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 | Cavuto on Business | Forbes on FOX | Cashin' In
This past week’s Bulls & Bears: Gary B. Smith, Exemplar Capital managing partner; Pat Dorsey, Morningstar.com director of stock research; Tobin Smith, ChangeWave Research editor; Scott Bleier, HybridInvestors.com president; Joe Battipaglia, Ryan Beck & Co chief investment officer, and Adam Lashinsky, Fortune Magazine senior writer.
Trading Pit: Dow 14,000
History at Wall and Broad. The Dow smashed through 13-thousand for the first time last week. 129 trading days. That's all it took for the blue chips to catapult from 12 to 13-thousand. Can the bulls run to 14K this year?
Tobin: YES!!! The world is growing faster than the US and is buying our exports at record rate. We’re benefiting from global growth. Anyone who thinks this subprime mess will bring down the American economy is wrong. Earnings growth will take the Dow to 14K.
Gary B: No, I don’t think the Dow will get to 14K this year. We’ve gone straight up. The market’s current run reminds me of late 1999 and early 2000. Stocks were just jumping then as they are now. We’re overbought and due for a big pull down.
Pat: Our fair value for the 30 Dow stocks is just below 14,000, so I think we could see it this year. Blue chips are cheap and are where the value is at right now. Investors have left wonderful stocks like Johnson & Johnson (JNJ) and Wal-Mart (WMT) for dead the past 6-7 years. And a stock gets cheap when it doesn’t go anywhere, but its earnings keep growing and growing.
Joe: No 14K for the Dow this year. In fact, we may see a lower Dow by year-end. The next problem for the market will be out of our hands. China wants to tamper down on all the speculation in their market. When the Chinese market fell 10 percent in February, we took a tumble too. The Japanese want to end the carry trade. If they move forward on that, it will present a problem for the global market. I think investors should take a defensive posture because we may see Dow 12K before 14K.
Adam: We’ll hit 14K, but I don’t think we’ll stay there, or end the year at that level. The Dow making a gain of a thousand points isn’t as tough as it used to be. To get from 13K to 14K is only a gain of 8 percent. Private equity boom will continue to manifest in an interesting way. They’ll continue to put more money into stock market, which will take companies off of the stock market, and that will raise the value of the stocks remaining.
Scott: No way the Dow will hit 14K this year. The domestic economy is clearly slowing and $3.00 gas is hurting the consumer. The only thing saving corporate America’s strong earnings is overseas business. The main thing fueling our markets is unprecedented corporate takeovers.
The More Bush Vetoes, the Better for Stocks?
When President Bush vetoes the war spending bill this week it will be only his second veto since he took office. Does Wall Street want the President to start making up for lost time with that veto pen?
Gary B: Absolutely! I hope he vetoes often. Obviously, this will not make the Democrats happy. But, it will create a giant stalemate. Thankfully the government will grind to a halt and then we’ll be able to get something done in this economy.
Adam: It would not be good for stocks. I'm not a fan of the school of thought that says that gridlock is good. We have a very complex government doing lots of important things. We have some huge tax issues to resolve. The President has every intention of working with Congress.
Pat: If the president doesn’t mind vetoing spending bills, it’ll be good for stocks. Congress has been spending out of control over the past 4-5 years. Less spending is good for stocks. It’s usually the threat of veto that makes Congress change a bill. If the legislature branch and executive branch are split, like in the 1990s or now, Congress won’t get all their bills approved with a rubber stamp.
Joe: The more Bush vetoes the better it is for the economy and stocks particularly when it comes to bills with frivolous spending attached. He better use the veto pen or Wall Street will run for the exits.
Scott: I don’t think gridlock is good in this circumstance. Wall Street is primarily worried about the capital gains and dividend tax cuts. If Bush vetoes everything the Dems put forward, they will then reject keeping the dividend tax cuts on purely partisan grounds. In reality the Democrats want to keep these cuts because they are great for the economy and they know it. If the President can master the art of compromise—even a little bit—then they can be protected, because if the cuts are not protected, the market will take a nasty hit.
Tobin: Stalemates are always good for stocks. President Bush needs to start using his veto pen—often! The more he vetoes the better for stocks. The President needs to use his veto power to fight off Democrats’ desire to start taxing oil.
Stock X-Change
A new "Spider-Man" movie set to hit theaters. And in this one, the superhero wears a dark suit and has a new dark attitude. So we decided to have everyone pick a stock that has a risky dark side, but super potential!
If you want to watch what each had to say about his stock, click here.
Tobin: American Home Mortgage Investment (AHM )
Gary B: Capital One Financial (COF )
Pat: Fuel-Tech (FTEK )
Joe B: Hot Topic (HOTT )
Adam: Akamai Technologies (AKAM )
Scott: Harmonic (HLIT )
Predictions
Gary B's prediction: Nothing "Rosie" for ABC & Disney (DIS); stock falls 20 percent
Scott's prediction: Rosie gets new show! CBS (CBS) up 30 percent by 2008
Joe's prediction: $ummer driving $eason! Gas hits $3.50/gal by midsummer
Tobin's prediction: Call it in! iPhone boosts Apple (AAPL) 50 percent by next spring
Adam's prediction: New AT&T (T) CEO a dud; buy Clearwire (CLWR )
Pat's prediction: Johnson & Johnson (JNJ) makes healthy gain of 25 percent in 1 year
Bulls & Bears | Cavuto on Business | Forbes on FOX | Cashin' In
On Saturday, April 28, Neil Cavuto was joined by Ben Stein, "Yes, You Can Get a Financial Life" author; Charles Payne, wstreet.com; Laura Schwartz, Democratic Strategist; Tracy Byrnes, NY Post Business Writer; Ben Ferguson, "The Ben Ferguson Show" Radio Host; and Rebecca Gomez , FOX Business Correspondent.
Bottom Line: Will $4/Gallon Gas Take the Fuel Out of the Economy?
Neil Cavuto: $4 a gallon gas: Some warn we'll see it this summer. So what will happen to our economy if that happens?
Charles Payne: It doesn't worry me. I mean, I know it's going to hurt some consumers, but, I listened in on a whole bunch of conference calls this week from all kinds of companies… the Cheesecake Factory, Black & Decker… no one talked about fuel like they used to. Wal-Mart talked about it, but I think it was more of an excuse. A year ago, I would have agreed that $4 gas could be a problem, but now I think the economy can handle it.
Ben Stein: Well, the real problem is that we're shipping tens of billions of dollars a day to foreign countries to buy oil and that takes it out of the American stream of consumption. Luckily for us, it goes back into buying Treasury bonds and stocks and other kinds of capital goods. One thing I'm glad about is that we're not hearing conspiracy non-sense about the oil companies. That seems to have been forgotten. I don't know why, but it's a lucky thing because the oil companies didn't do anything wrong.
Rebecca Gomez: I remember last summer when we were talking about $3 a gallon for gas.
Neil Cavuto: That's right.
Rebecca Gomez: I was saying it would hurt the consumer. I was hearing stories about people not taking trips and cutting back on spending. But, I was proved wrong! The consumer's very resilient. And I think people now see gas prices as something that just goes up, like stamps, and cable service, and coffee. It's just something they deal with, and they continue their lives as is.
Neil Cavuto: Nothing magical about the $4 thing?
Tracy Byrnes: Only if it sustains itself. I think people think it's going to be a hiccup. We'll hit $4. It'll go back down. Maybe it'll go up again. People aren't going to change their lives because of that. But, if the prices hold, you might see people making some changes. Everyone needs to remember that gas prices work on a lag. Refinery utilization was down for a while. But now, they're coming back. So I think in 30 days you'll see more supply, and prices will come back down.
Neil Cavuto: Laura, is this a hot campaign issue?
Laura Schwartz: I think it is. It could be a huge catalyst for energy efficiency and getting people to get out and get behind the clean energy bill and finding alternative forms of fuel. I think gas prices will help candidates make that point -- both on the right and the left side of the issue.
Ben Ferguson: Think about it for a second. If you drive to a gas station and see $4 a gallon up there, people are going to change their lifestyles. They're already maxed out at almost $3 a gallon. People are going to start saying, "I'm not driving that far across town to have dinner with friends because it's going to cost me $4 a gallon to get there." Or "I'm not going on vacation." It's going to cost more at the store. It's going to cost more for businesses to do their business. And, we're going to have to pay for it. I think people are already maxed out.
Ben Stein: What I'd like to know from the lovely Ms Schwartz is who are they going to be campaigning against? Are you going to campaign against the Sierra Club for blocking the refineries? Who are you campaigning against?
Laura Schwartz: You're not going to campaign against anyone. You're just going to come up with the best form of alternative energy and say you're behind it and you're going to make it happen faster than anybody else.
Ben Stein: [Alternative fuels] are far more expensive than oil, Ms Schwartz, with all due respect. Ethanol and all those other forms of alternative fuel may be great in other ways, but they're far more expensive than oil-based gasoline.
Laura Schwartz: You know what? Look at Toyota. Toyota has record profits. They beat GM this week. People are buying energy efficient vehicles.
Ben Stein: Ok fine. You're going to campaign against the United Auto Workers? Is that what you're going to do?
Laura Schwartz: No, you're going to campaign with the United Auto Workers. It's going to be a public/private partnership to get the U.S. automakers to make more of the vehicles that are more efficient and what people want to buy.
Neil Cavuto: Laura, I love you dearly, but be careful there because you are going to be going against unions who are a big Democratic base. Charles, what are the long-term effects of this?
Charles Payne: I think what we haven't touched upon is the fact that higher gasoline is sort of a reflection of a great economy. No one's talking about that. Also, we've seen some legislation this week that went against the oil companies -- windfall taxes. Exxon Mobil had its best 1st quarter ever. So, I think we're going to get some politicizing of it, and it's going to be part of the "war on the middle class." Believe me. The Democrats will find a way to make this a campaign issue. But at the end of the day, it's a reflection on how strong our economy is and how strong the global economy is.
Ben Ferguson: I think $4 gas could kill the economy though! Yes, it shows we have money out there when it's $3. But $4 can kill it. Is it going to be a campaign issue on both sides? Sure.
Charles Payne: They used to say that about $1 gas!
Tracy Byrnes: It's not going to kill it. If you adjust gas for inflation, it's actually cheaper now than it was in the 80s. And you know what? You're not going to stay home for dinner on a Saturday night just because it's $4 a gallon. You still have to take little Johnnie to baseball. You still have to get your daughter to dance, the kids to school, and yourself to work. You're not going to adjust your lifestyle that much.
Neil Cavuto: Well, it would take a lot to drag me away from a restaurant. You're right about that.
Rebecca, what do you think the long-term effect is?
Rebecca Gomez: Well, I agree with Tracy's point. We seem to always just focus on the short-term. But in the long-term, if gas prices stay around $4, then it will hurt. The CEO of Wal-Mart says gas prices are the number one threat to his bottom line. If we have these high gas prices all summer long, come fall when parents are shopping for back-to-school clothes, they're not going to buy as much stuff for their kids.
Neil Cavuto: Ben Stein, at week's end we had this round-up of all these terrorists who wanted to blow up Saudi oil fields. And I'm thinking, "Had those guys succeeded, we would be looking at sharply higher gas prices." Is there a number in your head where it starts to hurt? $5, $6 a gallon?
Ben Stein: Of course there has to be a level. I don't know what the level is, but there has to be some level where the consumers get hurt. Real income hasn't risen for the factory workers in this country in 34 years. Obviously, if oil and gas are going through the roof, that money is coming out of somewhere. It looks like it's coming out of savings since savings are negative for the vast majority of American people. So, of course gas prices are going to hurt, but it hasn't hurt enough yet.
Neil Cavuto: Ben Ferguson, you're saying $4 is "no mas." I know you're young. And maybe you're speaking for the young folks out there, but I don't think they're quitters.
Ben Ferguson: I think it really does hurt the economy because a lot of people are living paycheck to paycheck. Look at the debt that we have. People are literally living paycheck to paycheck. And when you have that and you have gas going up, you have to realize we're one natural disaster or terrorist attack away from gas prices going above $4 a gallon. I don't think the economy can sustain that.
Charles Payne: Ben, people living paycheck to paycheck aren't doing that because they're filling up their gas tank. They're doing it because they're buying stuff they really can't afford.
Ben Ferguson: But, if they stop buying that stuff, Charles, it hurts the economy.
Charles Payne: There is a point where if it's unnatural, like what Neil mentioned about a Saudi attack, and gas spiked up, that would be unnatural. But, the way gas prices are moving now is natural. It's a natural reflection of the economy, an economy with 4.3 – 4.4 percent unemployment, where people are making more money than ever before. It's a reflection of the economy.
Ben Ferguson: I hope I'm wrong, but I don't think so.
Neil Cavuto: Ok, I wish we had time. Ben Ferguson, don't take offense: Charles just hates young people.
Head to Head: Are "Fat" Employees Weighing Down The Bottom Line?
Neil Cavuto: Cut the fat? That's what Duke University researchers think companies should do. The researchers found that overweight workers are twice as likely to file for worker's compensation, and they call out sick a whole lot more. So, should employers hire only fit people to save money?
Tracy Byrnes: I do think there's something to be said about that. And it's not just thin people. The survey was a little misleading. To test BMI doesn't show the difference between who is fat and who has muscle. People who are fit played in team sports. There's a lot to be said about what you learn from team sports. I think you get a lot out of people who are fit and into doing healthy things.
Neil Cavuto: I know a lot of thin SOBs who miss work every week.
Charles Payne: Not only that though. I have to tell you that sometimes a person is fat because they're working hard. You know, they're working 60, 80 hours a week as opposed to 40.
Neil Cavuto: Exactly. Keep talkin'.
Charles Payne: I've fired more skinny people than fat people. There is some merit to it if someone is obese, but a lot of times, that skinny person's gotta go to the gym so they can't work overtime. The fat person… you get ‘em at their desk and they can be a machine.
Neil Cavuto: Absolutely. A Twinkie and a spreadsheet and away you go!
So what do you make of that?
Rebecca Gomez: The study doesn't take into account how much overweight workers contribute. It only looks at how many days they missed, their medical claims, and their worker compensation claims. I mean, it doesn't say how much they contribute, how smart they are, their teamwork, or their morale. There are a lot of other things besides just the financial aspect. And hey! A lot of good companies, like cable companies, may not have been founded or started if hiring was based on weight!
Neil Cavuto: That's right -- like the ones who come by and fix my place.
Neil Cavuto: Ben Stein, what do you make of this? This does seem to be the trend.
Ben Stein: Well, I think that if a person is really grotesquely overweight, it's a sign of mental illness. And if a person is very seriously overweight and mentally ill, he or she is not going to be contributing. By the way, I do love that you have me in this little box on the screen and you have these large human beings in the other box.
Ben Stein: It seems to me just a few weeks ago you had me and Anna Nicole Smith. How we have deteriorated.
Neil Cavuto: We'll go back and forth.
Ben Stein: I think your ratings are going to do better with Anna Nicole Smith. If someone is grotesquely overweight, he or she is mentally ill by definition. By definition, a mentally ill person is not going to do as well at the workplace.
Neil Cavuto: Laura Schwartz, what do you think?
Laura Schwartz: I need all the incentive I can get to get out and go to the gym every day. I think it's a wonderful idea. But, I think that if a company takes on the role of making sure their employees are fit, they have to take on the responsibility to let them have fit time and access to the gym. And it's not just physical health; it's mental health too, like what Ben was alluding to. Mental and physical health go hand in hand. I gotta tell ya, Oprah Winfrey, right down the street from me at Harpo Studios, does a great job. They've got a gym. They have a cafeteria with heart-healthy food. A fit environment is a healthy environment at the workplace. I'm all for it.
Ben Ferguson: I can speak to this personally; I lost more than 70 pounds a couple of years ago. I have become much more productive since I lost the weight. I feel better about myself. I work harder. I don't sleep as much. I'm more active. So personally for me, it was transforming. [Losing the weight] made me want to go after my dreams and goals. I think most people I know who have a lot of extra weight on them aren't as productive as others. They don't have as much self-confidence. They hide behind their desks. They're not as outgoing.
Neil Cavuto: What do you mean by that?
Neil Cavuto: Charles, I can see all the healthy benefits, but I'm wondering if some employers will use weight as an excuse to get rid of people they just don't like.
Charles Payne: We hear about that all the time. We know it's a fact that people who look good make more money than people who aren't as attractive.
Neil Cavuto: That's how Ben Stein got so rich.
Charles Payne: At the end of the day, you have to be able to enjoy the person's heart and their brain. And that's what it boils down to.
More For Your Money: Fat Stocks!
Fat stocks for a fat wallet! These companies' products may increase your waistline, but their stocks could increase your bottom line. It's time to get "More for Your Money."
If you'd like to watch what each had to say about their stock, click here.
Ben Stein: McDonald's (MCD )
Charles Payne: CEC Entertainment (CEC )
Tracy Byrnes: Pepsi (PEP )
FOX on the Spot
Tracy Byrnes: Told ya so! Now Rosie gets show on "WB"
Charles Payne: "Old" bulbs get banned; Buy CREE (CREE )
Ben Stein: Toyota running over GM is a sad sign of the times
Rebecca Gomez: Apple's (AAPL ) still shining; take a bite!
Ben Ferguson: Dems lose war over the war
Neil Cavuto: Dems ignore good news on market and economy
Bulls & Bears | Cavuto on Business | Forbes on FOX | Cashin' In
Flipside: "Gender Pay Gap" Is a Big Lie!
Mike Ozanian, senior editor: The gender pay gap is a huge myth! In this society that we have that is politically correct and driven by tort lawyers, women actually have an advantage. Women CEOs of the Forbes 500 companies have only grown the company's sales 8 percent the last 3 years. Men have grown them 30 percent a year!
Lea Goldman, associate editor: This isn't even a pay gap issue, it's an inequity across the board. You see it from the bottom, women suing Wal-Mart because they can't get management positions all the way to the top where women are suing investment banks.
Rich Karlgaard, publisher: The modern economy rewards disproportionately those who studied engineering and high finance in college. Those positions are well-paid jobs and they still tend to be male dominated areas. But I believe the jobs where men and women have similar skills and performances, the pay is fairly equal.
Elizabeth MacDonald, senior editor: The reason women are paid less is because they tend to work less hours and they have less experience on the job and they take more hours off because they are raising children. When you adjust for those there is a gender pay gap of 80 percent.
Steve Forbes, editor-in-chief: The pay gap has narrowed substantially the past couple of years. Women are needed in this economy.
Victoria Barret, associate editor: Women of the top CEOs in this country are making on average $3.2 million a year. The men in that group are making more than $15 million a year. That's a huge gender pay gap!
In Focus: Toyota Passes GM: Proof Unions Are Hurting America?
Victoria Barret: Unions have crippled the American auto industry. Funds that would have otherwise flowed into research and development and marketing and pushing new innovative cars onto our streets go into complex union negotiations.
Dennis Kneale, managing editor: Unions deserve a big piece of the blame. But unions succeed because management caves in to their demands. It's ultimately management's responsibility to run the business well and it's management's fault when unions win because it hurts the company.
Elizabeth MacDonald: Management doesn't have a choice because unions could do work stoppages. What I find interesting is that GM is running away from unions here in the US, but opening plants in China where they have to deal with communism.
Steve Forbes: Unions are a big part of GM's trouble, but management is to blame too. The real damage unions do is to education where they monopolize the public education system!
Mike Ozanian, senior editor: I think unions hurt themselves. In the free market, GM is shrinking, Ford is shrinking. Why? Because of the unions! As long as the markets remain free, unions will just hurt themselves.
John Rutledge, Forbes contributor: GM has been dying since 1961 when they had a 51 percent market share. China's cars are now coming into the U.S. Unions are in third place here. The management killed the company, the politicians helped. Unions did their part too.
Rosie: Canned or Quit For a More Lucrative Show Deal?
Elizabeth MacDonald: I think it was mutual. Rosie was complaining about the show for a while now. I think there is battle fatigue on both sides. I think if they wanted to keep her they would have accommodated her contract demands.
Michele Steele, Forbes.com reporter: She wasn't fired because she's still working for ABC, guest hosting from time to time. Let's not forget not a single sponsor left that show. I think they let her quit.
Steve Forbes: I think they had enough of her offensiveness. They thought if she wants to go, get rid of her.
Lea Goldman, associate editor: I don't think she was fired I think she left. She only signed on for a year. She was doing that year-by-year contract when she was on the Rosie O'Donnell Show. She's still a commodity. I see her going to cable and making big bucks there.
Victoria Barret: I think she was fired. If they wanted to keep her, they would have. I think she joins an elite group of celebrities, like Don Imus, who have gone too far. There is a subtle balance between being punchy and controversial and being mean. Americans don't like mean. I think ABC saw it coming and they didn't want the ratings to tank.
Informer: DOW 18,000 Stocks!
General Electric (GE )
Coca-Cola (COKE )
Intel (INTC )
Citigroup (C )
Bulls & Bears | Cavuto on Business | Forbes on FOX | Cashin' In
Our Cashin' In crew this week: Wayne Rogers, Wayne Rogers & Co; Jonathan Hoenig, CapitalistPig Asset Management; Jonas Max Ferris, MaxFunds.com; Dagen McDowell, FOX Business News; Cheryl Casone, FOX Business Now; and Mike Norman , BizRadio Network
Stock Smarts: Wal-Mart's Discount Clinics: Better Than National Health Care?
Democrats making it clear at last Thursday's debate: they want national health care. Will Wal-Mart's move into discount health clinics make socialized medicine unnecessary?
Jonathan: Bravo to Wal-Mart! These for-profit clinics are going to be incredible. For $50 you can see a doctor with high-quality care. It's convenient and you won't have to run to the emergency room. We would all be blessed if Wal-Mart brings the same kind of efficiency and productivity to health care as they do to selling Lucky Charms and Huggies.
Wayne: Bringing clinics into Wal-Mart is a terrific idea; I just don't know if Jonathan is right about getting the best health care. The clinics will have to employ physicians and I'm not sure how much diagnostic work they can do. Overall, I'm all for it.
Mike: It's a great step, but it is part of an overall comprehensive solution. These facilities will treat primary visits like getting flu shots, testing for colds, etc. Many times it will be a nurse practitioner doing the treatment, not a doctor. Those costs are built into the medical system to the degree that Wal-Mart's program can reduce that. It will be great, but it will not eliminate the need for some kind of safety net or heath care system.
Dagen: It does touch on something that does need to happen in the health care system in this country to drive down the cost: it will show people how much they pay for health care services. This will be a major shift in how we hand out health care in this country.
Jonas: It is a great move for entry-level health care, which actually needs a lot of work. It's very hard to get an affordable low-end health care plan in this country. Although, it still doesn't get rid of the need of someone without a job or health plan. Unfortunately, the only way to solve the problem is some sort of government health care plan. John Edwards noted at Thursday's debate that a universal plan will be somewhat expensive and will require raising taxes.
Cheryl: Health care stocks have been a great way to invest in the last few years. The problem is the relationship between doctors and companies that make the drugs and medical devices. The relationships are too close and there's a lot of impropriety going on. That's another way to bring down the cost, along with providing health care in retail stores like Wal-Mart.
Wayne: The Democrats are talking all about national health care. Not one talked about how it will be paid for. The current Medicare plan is going to go broke in 2041. A national plan is insane unless we find a way to pay for it.
Cheryl: John Edwards said he is going to raise taxes.
Wayne: They can't just hand out a free ticket and not pay for it. There's got to be responsibility.
Mike: Don't you think there will be costs in the long-term for not doing it? There will be a large segment of society without any care who are sick and need attention. What impact will that have on our society? Won't that incur costs as a result of that on our society as well?
Wayne: Mike, you sound just like the politicians.
Dagen: We already have government plans in place to give low-income Americans health care. We have taxes to pay for that. It's called Medicaid. This is a way to get people immediate treatment for things that are small now, but could lead to much bigger problems down the road.
Would It Matter if the U.S. Stopped Making Cars?
Toyota passed General Motors in quarterly sales for the first time ever. Many reacted in shock and horror to the news this past week. Would it even matter if the U.S. just stopped making cars?
Wayne: We live in a world economy. If we can't compete, we have to go home. It's as simple as that. Foreign automobile companies are also building cars right here in America and they are building them better. It's the economics of free society.
Jonathan: Just because I am American, doesn't mean I have to buy American. I should buy the highest quality product at the lowest price. Take a look at your television or your clothing; chances are they are not made in America. Toyota makes a heck of a good car and I drive a Honda. Consumers should be able to buy the best product available.
Dagen: American automakers get a bad rap for the reliability of their cars. They've improved a lot in the last few years and have some hot cars out there. If the U.S. auto industry went out of business, it would send a horrific message about the state of United States. It would say that we just can't compete, we don't innovate, and that our products stink. It would be a disaster.
Cheryl: Automakers in the U.S. are doing a lot of things to work on fuel efficiencies and other standards. In fact, some executives flew over to Japan to find out how they can do this better. Times are changing and the cars have got to change.
Mike: Dagen is right about the car companies getting a bad rap on quality. I don't have a car, but I do own GM stock. I hope they don't go out of business! Any industry could go out of business and it wouldn't matter as long as we can secure those products and services from somewhere else. There used to be a huge garment industry in America, but not anymore.
Jonas: There's a big difference between the auto industry and the garment industry. It would be a big loss to America if we lost the auto industry. America isn't losing this industry because of cost, but because it's not a good product. It's a bad thing for America that we can't compete with high cost countries like Germany. That says a bad thing about our quality and one of the reasons why our dollar falls and why our deficit is bad.
Dow 13,000: Proof "Sell In May" No Longer Applies?
The Dow barreled through 13,000 for the first time this week. History says that May through October is a losing proposition for the Dow. With stocks on a roll, is it really time to sell everything?
Jonas: It is time to sell. This Dow 13,000 has me all freaked out. Many of my recommended picks that were down and out in the past year are now up 50, 60, and 70 percent. It's not that I'm the second coming of Warren Buffett, it's because the market is overheated. These stocks are expensive and if you bought them last year, it's time to sell. Cash is not a bad place to be right now.
Cheryl: That is so dangerous for the average investor. We can't time the markets. Jonas, you are a professional, but the average person should be buying into the market in a steady way. I do think the market is going to have a good summer with a lot of liquidity.
Wayne: You might as well go to a fortuneteller if you believe sayings like "sell in May and go away." It's not a stock market; it's a market of stocks. Individual stocks will do what they want to do. I'm not smart enough to guess market trends, and if I were, I would be out there trading right now.
Dagen: It could be a weak spring for stocks because of a weak spring selling season in the housing market. There's tighter lending standards and people can't get into homes. I think it will hurt in the next month or two.
Mike: I agree with Cheryl that most investors should not be thinking about timing. They should be thinking long-term, which means putting your money into the stock market in good times and bad by buying quality stocks. To Wayne's point, there are seasonal tendencies in the market that hold up year after year. It isn't going to happen this May. I'm actually more worried about the summer if we have a tough hurricane season because it will drive up gas prices.
Jonathan: I don't believe in seasonal trading. It can be fooled by randomness and statistics. What the market did in May 1957 doesn't matter to me compared to what the market is doing today.
Best Bets: Buy In May!
Click here to watch this segment in its entirety.
Mike: Intel (INTC ). Friday's close: $21.87
Wayne: PowerShares WilderHill Clean Energy (PBW ). Friday's close: $19.97
Jonathan: First Israel (ISL). Friday's close: $19.18
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