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 Danielle Hughes, president and founder of Divine Capital Markets.
Trading Pit: Wall Street’s Nuisance?
Reducing terrorism to a "nuisance". That's how John Kerry sees his role as commander-in-chief. No surprise this point of view drew a lot of fire from President Bush and has been a major issue in the run for the White House.
Is John Kerry a nuisance to Wall Street?
Danielle Hughes: Wall Street isn’t worried about Kerry being soft on terror. What they’re worried about is that he will take away the tax cut for the top 3 percent of “fat cats”. Investors aren’t concerned about Kerry winning the election because, in my opinion, Kerry won the first debate, and the Dow was up over 100 points the next day.
Tobin Smith: Kerry is a nuisance to Wall Street. He’s ashamed of being rich. He’s ashamed of making money. Being embarrassed by wealth and success is the antithesis of Wall Street. Kerry’s way to build America is to take money from the most wealthy and successful people and give it to people that are less successful and wealthy. And the real reason for the 100-point gain the day after the first debates was that oil prices dropped $4/barrel.
Gary B. Smith: The Dow has been as undecided as the Presidential race. Right now it’s in the middle of a downtrend channel, which isn’t good or bad and means it could go up or down. I thought we might start moving up after the last debate, but now we’ll have to wait until after the election. As for Wall Street and Kerry — he has liberal background, but the more he leans towards the middle, the more the market embraces him.
Pat Dorsey: They’re both a nuisance! Neither has said anything about lowering the deficit or reforming Medicare or Social Security. The latter two will suck the life out of the country for the next decade or two. Kerry’s a little less of a nuisance because at least he admits that if you’re going to spend money, you have to raise it from somewhere.
Scott Bleier: Kerry’s not ashamed to be wealthy; he’s pandering to the middle class. This is why he’s a nuisance to Wall Street. If he panders to any, it should be a little bit to the rich, because they’re the largest wealth creators in the country. He’s not pro market and that is the ultimate nuisance to the market. Kerry wants to redistribute wealth from the rich to the poor.
Scott, Tobin and Pat picked the stocks that are ready for a post-election rally.
Pat: Emulex (ELX). This is a technology company that designs and develops products for computer storage networks. The stock is an incredibly volatile one, but is also very profitable. If the market rallies, Emulex could go up to $15. However, if the market tanks, it will head down in a hurry.
Scott: No matter what happens, this is a stock to hold on to for the long term.
Tobin: I’m passing on any tech stock Pat picks!
(Emulex closed on Friday at $10.44.)
Tobin: UnitedHealth Group (UNH). This stock will go up whoever wins the election. It will do well under Kerry’s proposed national health plan because it has the largest plan available. It will do well if Bush wins too because healthcare stocks as a whole have been beaten down in recent months due to the concerns of Kerry’s national health plan.
Pat: This is a high quality company in an ugly industry, but it’s too expensive.
Scott: UnitedHealth is a great company, but it is priced to perfection. If you do buy it, put a stop/loss on it to minimize the risk.
(UnitedHealth Group closed on Friday at $73.35.)
Scott: Applied Micro Circuits (AMCC). This company designs and develops microchips for communications and storage technology. It was one of the top stocks of the bubble and now has very little downside risk. The stock is fairly valued and relatively cheap. I expect it to go to $4.50.
Pat: Applied Micro is a decent company, and if the market moves up, it will go up too. But if the market goes down, it will too.
Tobin: Again, I’m not “endorsing” any tech stock that Pat likes!
(Applied Micro Circuits closed on Friday at $3.11.)
Danielle’s initiation rite: Face the Chartman!
First, Danielle picked Verizon (VZ). She likes that the company’s leadership runs it as a growth company. It has a lot of cash, pays a large dividend and is poised for more growth. Gary B. agreed that this is a terrific pick. He said that it recently broke a downtrend and now has upward momentum. He thinks it’s a definite keeper. (Verizon closed on Friday at $40.87.)
Next, Danielle chose Tiffany & Co. (TIF). She likes that it is a classic, well-established luxury brand, has a great business model and is highly profitable. Tiffany’s revenues have grown 16 percent since last year and the net worth of the company has doubled since 2000. Gary said Tiffany has been drifting down since last year and thinks it’s going to keep going lower. (Tiffany & Co. closed on Friday at $28.77.)
Tobin's prediction: Oil prices drop $10 a barrel; buy the Nasdaq 100 (QQQ)
Danielle's prediction: Make no objection to buying Business Objects (BOBJ); up 25 percent in 6 months
Pat's prediction: Pepsi's (PEP) got the "Edge"; stock gains 20 percent in a year
Scott's prediction: Kerry's health plan is nothing more than smoke & mirrors; buy Cigna (CI)
Cavuto on Business
Neil Cavuto was joined by Jim Rogers, president of JimRogers.com; Gregg Hymowitz, founder of Entrust Capital; Charles Payne, CEO of Wall Street Strategies; Adam Lashinsky, Senior Writer at Fortune Magazine; Barbara Corcoran, founder of the Corcoran Group; Doug Shoen, Democratic Strategist; Wendell Perkins, Chief Investment Officer at the Johnson Family of Funds.
Neil Cavuto: Oil's up… stocks are down. Who's to blame? John Kerry playing a high-stakes blame game in his bid for the White House. Now he says President Bush is the reason oil prices are so high. Jim, is John Kerry right to blame the big oil companies?
Jim Rogers: I would be embarrassed if I said something like that. The reason oil prices are high, as I've explained before, is because there's no supply. There's been no great oil discovery in over 35 years. England will be importing oil soon. The North Sea is in decline. Alaska and Mexico are in decline. Unless someone finds a lot of oil very quickly prices are going to go a lot higher.
Gregg Hymowitz: I think Jim is wrong, and I don't know where he gets his information. You pick up the paper everyday and read about more and more drilling being done. There's plenty of oil out there. And the other complaint people have is, well it's China. But look at commodity prices lately, zinc and copper. Jim knows commodity prices. Everything's been plunging. Why? Because China's slow.
Neil Cavuto: China has slowed to 8 percent growth. That's still pretty good.
Gregg Hymowitz: The one thing that hasn't slowed is oil prices. Why? One simple reason, the Middle East is an absolute mess.
Neil Cavuto: So this goes back to it being the president's fault.
Gregg Hymowitz: Yes!
Barbara Corcoran: You can pin a bit of it on the president because he's our leader. But I think it's all of our faults. We fill our cars. We heat our homes. We have an energy dealer in the Middle East, and we all bought from him. We as Americans can't find a new source.
Neil Cavuto: So is this the president's fault or not?
Barbara Corcoran: It's not, but why can't we discover a new source? We sent a guy to the moon or to outer space.
Charles Payne: We do have new sources. One of the reasons it's not Bush's fault is his hands are tied. We're not allowed to go to some of these new sources. There's a lot of oil out there, and we need advance technology to get to it. The reality is there's no correlation to the war in Iraq, the Middle East and the price of oil. The reality is right now the oil market is like the Internet bubble. I hope the bubble bursts soon for all Americans, but it's not Bush's fault.
Adam Lashinsky: Neil, for better or worse, neither Charles or Jim or anyone else at this table is running for president. You have to acknowledge that some of the points that John Kerry was making resonate. So let's try and be honest about this, and strip some of the politics away. As Gregg said, in the Middle East we're a mess right now. There is no question that the United States going into a pre-emptive war hurts the situation in the Middle East. Now, the president had nothing to do with being attacked on September 11th, nothing to do with hurricanes in the Gulf of Mexico, and nothing to do with China’s growth, which has had a very real impact on current oil prices.
Jim Rogers: Saudi Arabia is pumping as fast as it can. So tell me where the oil is coming from to drive down the price of oil. You say there's a lot of oil. Where is it?
Gregg Hymowitz: Jim, you're an investor. You understand risk premium. I agree with Charles, there is a bubble. The question is why is it at this price? It's at this price because there is a big terrorism premium in the air.
Charles Payne: You're right. There is a terrorism premium but if Bush wasn't president, it would be double whatever your estimate is.
Gregg Hymowitz: And why is that?
Charles Payne: Because of the actions that we've taken. There have been no terrorist attacks. We've been really tough and the rest of the world knows that. I don't understand why you think the Middle East is the problem.
Gregg Hymowitz: And I don't understand where you get the sense of calm from. It's pretty scary out there.
Jim Rogers: If you want to say there's a huge terrorist premium, why are the inventories so low? The inventories are at a multi-year low.
Neil Cavuto: We simply are not building any refineries and the fact of the matter is with a global economy picking up steam, maybe not to your liking, and China slowing down growth, although 8 percent is still pretty heavy, it's a supply and demand issue.
Gregg Hymowitz: Economies throughout the world have been relatively anemic for the last three years. But on the other hand, oil prices are now up roughly 40 percent.
Neil Cavuto: You're attaching all of that to the Middle East? You're saying nothing about the improvement in the U.S. economy. You're saying nothing about the improvement in China and India, even the pick up in Europe.
Gregg Hymowitz: I'm saying the economies throughout the world have been relatively anemic. And Jim is telling me that the problem with oil is that demand is so strong that there's no supply.
Jim Rogers: Demand is at an all time high. You're telling me that's because of manipulation?
Charles Payne: If Bush is responsible for at least one problem it's the strategic petroleum reserve. I really think we should stop buying for it right now.
Jim Rogers: That's 1 percent of demand for one day.
Charles Payne: That might prick this bubble though.
More for Your Money
Neil Cavuto: Drug stocks are looking pretty sickly these days, but if you buy now will you get more for your money? Wendell, you're bullish on drug stocks right now. Why?
Wendell Perkins: Investors should back up the truck and start buying. This is a very unique opportunity to buy companies that have valuations on stock that we haven't seen in years. I would buy a number of them. One that we happen to like because the product line is so diverse is Wyeth (WYE), which has a combination of a great value along with a great pipeline. We own it and think it's a terrific long-term investment.
Neil Cavuto: But is this theme just based on valuations? They've gotten beaten down and now's the time to pounce?
Wendell Perkins: Absolutely. But these are companies that have to grow. The pharmaceutical industry is a critical industry in this country.
Jim Rogers: But you can say everything has to grow. Airlines have to grow. Railroads have to grow.
Adam Lashinsky: Jim, people don't need more airlines. They don't need more railroads. They do need more pharmaceuticals.
Jim Rogers: How are we going to move the goods if we don't have any transportation?
Adam Lashinsky: It doesn't take a lot to move a bunch of pills.
Wendell Perkins: The largest crisis facing this country today is healthcare. Healthcare costs are out of control.
Neil Cavuto: Charles, you agree with that?
Charles Payne: Absolutely not. Drugs can become a commodity. If we listen closely, Bush actually threw the drug companies under a bus when he talked about the re-importation of drugs from Canada. There's a fundamental problem with these drug companies. They all work for the blockbuster drugs. And all of a sudden the generics came and started eating their lunch. They don't know what kind of model to choose.
Neil Cavuto: So you'd stay away from them?
Charles Payne: Definitely. Relatively speaking, sure, on a historical basis you can go in and trade them every now and then. But I would stay away.
Gregg Hymowitz: I'm surprised Charles doesn't like the re-importation of drugs. For such a capitalist re-importation should, in the long-term, be a benefit for the drug companies. Look, I think drug companies are interesting here, more of a contrarian bet, a valuation bet. One name we like but don't own is Merck (MRK).
Neil Cavuto: Even with all their troubles with Vioxx? You're looking at potentially billions in litigation.
Gregg Hymowitz: We don't own the stock. If I had to start getting invested in these stocks, if I had to start nibbling, that's one name I would buy.
Adam Lashinsky: I agree with Wendell's thesis, which is you have to be involved in pharmaceuticals. You don't have to be involved in big pharmaceuticals though. I'll give you a contrarian play that is not a value play like Genentech (DNA). No matter how much the stock goes up, it keeps going up.
Jim Rogers: We do have a healthcare crisis, but higher drug prices aren't going to make it go away. It's going to make it worse.
Wendell Perkins: I disagree. Pharmaceuticals are the cheapest way for all of us to be treated for whatever ails us. It is not spending time in the hospital. It is through therapy and that is through drugs.
Charles Payne: We all need to go to the supermarket, but grocery store stocks aren't great stocks to invest in. And if you're talking about a demographic play, how about body part replacements. I think medical devices are a much better play.
Head to Head
Neil Cavuto: Historic elections in Afghanistan, a landslide victory for Australia's leader, and French tourism dollars way down. All proof we are winning the war on terror? Time to go head to head. I see clear results from the war and constructive steps that we don't see your side talk about.
Doug Schoen: Those are small steps. We're losing the war in Iraq.
Neil Cavuto: Why do you say we're losing the war in Iraq?
Doug Schoen: Because there are terrorist acts everyday. There's instability in the country and everyone including our own administration recognizes that.
Neil Cavuto: But are you ignoring all of the progress? Are you ignoring the 700 businesses that have been established? Are you ignoring utilities in the infrastructure?
Doug Schoen: I'm not ignoring the beheadings and the instability. The fact that most of the country hasn't been pacified.
Neil Cavuto: Wait a minute. Is everyone getting beheaded? Is everyone getting killed?
Doug Schoen: Of course they're not.
Neil Cavuto: So here's what I'm saying. You're looking at all the negative. I will grant you there are some horrific things going on. But what would you have been saying during the reconstruction of Germany after the war and all of the horrific things that were going on then? That it was not worth the time and trouble?
Doug Schoen: I would have said it was a wonderful thing to do but we are less secure. We're less secure with Iran, which is fomenting problems in Iraq. More importantly, we're losing the hearts and minds of the world. Around the world, we're seen as the enemy. We're seen as more of a threat than Usama bin Laden.
Neil Cavuto: So go to Australia where there was an anti-war movement going on there. And yet the incumbent party that supported sending troops there won in a landslide. And all the fear mongering that only a small percentage of voters would turn out for the Afghan elections, and they had 70 percent turnout. We'd envy that in our country.
Doug Schoen: The Australian election really wasn't about Iraq. And in Afghanistan, a large part of the country is still controlled by warlords.
Neil Cavuto: Would you have said the same when there were elections in El Salvador and people were afraid to show up to vote? I think you'd say today that El Salvador is doing pretty well as a democratic republic.
Doug Schoen: El Salvador is one of the few countries that we know is free from terror, but sadly we're more insecure.
Neil Cavuto: But my point is that back then people were afraid too about what might ensue once voting was allowed, and things are looking good today. I'm telling you, be patient.
Doug Schoen: It isn't looking better in the northwest province.
FOX on the Spots
Adam Lashinsky: Usama rumor lifts Dow 500 pts in Oct; take profits!
Charles Payne: Market tanks before election; huge rally after!
Barbara Corcoran: Housing boom stays even if Bush goes!
Gregg Hymowitz: President Kerry orders Spitzer probe of "Iraq-gate."
Jim Rogers: Insurance scandal grows. Avoid Insurance stocks!
Neil Cavuto: The consumer... signs she's spending a lot more than earlier thought which could bode well for President Bush. The independent voter seems to be speaking through her spending. Good news for the incumbent!
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: New battles in Iraq. Could a new offensive over there kill off a post-election market rally right here? Now, many say stocks could rebound big time once we have a clear idea of which one of these guys will win the election. But what happens if the president launches a big offensive in Iraq just after the election? Could that stall a post-election rally?
Dennis Kneale, Managing Editor: I think a lot of my fainthearted colleagues will say that it can. But I'll say not only will it not stall a rally, it could set off a rally. I think Wall Street hates uncertainty. And we watch these bastards over there killing innocents, beheading them and we've done nothing and we know we have the firepower to go in there and win it and crack down and punish them, but we have held back. You send them in there to do that and there’s nothing like the loss of impotence to make Wall Street traders feel like betting on the economy again.
David Asman: Time to hit them hard?
Victoria Murphy, Staff Writer: How can you say we've done nothing? We've been doing a lot. I think the Bush administration would be rather insulted by you calling them impotent. Take Fallujah, for example, which would probably be the focus after the election. We don't know if Fallujah is the tipping point toward victory or if it's just a footnote in ongoing protracted battle in Iraq. And look at what is going on. We're using funds that were set aside to rebuild Iraq, to bring people water and electricity. And now those funds are going toward law and security.
David Asman: You have a son who went to Fallujah when all this was happening back in the spring. What do you think?
Jim Michaels, Editorial Vice President: Well, I think Victoria is missing the point. The point is not a single battle. We know our guys can clean up any of those towns. The issue is when they do go in with the Iraqi army and National Guard, will the Iraqis show that they're now trained enough and brave enough to fight for civilization on their own? If we take Fallujah, and the Iraqi army does a good job, then I think that's going to send a signal to me and every other investor that we're winning.
David Asman: Elizabeth, it's not just the Iraqi army that is striking these. Some of the Fallujah residents themselves are beginning to lynch these guys. Zarqawi and some of his aides. We don't have Zarqawi yet, but they're starting to kill his supporters, and they don't like him.
Elizabeth MacDonald, Senior Editor: That can only be a positive, to get rid of these murderers and it’s a great thing if the towns have an uprising against these terrorists. I do think there will be a huge election relief rally, once the election is settled. But I don't think that there will be any life to this rally beyond the Iraqi elections, because when the Iraqi election takes place there will be more credibility and moral authority to launch another offensive. The market will be rocky for a bit. I think the market will take off six months into the first of the year.
Quentin Hardy, Silicon Valley Bureau Chief: I don't think it's about any single battle. It's about the election itself. And I don't mean the election here but the election in Iraq. I'm with Liz. Iraq interim Prime Minister Iyad Allawi may be a brave guy but he is also a CIA asset that we installed. When the Iraqis elect their own people, they will feel stronger. They will move forward.
David Asman: What do you mean, he is an CIA agent?
Quentin Hardy: He was an asset to the CIA for several years.
Steve Forbes, Editor-In-Chief: He was sympathetic to us but to say that he is a creation of the CIA is preposterous. He couldn't have done as well as he did if he was simply a puppet.
Quentin Hardy: He was installed by us, though. And the Iraqis would like to vote for their own leader. That's what I'm saying.
Steve Forbes: What do you do in the interim? Anyone you appoint, people like you will call a puppet.
Elizabeth MacDonald: Talking to the traders down in the market, they were frightened out of their minds that this war was a clash of civilization. Right now they are seeing it is a clash with these terrorists, religious cultists and these nuts. Isolating these people in places like Fallujah can only be a good thing for the market.
Steve Forbes: The market likes firmness and sureness and that's what will happen after the election. But there will be something else coming along early next year after the Iraqi elections. And that will be the big uncertainty, what do we do about Iran?
David Asman: Well, we will deal with Iran in a second. But you wanted to make another point on the last issue.
Victoria Murphy: The market wants to see that the Iraqi forces are capable of taking over for our forces and our coalition forces. And even the Pentagon has said that we're not going to see that just given the numbers of guys we're training right now until mid 2005, potentially early 2006. And we have to think of this in the longer term.
Jim Michaels: In Ramadi, they used Iraqi troops. They went in and cleaned out the mosques. They are getting them ready.
Victoria Murphy: That's one round.
Jim Michaels: The question is ‘can they demonstrate to the world that they're capable of shouldering the fight themselves?’
Victoria Murphy: I agree.
Jim Michaels: That's the key issue.
Elizabeth MacDonald: That's the situation. Right now what we are dealing with is a country that feels like it's occupied by the Americans. Once the Iraqi election takes place, they will then have the moral authority to clean out these terrorists with their own forces with the help of the Americans.
David Asman: Quentin, what about Steve's point that after this we still have to deal with Iran? They are the ones with the nukes and that's what really scares Wall Street.
Quentin Hardy: Absolutely. But the first thing we have to do is get the pressure out of Iraq. Not look like occupiers. What I was saying is I think the insurgents already feel like the election is going to be a problem for them. That's why they were setting off bombs in the green zone today; to try and keep out the UN and the election monitors. As soon as it is clear that we are not occupiers, the rest of the area will settle down.
Jim Michaels: You are calling them insurgents. The French prime minister calls them "La Resistance." Why don’t you go all the way and call them "The Resistance?"
Quentin Hardy: Why don’t you listen to what I'm saying?
Jim Michaels: You are calling them insurgents. What are they "insurging" against?
Quentin Hardy: They are not an army, and they are fighting an army. That's what you call them.
Dennis Kneale: Quentin, I wish the U.S. troops would start acting more like an occupying force. The fact is it's a conquered country. And there is lawlessness throughout the land. And it's time to crack down. And I think the market will like that.
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: Wealthy Americans should vote for John Kerry. Everyone, rich, poor and all of us in between would have a fatter bottom line if Kerry were president. So Senator Kerry is vowing, if elected, that he would raise taxes on about 2.5 million American households. Those in which they make $200,000 or more and Lea, that's good for all of us?
Lea Goldman, Staff Writer: The reality is that most people in that bracket are not going to feel the pinch. Mike Ozanian will argue that...
David Asman: It already started him.
Lea Goldman: That at $200,000+, they most certainly are. But the reality is when you are über wealthy, that percentage difference will not feel like much. I know Steve is probably cringing, speaking from experience.
David Asman: Not everybody who makes $200,000 a year is über rich.
Mike Ozanian, Senior Editor: If you're über rich like John Kerry and his wife are, you can afford all the high-priced attorneys and accountants and, like John Kerry and his wife, you only pay 13 percent income tax rate. How great. But for most of the people that he is going after, the private business owners that are making the $200,000 to $300,000, they're going to get socked. And look, Kerry economics has been in Europe for years; where you have very rich now and very poor and an 11 percent unemployment rate. That's Kerry economics.
David Asman: So no matter how high you raise the tax rate on the superrich they will always find ways to avoid it like the Kerrys do.
Quentin Hardy, Silicon Valley Bureau Chief: Well, David, why me? But here we go. You know, I seem to be the only one that remembers a lot of these tax cuts were passed as "temporary" and you talk about them again and review them based on how the country was doing. And we're in debt and at war now, aren't we? Shouldn't we be discussing this the way President Bush said we would? Set that aside for a moment. If you make $200,000 a year and elect Kerry, you get, possibly, an administration that starts to care about civil liberties again, an administration that cares about the environment, an administration that isn't running an incredibly high debt. You don't live in an over policed indebted superfund site, the way Bush seems to want to turn the country. So I think on balance it's worth it.
David Asman: You are setting the stage for Steve Forbes.
Steve Forbes, Editor-In-Chief: What's the relevance of the environment and the Patriot Act on the subject of taxation?
Quentin Hardy: You vote for many things when you vote for president.
Steve Forbes: And Quentin seems to think when you raise rates you will get more revenue. Bush demonstrated, Kennedy demonstrated, Reagan demonstrated when you cut tax rates you get a stronger economy and that's what we need to fight this war, to have more resources, a stronger economy. And by the way, half of the people making over $200,000 are business owners. You sock them. You're going to hurt job creation.
David Asman: So hold on a second. We haven't heard from Rich. Sometimes when you raise rates, you don't bring in a lot of revenue. That's what Steve has said.
Rich Karlgaard, Publisher: No, you don’t. Yeah, well supply side theory, I know it doesn't make sense to a lot of ‘flat Earthers’ but it has been proven time and again as Steve said. But the unmitigated gall of John Kerry who married into wealth twice, who probably spends $200,000 a year on snowboarding and wind surfing, drawing an arbitrary line at that level, nobody I know who lives in an urban area where the family makes $200,000 feels rich. That's about the equivalent of $60,000 in Des Moines, Iowa. So, what a stupid, arbitrary number to draw.
Lea Goldman, Staff Writer: I think Rich is living in very cozy environs in San Francisco. Only 8 percent of Americans live in cities, and an even smaller fraction of that 8 percent is what would you characterize as wealthy even by Kerry's definition of $200,000. Plus, you go 30 miles south of San Francisco, and tell me they don't think $200,000 is a lot of money?
David Asman: $200,000 doesn't sound like a lot in New York, but it does elsewhere.
Mike Ozanian: The top 20 percent of the income earners in this country are, after the Bush tax cuts, already paying 80 percent of all income taxes. So we've already put a huge burden on them. Why increase it further as we try to grow the economy?
Lea Goldman: One of the biggest crunches that small business owners, the ones you say are the $200,000+ earners is health insurance. These people cannot afford the health insurance liability. And Kerry has a plan.
Steve Forbes: The way to reform health insurance is by letting patients get control of those dollars again, which health savings account, which Bush passed last year, does. When they get really going next year, when the regulations are written, it will take off.
Quentin Hardy: Mike wants to have it both ways. They pay 80 percent of the tax. They have most of the money to give to tax. We’ve got to pay down the deficit. We're at war, a time of sacrifice. They are the ones with the money and they’ve got to pony up, right?
Makers and Breakers
• GlobalSantaFe (GSF)
Susan Breakefield Fulton, Managing Director of FBB Wealth Trust: MAKER
GlobalSantaFe is a harsh water, deepwater driller. And as oil prices have gone up it makes more and more sense for exploration to begin to take place again. And that seems to be where most of the exploration has been done.
David Asman: These stocks have gone up but you think this one could go to $45 (Friday’s close: $30.06). That’s about a 35 percent increase. A big increase.
Susan Breakefield Fulton: They got a $500 million contract from Mexico two weeks ago. I think oil is going to stay above $40.
Jim Michaels, Editorial Vice President: MAKER
I'm going to buy this one. If you believe oil prices will stay high, this is a good way to play it. And there’s a lot of leverage on the upside for that.
Dennis Kneale, Managing Editor: BREAKER
I'm a breaker. Pound for pound, if you compare this stock to a lot of the others, it’s one of the most expensive stocks in the market based on its earnings. And I don't think oil will stay this high, and it will go down and could hurt it. And its return on equity, Mike Ozanian did some research, 1 percent in a year, you could earn more money by buying a CD in the bank.
• Cemex (CX)
Susan Breakefield Fulton: MAKER
The second largest cement company in the world. It dominates North America. It just bought a company in England and bought it for cash, which we like, because it doesn't dilute the stockholders.
David Asman: You think it can go to $35. (Friday’s close: $28.22)
Susan Breakefield Fulton: It has been at $31, and it pays a 3.5 percent dividend.
Dennis Kneale: BREAKER
If Kerry wins the election, he will kill that with the repeal on the dividend tax. The stock is up almost 60 percent in the last 18 months. And it's cement. It’s not like their brand of cement is better. It's cement.
Jim Michaels: MAKER
Dennis would rather lose money in biotech and high-tech. I'll take the stock.
Our panelists give you the scoop on all the inside business information before you hear it anywhere else in The Informer segment:
David Asman: Microsoft (MSFT) was once a small, relatively unknown company, so what are the best small companies out there? This week's Forbes magazine lists the 200 best up-and-coming companies. So Elizabeth, what is your best up-and-coming?
Elizabeth MacDonald, Senior Editor: FLIR Systems (FLIR). Funny name but I love the stock. This is an infrared imaging products company. They also do thermal imaging. They just got a big military contract. FMR Corp apparently has a 15 percent stake in this company. This is a hot company. I love this one.
Dennis Kneale, Managing Editor: I like it. It's in tech and you are always guaranteed to be happy about losing money in tech.
Lea Goldman, Staff Writer: It’s a great stock and a great company but it’s priced that way and trading at 35 times earnings. I think that's fine. But it's not a bargain.
David Asman: You are out of tech and into some real heavy hardware.
Lea Goldman: Overseas Shipholding Company (OSH). It’s a tanker company that's made a killing off of high oil prices and the inelastic supply of ships. There are not that many ships so the tanker rates have gone up 50 percent in the last year alone, and the company is making money hand over fist.
Mike Ozanian, Senior Editor: I don't like it because I think one big oil spill could sink the whole fleet. And if Kerry gets elected, we know that terrorism will just be a nuisance. We could have lots of ships getting blown up.
David Asman: We will get everybody a chance to jump on Mike. He has a stock the name of which I love.
Mike Ozanian: Schnitzer Steel (SCHN). They have many mills and take scrap steel and make it into new steel. They also sell auto scrap parts back to auto companies. I like the company a lot.
Dennis Kneale: I won't touch it. I'll leave it alone.
David Asman: What do you have for us?
Dennis Kneale: I have a fair maiden among stocks called Fair Isaac (FIC). And this is a company that lets all other companies figure out who they should lend money to, who they should take a credit card purchase from, because it gives them credit information. It takes the risk out of high-risk loans. They’re great with data and they’re great with tools to do that. And they serve Citibank (C) and Wells Fargo (WFC), the stock is down 25 percent in the last six months to $30. And in the past year it has been as high as $43. It's going up.
David Asman: What do you think of Fair Isaac?
Lea Goldman: I think it’s OK. I don’t think this is anything novel, I don't see any upside to the bubble bursting.
David Asman: Lea is a tough cookie today. How do you respond, Dennis?
Dennis Kneale: It builds your heart when you look at a youngster who is trying to find their own way, even though they are entirely wrong. I salute it and like it.
Elizabeth MacDonald: This stock has great earnings potential and great, solid fundamentals. And I think Lea took a load of cranky pills this morning. I don't know what's the matter with her.
Mike Ozanian: I like it because I think that tech spending in the tech sector will lead the economy next year. That’s why I think it's a great play.
David Asman: The tech sector will lead the economy? Lea doesn't agree.
Mike Ozanian: Companies have a lot of cash. And they're going to start spending it.
StockSmarts: The Man With The Plan?
Round three of the Presidential debates in the books. President Bush said that his plan of tax cuts and creating an “ownership society” is the right way to keep the economy on track. John Kerry thinks that a tax-hike on the wealthy and insulating American from the global economy is the way to go.
So which man has a better plan for the market and the economy?
Stuart Varney of FOX Business News says the Bush plan is already in place, it has restored prosperity and growth, even with the collapse of the Nasdaq, 9/11, the War on Terror and corporate scandals. It is not in the best interest of the American economy to change course at this moment and elect a “tax-and-spend” liberal. The top two tax brackets would be raised under a Kerry administration, and that would not be good for the economy or the market. And investors are definitely concerned about a Kerry victory – do they really want a trial lawyer as Vice President?
Jonas Max Ferris of MAXFunds.com wonders if we are in an “ownership society”, or a “debtors” society? He says that the only thing worse than a “tax-and-spend liberal” is a “cut-tax and spend anyway” Republican. He questions if anyone knows we as a country are running out of money? The market doesn’t really worry about long-term problems, like Social Security. And in terms of Bush and the Congress, the problem we now have is that since both the White House and Congress are Republican, the President has yet to veto any spending bill.
Dagen McDowell of FOX Business News says that at least if you had Kerry in the White house and a Republican congress, you would have gridlock, which would prevent an explosion of spending an/or tax hikes. And Dagen thinks that the Bush tax cuts are not all that palatable considering the huge debt we are running as a country.
Gretchen Morgenson of the New York Times thinks that tax cuts are always good for the economy. But she worries about things that neither candidate can control, like oil and commodity prices. These things will have major impact on the economy. She thinks the market would go down on Kerry victory – Wall St. does favor a pro business, Republican administration.
Jonathan Hoenig of Capitalistpig Asset Management doesn’t like either candidate’s plan when it comes to the economy. What the economy needs is a total free market, and we need a President who is committed to this principal. And in his mind, both men fall short. We know that Kerry is a “card-carrying socialist” who thinks that the wealthy keep the rest of Americans down, but President Bush has supported a lot of tariffs, and his “regulatory regime” has been the worst since the Great Depression. He sees the market as being “scared” of U.S. assets right now.
Wayne Rogers of Wayne Rogers & Company thinks that Jonathan has an ideological headache, and he tends to agree with Gretchen, in that there is a lot that neither candidate can control, including the Congress. No tax legislation by a Kerry administration would ever get through a Republican Congress, and no Bush tax cut would ever get through a Democratic Congress (if the Congress was to switch parties). In terms of stocks right now, the market has been very choppy and very difficult to predict. You could have certainly gone with natural resources and commodities lately, but it has been tough to pick out good stocks in this market. And he really doesn’t think the market cares who is elected President.
Best Bets: Retire Rich!
Some say Social Security might run out of money down the road. Regardless of that, you don’t want to depend on it as your main source of income when your working days are over.
What stocks will help you build a nest egg so you can retire with more security?
Wayne says: Citigroup (C)
Friday's close: $43.94
If you are looking for a stock that has staying power that will be around for years to come, Citigroup is one to consider. Wayne has owned this stock for a while and thinks it is a great company. He also likes the dividend it pays. Jonathan says this stock is “super weak”. Jonathan likes the foreign banks much better than the U.S. banks right now – he owns shares of Allied Irish Bank (AIB) and National Bank of Greece (NBG) – that’s where the action is. Jonas thinks that Wayne has the right idea for the long haul – great place for a long-term investment.
Jonathan says: International Power (IPR)
Friday's close: $27.90
Utilities are super hot right now, and this is the time to take advantage of them. He owns shares of this stock, in addition to other international utility companies. It pays a dividend, but you will make the money on this one from its price appreciation. Wayne says Citigroup is still a better long-term play because of its higher dividend.
Jonas says: T. Rowe Price (TROW)
Friday's close: $50.22
Jonas thinks that Social Security will collapse, and the money will then flow into mutual funds, like the ones run by T. Rowe Price. And this one is scandal free, which makes it more attractive. Jonathan is worried about the regulatory risks facing this company. Wayne thinks this is a good, safe play.
Stock of the Week
Mike Norman of the Economic Contrarian Update thinks that Texas Instruments (TXN) is primed and ready for a big week. He likes to buy things that are out of favor, and the semi-conductor sector fits into that plan. TXN reports earnings this week, and we saw with Intel a good earnings report, even with concerns about over capacity. He thinks we might see a surprise from TXN when it reports. He thinks all the bad news surrounding the stock in terms of over capacity and lack of demand has already been factored into the price. Jonathan doesn’t like any of the semi-conductor stocks right now – he just isn’t seeing it with this stock.
Cashin’ In Challenge
Check out the $10,000 Cashin’ In Challenge at: www.foxnews.com/challenge
Wayne, Jonathan, Dagen and Jonas answered some of your comments and questions dealing with the debate.
Question: “If we are allowed to buy drugs from Canada, won’t that amount to outsourcing American jobs, taking away from the drug industry?”
Jonathan doesn’t think there is anything to this idea, but he thinks that a “protectionist” approach will hurt the U.S. economy no matter what is going on. Dagen says allowing Canadian drug imports could potentially hurt profits from the drug companies – yet another reason to stay away from the drug stocks. Wayne says that both Bush and Kerry are right to want to get some of these more expensive drugs down to the generic level, but whether or not the drugs come from Canada isn’t the issue. He does like some of the biotech drug stocks right now.
Question: “My husband and I make a combined $70,000 and we each got some extra money with Bush’s tax cuts. Will that go away under Kerry?”
Jonathan says everyone would suffer from a tax increase under John Kerry; he punishes success. Dagen does mention that John Kerry promised that he would not raise taxes on the middle class. Wayne says that no matter what goes on with Kerry tax plan, his spending plans are just too much money.
Question: “John Kerry says he will raise the minimum wage to $7 an hour. Is that really going to help businesses?”
Wayne says this will help the worker and hurt the businesses – whenever you have to raise costs, your business will suffer. The biggest problem with this (something that neither Kerry nor Bush addresses) is that a higher minimum wage would continue the push of sending jobs overseas.
Question: “I’m 24 and already have a 401k and an IRA. I’m looking for a high-risk, speculative play with some extra money I have. Any thoughts?”
Jonathan says you don’t want to look for risk – you want to look for strong stocks. And right now, that means looking overseas to foreign stocks. Wayne isn’t too crazy about the market right now – he would wait until after the election to see how things shakeout.