deficit is a real problem. I just don't see how we cannot raise taxes.

David Asman: You think Kerry would have to in the end. Chana, what do you think?

Chana Schoenberger, Staff Writer: He will definitely raise taxes. Who are you kidding? Did you hear that Hillary Clinton spending plan he came up with for health care? It’s just hilarious. It's completely socialized.

Elizabeth MacDonald: It's not completely socialized. That's the most ridiculous thing I've ever heard. It's not completely socialized.

David Asman: It's all going to cost a lot of money. Mike, you are the only one hanging on this. You still think he can spend all the money he wants to spend and keep taxes down?

Mike Maiello: He can because his spending is smart and stimulative. That's point one. And point two, is that raising the taxes on people making over $200,000 a year is not the only way he is filling this hole. He is also closing loopholes that are allowing corporations to keep profits overseas and not pay taxes on them.

David Asman: And it’s not just a tax rate he is talking about. Go ahead.

Jim Michaels: These loopholes, every time they pass a spending bill, they say we're going to get $50 billion by closing loopholes. These so-called loopholes were enacted by congress. And others say ‘we will close the loopholes.’ That's all B.S. There is always a reason for a loophole. And there is always lawyers who will get around it.

David Asman: Hold on a second. We got somebody inside the beltway. Chris Buckley, you're there. You've seen a lot of the lobbyists in Washington and the loopholes. Are we ever going to get rid of loopholes in Washington?

Chris Buckley: No, of course not. Jamie Whitten, who was for many years chairman of the Appropriations Committee, once said something very memorable. He said you have to understand that every piece of legislation, every law that was ever signed was designed to give someone else a break at the expense of someone else. There was a fascinating moment during the democratic convention when Senator Daschle got up, and said — and I wrote this down because I was so stunned by it. He said ‘Americans aren't looking for a special deal from Washington.’ And I heard this giant snorting sound. And it was the sound of Chardonnay being expelled from the nostrils of 15,000 K Street lobbyists. And it was incandescent. Some of the most amazing things are said during a campaign. It's all about loopholes. They should rename the beltway to the loophole.

The Flipside

From Friday Night's Presidential Debate:

(BEGIN VIDEO CLIP)

Charles Gibson: Would you be favoring capping awards on pain and suffering? Would you limit attorney's fees? To follow up on this for a minute.

Senator John Kerry: Yeah, I think we should look at the punitive and we should have some limitation.

President George W. Bush: You’re now for capping punitive damages? That’s odd. You should have showed up on the floor of the senate and voted for it then. Medical liability issues are a problem. A significant problem. He has been in the United States senate for 20 years, and he hasn't addressed it. We passed it out of the House of Representatives. Guess where it's stuck? It's stuck in the senate, because the trial lawyers won't act on it. And he has put a trial lawyer on the ticket.

(END VIDEO CLIP)

David Asman: Trial lawyers. You want to slam down the gavel on trial lawyers and frivolous lawsuits? Then vote for John Kerry and former trial lawyer John Edwards. That's what John Kerry said last night. John Edwards made a fortune as a trial lawyer and law firms as we saw before are giving nearly three times the money to Kerry and Edwards than they are to Bush and Cheney. Is it a tough sell to believe that Kerry and Edwards would be tough on lawyers?

Luisa Kroll, Associate Editor: I don't think it's a tough sell at all. John Edwards is a smart, very ambitious guy. And he knows that his Achilles' heel is the lawsuits. And he has every motivation to take this on and fix it. And with his experience as a lawyer, I think he will do it. And he has hinted at that in the Vice Presidential debate and Kerry brought it up as well. I don't think they have the plan worked out, but I think these guys have every political motivation to really fix this system if they are elected.

David Asman: I'm not saying anything about Edwards and Kerry, but sometimes they say it takes a thief to catch a thief. If you want to get the trial lawyers you need a trial lawyer to do it.

Jim Michaels, Editorial Vice President: That is assuming the thief is not in the pay of other thieves. This guy is getting all his money from fellow trial lawyers. Luisa, you didn't listen to Kerry last night. Kerry immediately starts to play down the thing. Oh, it's only 1 percent, he says. He knows it's 3 percent or 4 percent.

David Asman: He said the cost of health care; only 1 percent of that cost is affected by trial lawyers.

Jim Michaels: It's four or five times that amount. He's not counting the unnecessary tests that are made. He's not including the tremendous burden put on doctors and hospitals to guard against these lawyers.

David Asman: So the cost of these things, you don't see it specifically but incrementally it does add to health care cost tremendously?

Mike Maiello, Staff Writer: I wouldn't say that. And I am confident that a Kerry-Edwards administration would be far less cozy with trial lawyers than Bush and Cheney have been with Halliburton (HAL).

David Asman: Hold on, hold on. We will talk about Halliburton in just a second.

Mike Maiello: Edwards, during the primary, laid out a ‘three strikes and you're out’ plan for bringing frivolous lawsuits. You bring three frivolous lawsuits you can't bring another.

David Asman: Let's go to the beltway. Chris, who do Americans hate more, Halliburton or trial lawyers?

Chris Buckley, “Forbes FYI” Editor: Oh, that's easy. What is brown and black and looks good on a lawyer? A doberman? Listen, I find this really a wonderfully amusing proposition, that the Trial Lawyers Association of America is quaking in its Guccis at the prospect of being regulated by John Edwards. I think that's lovely. But I like very much Jim's slogan ‘it takes a thief’ as a Kerry/Edwards bumper sticker.

Chana Schoenberger, Staff Writer: The trial lawyers are solidly behind the Kerry ticket. And I was talking to a trial lawyer last evening who was talking about how much he supported these guys. The fact is that medical malpractice is one example of tort reform that is a huge problem. And I can't imagine Edwards would do anything about it. It means that OB/GYN's are paying upwards of $100,000 a year per doctor in insurance premiums. And that's before they even touch a baby.

David Asman: So Luisa, Kerry's figures were off is what the consensus is here.

Luisa Kroll: I think we're missing the bigger picture. The point is Edwards, if he becomes VP, will want to become president. And if he wants to become president, he will have to deal with it.

David Asman: You aren't saying that the costs are low. You are saying they do cost a lot but Edwards is the man to do it. And you agree, Mike.

Mike Maiello, Staff Writer: I do. He has a lot of ambitions. His big problems right now are his inexperience and his past career. If he can serve eight years as vice president and do something about it he can become president.

Makers & Breakers

• Schlumberger (SLB)

Patricia Powell, President of the Powell Financial Group: MAKER

If President Bush is re-elected buy Schlumberger (SLB). This is an old warhorse of an oil service stock. And it has been around for about 75 years. You’ve got to like fossil fuel. You’ve got to think oil prices are going to stay high. And you’ve got to think we have to be looking for more of it. If that's true, then this is the stock to buy.

David Asman: You think it can go to $80? (Friday’s close: $69.20)?

Patricia Powell: Correct.

Jim Michaels, Editorial Vice President: BREAKER

You call this a Bush stock. I think all stocks are Bush stocks because if Bush wins, the market will go higher.

David Asman: Gee, who are you for, Jim?

Jim Michaels: Well, I might be short the market. And then I would be for Kerry.

David Asman: Are you a maker or breaker on Schlumberger?

Jim Michaels: I think it’s a very good company and in the right business but not a cheap stock. No great bargain. I don't see it at this time.

Pete Newcomb, Senior Editor: MAKER

I kind of like this stock. If Bush wins we are really going to try to extract more oil out of the ground, whether it’s in Alaska or Kazakhstan. These guys make the equipment that does it. I like it.

• Costco Wholesale (COST)

Patricia Powell: MAKER

If Kerry wins I'm going with Costco.

David Asman: The warehouse.

Patricia Powell: The warehouse, the club plan, 400+ stores.

David Asman: And you actually shop there as well as wanting the stock?

Patricia Powell: Absolutely. And you might be there too; as will all the other people losing their tax cuts if Kerry gets elected.

David Asman: (Friday’s close: $44.69), Patricia’s target price is $53.

Jim Michaels: BREAKER

As far as that being a Kerry stock, you're already shopping there. And so are a lot of other very prosperous people who count their pennies. The story is out. Everybody knows it's a good company. And low yield. And it's just not a compelling buy.

Pete Newcomb: MAKER

I'm cautiously optimistic. I'll use the Warren Buffett approach, ‘buy what you know and like.’ And this is one of those companies that I love. They are a huge wine seller. They’re now selling gas. Their top line will grow.

David Asman: And you have a Costco card.

Patricia Powell: Absolutely. Double-digit growth rate and every prospect of continuing no matter who gets elected.

The Informer

From Friday Night's Presidential Debate:

(BEGIN VIDEO CLIP)

President George W. Bush: The fundamental question of this campaign is who is going to keep the economy growing so people can work? That's the fundamental question.

(END VIDEO CLIP)

David Asman: And another question, who is the biggest job creator in America? Despite what they said last night, presidents can't create jobs. So who does? Elizabeth, do politicians create jobs?

Elizabeth MacDonald, Senior Editor: No, they don't create jobs.

David Asman: Who does then?

Elizabeth MacDonald: Businesses do. Businesses that aren't shackled by rising health care costs and regulatory costs. Look, the real problem with businesses, in terms of creating jobs, is high health care costs. That's why you see outsourcing growing at record rates. And if Bush's tax cuts really were meant to create jobs, then why didn't we get the 5.5 million jobs he promised in his first run in office? So we’ve had a net loss of something like 800,000 jobs.

David Asman: Most of those job losses were right after 9-11 and after the dot-com bust.

Mike Maiello, Staff Writer: Policy matters. If it didn't then businesses wouldn't be spending millions on lobbyists to demand $65 billion in subsidies every year and trade protections. All of that, they do not exist in a market vacuum at all. If they did they wouldn't survive a week.

David Asman: Politicians do have an effect on job figures.

Chris Buckley, “Forbes FYI” Editor: I always got a kick out of it when Clinton used to claim that we have - ‘Al Gore and I have created 22 million jobs.’

David Asman: I think it was 23 million, Chris. But go ahead.

Chris Buckley: I suspect that Wal-Mart (WMT) and Starbucks (SBUX) had a little more to do with that. I think the only jobs that politicians create are the staff jobs on these commissions we have to set up every couple of months to figure out who screwed things up.

David Asman: So politicians are a good employer for the government but not for the private sector.

Jim Michaels: Both President Bush and Kerry are blowing smoke when they say they create jobs. They don't. It’s factors beyond their control, things like outsourcing. But what government can do is create conditions where business can make money, where taxes are not too high, where frivolous litigation is taken off their back.

David Asman: And you say that too much regulations, can stem job growth. So who is for lowering regulations? Kerry or Bush?

Elizabeth MacDonald: It's clear the republicans have always been for less regulation. But Chris, in the first segment, talked about lobbyists expelling Chardonnay out their noses. I'm going to spit my melba toast every time I hear the Bush campaign saying that Kerry's tax increases would hurt small businesses. Those numbers that they are using are inflated. It includes people who get yachting income. It’s probably half that.

David Asman: Chris, you know about yachting. Forbes F.Y.I. is all about this stuff that rich people do. Good presidents may not create jobs but can bad presidents destroy jobs?

Chris Buckley: Sure. Bad presidents can destroy a lot. This is why we have to be careful on November 2.

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Cashin' In

StockSmarts: Debate Rally?

Round two of the Presidential debates went down last Friday night, with President Bush and John Kerry trading body blows. Could their jabs give the market a jolt? The day after the first debate, the Dow went up over 112 points.

Will we see another post-debate rally?

Dave Nelson of DC Nelson Asset Management says the markets will be pretty strong on Monday morning. He felt that President Bush was very strong in the debate, and the best thing about that is the fact that the world sees the political process in America works, and that will only help to strengthen our position. Kerry had a “Robin Hood” position in the debate: taking from the rich and giving to the poor to help subsidize programs. People are looking for a meteoric rise in the economy, and we just aren’t going to get that out of the recession we experienced. It is going to be a more tempered rise, and that could really be a good thing. But he does think that the price of oil is really putting a drag on the economy and the market.

Jonathan Hoenig of Capitalistpig Asset Management says the first thing he thought of when watching the debate was that he needed to sell all of his U.S. stocks and buy gold (a comment that drew a big, collective laugh from the panel). He felt the debate was an “absolute disaster” and the whole evening was a “nightmare”. The centerpiece of John Kerry’s plan, in essence, is the progressive tax system (which was echoed in the “Communist Manifesto” he said). And while John Kerry wants our pocketbooks, President Bush “wants our minds”, with his stances on social issues. In terms of the market, rising oil prices (in fact, rising commodity prices across the board) are going to be the norm for a while. He thinks $50 a barrel for crude could be considered cheap in the not too near future.

Democratic strategist Bob Beckel says that John Kerry did win the debate, albeit slightly, and to those who said that President Bush’s performance was much better than his effort in the first debate, he felt that the President really had no where to go but up. Bob thinks that the economy will start to resonate more with the voters because Kerry has gotten over the hump of weather or not he can be commander-in-chief. In the end, George Bush took a surplus and turned it into a deficit, and that in turn is going to raise interest rates. Kerry will cut the deficit.

Dagen McDowell of FOX Business News says one thing that Wall St. can look for is that even if John Kerry wins the election, the House and Senate will still remain in the hands of the Republicans, so Kerry would not be able to get any kind of tax increase through Congress. She thinks the debate was more of a draw, and that hasn’t cleared up any of the uncertainty in the market. The economy did need some stimulus after the dot-com bubble back in 2000, and few would argue that the Bush tax cuts didn’t provide some stimulus to the economy. But the problem that a lot of conservatives have with President Bush is that he doesn’t veto any spending bills. If he wants to be a real conservative, he should lower taxes and lower spending.

Jonas Max Ferris of MAXFunds.com says that we’ve had a progressive tax system in this country for over 80 years, and it hasn’t really hurt us as a country. He thinks the takeaway from the debate was pretty depressing, as he wonders if either candidate is going to be able to solve any of the economic problems we face in America.
 
Adam Lashinsky of Fortune Magazine thinks we need to take a step back for a moment. The market for weeks has been assuming a victory for President Bush. But after the first debate, which Kerry won (by most accounts), the market rallied. So while the election is on the mind of investors, it is way down the list in terms of importance. If we have any take away, it’s that Wall St. cares about a runaway deficit. Investors as a group are neither Democrat nor Republican, and what we heard from the debate is that John Kerry is more concerned about the deficit.

The Best Defense?

Both President Bush and John Kerry made the point that defending America is their top priority. But can either man do it right – or will their plans just bankrupt the country?

Bob says that realistically, we can’t check every single piece of cargo that comes into America (something that John Kerry says we aren’t doing but should be doing as part of homeland security). If that happened, then costs for shipping and handling would certainly go up and that would be passed to consumers. But he says that President Bush didn’t even want to create a Department of Homeland Security, so the fact of the matter is that Kerry would keep us safer, and he could pay for it by ending the war in Iraq much sooner.

Jonas agrees that there is no way we can have “total security” – something the politicians will never tell the voting public. We are going to have to be smart about protecting ourselves, because we can’t spend endlessly on security. If we did, the economy would basically grind to a halt, and then the terrorists will have (in effect) won the war.

Dave says you could argue for quadrupling the budget for homeland security, and it would make sense. But the reality is that there is only a certain amount you can spend. But Dave feels safer since the 9/11 attacks.

Dagen says that we have come along way since 9/11. We do have better inspections for the airlines and for ships. And as long as we are smart about it, we don’t have to spend a lot more money.

Jonathan thinks that the point isn’t how many bags we can inspect before arriving into the country. The point is having a self-interesting, aggressive and moral foreign policy. And neither candidate can do that. Bush has lead a very compassionate war on terrorism, and that has made us a “paper tiger in the Middle East.

Adam says we can’t afford the kind of defense that Kerry is promising. And Adam feels that the President missed an opportunity to illustrate that the government has done quite well since 9/11. The President should have done a better job explaining that our country is safer since 9/11 and that his plans have worked to a certain extent.

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MoneyMail

Jonathan, Bob, Dagen and Jonas answered some of your comments and questions dealing with the debate.

Question: “I am a CPA and I’ve seen what a high tax rate on a businessman does – it makes many decide not to invest in the market. That will happen with John Kerry as President.”

Jonathan thinks that Kerry’s progressive tax system, which will raise taxes on those making over $200,000 a year, will totally keep money out of the stock market. It is also immoral to place a higher tax burden on the wealthy just because they can afford to pay. These people have worked hard to earn their money, and the government shouldn’t take more of it because it is out there for the taking. One thing Dagen says is that investors can probably look forward to a Republican Congress, which would certainly veto any tax increases from Kerry. Morals aside, Jonas says there will be less money to go into stocks with a tax increase on the wealthy. But the biggest problem with the market isn’t a demand for stocks, but corporate earnings. Bob says the middle class has been driving the economy and stock market, not the wealthy.

Question: “No matter what happens to the market because of the debates, we can’t sustain a rally with such high oil prices. How high will oil go?”

Jonas thinks that the market can’t rally is oil continues to go significantly higher. But he thinks oil prices will come back to $35 a barrel, because oil has a self-correcting mechanism, in that economies can crash if the price of oil gets too high. The demand will just go away if it costs too much. Dagen says that neither candidate has come out with a real strong message on what to do with energy going forward, and how they would deal with higher oil prices.

Question: “Does the monthly jobs report take into account small businesses? It would seem that under President Bush’s policies, we would have more jobs.”

Dagen says the big criticism of the payroll survey (the one that stated 96,000 jobs were created in September) is that it only monitors around 400,000 large corporations, and doesn’t take into account smaller businesses and those who are self-employed. The household survey (which is used to calculate unemployment) takes these small businesses into account. If you look at that number, it paints a much better picture for the Bush economic plan.