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.
This past week's Bulls & Bears: Gary B. Smith, Exemplar Capital managing partner; Pat Dorsey, Morningstar.com director of stock research; Scott Bleier, HybridInvestors.com president; Tobin Smith, ChangeWave Research editor; Eric Bolling, Independent Trader; Marc Lamont Hill, Temple University Professor of American Studies
Trading Pit: Thank You, America!
Thank you America —You just gave the economy and the market the best gift possible: proof you are alive and spending! On Friday (12-21-07), stocks went flying at Santa altitudes, you might say, after finding out consumer spending was flying high in November—the best jump in 3 and-a-half years! Is this a sign our economy and market are back on track?
Gary B. Smith: Absolutely! I’m not so sure the economy ever got off track. If people have jobs and they have money, they’re going to spend. That will keep this economy propelled in 2008.
Scott Bleier: The consumer is adding too much debt to their credit cards. Consumers are “spent up”, and the economy is going into a recession!
Tobin Smith: If you look at the growth of income for next year, we are continuing to be a solvent economy. The market is priced that way right now.
Eric Bolling: Corporate compensation committees are the Santa Clause this year. They are employing us at 95% and they’re paying us more than last year. We’re spending all of it and it’s putting real confidence in the economy and the market.
Pat Dorsey: Job growth is the most important thing to watch right now. We’ve had an offset with housing and exports. We’ve added jobs in exports that we’ve lost in housing.
Riots Over Public Housing: Proof Gov't Handouts Don't Work?
Protests in the “big easy” turn ugly. Residents in New Orleans up in arms over plans to demolish their government housing damaged by Katrina - even though the city promises to rebuild new modern homes. Is it time for our government to get out of the housing business?
Tobin Smith: New Orleans is a laboratory for all the wrongs of this type of housing. They (the government) built a generational approach to poverty. This is fifth generation and it created this sense of entitlement. What you’re seeing here are people saying, “the government owes me a home”. It disincentives and it’s the wrong approach.
Marc Lamont Hill: These people work everyday, they are citizens of the United States and they pay taxes. The reason why these people are in fifth generation of public housing is because there is often times lack of economic opportunity, in New Orleans in particular. To take away and deprive them of public housing is Un-American and unethical.
Gary B. Smith: It’s been going on for generations because the government does a lousy job of building and maintaining these properties. The better solution is to just give them the vouchers for housing, and let the free markets work!
Can't figure out "what" to buy in these last days before the holiday? Wait no longer, procrastinators: last minute buys from the Bulls & Bears in the Stock X-Change.
Gary B Smith: Best Buy (BBY)
Pat Dorsey: Covidien (COV)
Tobin Smith: Cree Inc. (CREE)
Eric Bolling: iShares Silver Trust (SLV)
Tobin Smith’s Prediction:
Don't get lost in the cold! Globalstar (GSAT) doubles by next winter!
Gary B Smith’s Prediction:
Put your Money in Financials in '08! Financial Select Sector (XLF) jumps 50%
Pat Dorsey's Prediction:
American International Group (AIG) survives credit mess; up 30% in 1 year
Scott Bleier’s Prediction:
Time for a "Male Pill" Invest in GTX Inc. (GTXI)
Eric Bolling’s Prediction:
Research In Motion (RIMM) up 30% by the first pitch of baseball season!
On Saturday, December 22, 2007, Neil Cavuto was joined by Ben Stein, "The Real Stars" author; Charles Payne, wstreet.com; Tracy Byrnes, FOX Business Network; Adam Lashinsky, Fortune Magazine; and and Jill Schlesinger, StrategicPoint Investment Advisors
Bottom Line : The Best Christmas Gift: A House?
Neil Cavuto: A new home for the holidays… Is that the best bargain you could buy right now?
Charles Payne: People need to start kicking the tires; it’s a buyer’s market. Homebuilders are giving out all kinds of incentives. But, if you’re too cute and wait for the market to hit the bottom, you’re going to make a big mistake. If you see a house you want, you’re in a position to drive a very strong bargain. At the end of the day, we have to remember that home ownership is still the American Dream and the sellers are really desperate.
Neil Cavuto: Ben Stein, you’re pretty good at real estate… is this that moment?
Ben Stein: Well, I wish I were pretty good at real estate. I definitely think this is a moment. Based on past experience, the market will decline for at least another year, maybe two or three. But, I think it’s low enough now. If you find a home you like, buy it now. Maybe you’ll lose money over the next couple of years… but over the next 10 years, you’ll make a ton of money! Home ownership is a great, great thing. There is no feeling like coming into your own home. No stock, no bond, no option, no derivative can give you that feeling.
Neil Cavuto: Only Ben can have that feeling in 7 time zones.
Ben Stein: Eight.
Neil Cavuto: Touché! That’s very good.
Neil Cavuto: Jill, what do you make of this?
Jill Schlesinger: I think there are two types of homebuyers: people who buy as an investment and people who buy a house to live in. I think no matter what’s going on in the market, if you’re buying a house you want to live in, I agree with both Charles and Mr. Stein, who I will never call Ben directly.
Neil Cavuto: That’s very interesting.
Jill Schlesinger: I know. I have great respect.
Neil Cavuto: Poor Charles, he’s just like Chuck…
Jill Schlesinger: You buy the house you want to buy. And, you do get choosey about location. As an investment, I’m more worried about what areas you’re going to buy in. I think it’s the old tried-and-true: location, location, location. Be careful if you’re buying for investment.
Neil Cavuto: I don’t know too many people who get homes for gifts… maybe we’re just using a metaphor if you will… Tracy, what do you think?
Tracy Byrnes: … I should get a home for a gift someday. I think that’s something I’ll aspire to. I think people should buy homes because they want a nice place to raise kids. To Jill’s point: if you’re buying a second home or an investment property, maybe you go try to time the market a bit. But, if this is your first home, a place where you’re going to teach a kid how to throw a ball, who cares what the market is doing?
Neil Cavuto: Adam Lashinsky. What if it’s a vacation home? What do you make of that?
Adam Lashinsky: I want to augment what Tracy said. Housing is not something a buyer should ever time. If you’re Ben Stein and you have plenty of dough to make investments in real estate, then the status of the market doesn’t really matter to you. If you can afford it, go ahead and do it. I think people should never, ever think about their primary home as an investment. They should think of it for exactly the reasons Tracy said, the proverbial place to teach your kid to throw a ball.
Neil Cavuto: I always wondered if I could get other people to teach my kids how to throw a ball.
Neil Cavuto: Charles, do you think that we are near a bottom here, and like with stocks, it’s a good time to buy?
Charles Payne: Without a doubt, there are a whole lot of folks out there who are waiting for the bottom. I worry they’re going to get too cute. I saw the same thing happen to people in the stock market in 2002-2003. Nobody wanted to buy then because they were waiting and waiting. We hit the bottom and then we went up. And people waited for a double bottom….
Adam Lashinsky: But here’s the thing, Charles: I kinda disagree. You can dabble in the stock market. But, most people aren’t going to buy a house here and a house there. They are right to wait.
Charles Payne: The only problem with that… The incentives right now are huge! Homebuilders are paying people’s mortgages for six months! These types of things are going to go away as soon as the supply comes down even just a little bit. If people are too cute, they’re going to pay a lot more money than they should have.
Ben Stein: What Adam is saying is like saying, “Once you find the woman you love, wait till her price goes down.”
Ben Stein: A house that fits you and your heart perfectly is so precious and rare; it’s worth just about any price… just as long as you can afford it.
Tracy Byrnes: To that point: People should go out and to their homework! I wish I was in the market to build a home right now. I’d be getting the granite, the top-of-the-line stove, I mean you name it! Take advantage of this. If you have the cash, get out there. If you’re not building a brand new home, ask for everything. You’re going to get it.
Jill Schlesinger: I think we have to be careful here. There’s not one housing market. There are a lot of different markets. I don’t see a lot of panic in New England. There aren’t a lot of bargains there.
Ben Stein: You have to move out here.
Neil Cavuto: You do see them in Massachusetts…
Jill Schlesinger: It really does depend where.
Neil Cavuto: They’re slashing prices in Boston.
Jill Schlesinger: Certain parts of Boston. That’s the problem. There are different markets. By the way, I can teach your kids how to throw. I have an excellent arm.
Neil Cavuto: I can teach ‘em how to eat…
Adam Lashinsky: Just one more point to something Charles said. I’d like to put things into perspective. I’m not sure once housing hits bottom that it’s going to race up again. What we’ve seen in the housing market over the last 5 years was unusual. We’re not going to see a giant bounce. It’s going to go back to doing what it usually does… which is appreciate…
Ben Stein: How do you know??
Adam Lashinsky: Because that’s the historical norm. That’s the way it’s been for decades.
Ben Stein: No, that isn’t the historical norm. The historical norm is when it hits bottom, it goes racing up like something I’m not allowed to say on TV…
Ben Stein: And again, as you said very aptly Adam, it’s not an investment like a stock or a bond. It’s something for your heart and soul. If you see something you like, even if it’s overpriced, you should buy it.
Head to Head: GodTube’s Success: Proof Religion is a Hot Commodity?
Neil Cavuto: GodTube.com getting nearly a million visitors last month alone, Jesus action figures selling out at Wal-Mart, and presidential front-runners releasing Christmas campaign ads. All proof religion’s a booming business in America?
Ben Stein, what do you make of religion as a business?
Ben Stein: It’s sickening. You know, God is the supreme Lord of all creation. He’s the Ruler of high places. He’s the Author of everything good and just in society. He is the ultimate Creator. To try to commercialize Him and make money off of Him by selling action figures and dolls is just horrifying to me. And to try to make money off a website devoted to worshiping God is just shocking to me. I totally agree that there should be a website where believers can check in and share their experience, strength, and hope with other people. I’m totally in favor of things like 12-step programs where you can get access to God for free. But, to make selling God into a business? It’s just revolting.
Neil Cavuto: Well Charles, I’ll risk getting struck by lightening to say that the good in it is that you obviously are getting people to respond… so there must be a thirst or hunger for it.
Charles Payne: I think it’s a little vulgar to say that religion or God sells. I think what we want to say is religion and God resonates.
Neil Cavuto: We said “sell” because this is a business show…
Charles Payne: Well, here’s the real deal: We are a society where having a belief in God gets ridiculed. I mean, you turn on the television and you can see it, and it’s gotten worse and worse over the last couple of decades. What I’m saying is people who believe in God are fighting back. If Hollywood won’t give them the content, they’re creating it themselves. And I think that’s a wonderful thing.
Tracy Byrnes: Well, I don’t know. I mean: it takes money to do anything this day and age. Last Sunday, I had to listen to the priest give me the rundown of the budget. Everything takes money. The fact that this website takes ads to run it… you know what? That’s the way this world works. If it’s making people happy… what’s so terrible about it?
Ben Stein: There’s a big difference between raising money for your church and making money by selling action figures of Jesus made in China or Taiwan. There’s a hell of a big difference. If you don’t see it, you don’t see it. But to me it seems fairly clear.
Tracy Byrnes: Yeah, but if my son is holding an action figure of Jesus instead of Batman, I don’t think that’s so terrible.
Jill Schlesinger: I think what’s interesting is that people are tapping into a void. There’s this book out there called “Eat, Pray, Love” about a woman who went out seeking spirituality, but not in a Western, traditional sense. So there’s obviously some need or want or desire for more of that.
Neil Cavuto: I agree with a lot of what Ben is saying… only because if I disagree with him… it’s going to be nasty.
Neil Cavuto: But, Adam, my issue is the money-grubbers. But, if people are responding to the money-grubbers, maybe even paying the money-grubbers… that’s saying something about them and not the people providing it.
Adam Lashinsky: I mostly agree with you, Neil…
Neil Cavuto: Can you entirely agree with me?
Adam Lashinsky: No. That’d be no fun, would it?
Adam Lashinsky: Religion has always been a big business in the United States. We have separation of church and state. And, we don’t want to have a situation where our government pays for our religion. I think these things are fine. I think it’s a way for people to express themselves. What I think this really shows is a fervor over user-generated content. There are sites out there that I’ve heard of that have the word “porn” in them and are getting more traffic than GodTube… that also speaks to the needs and desires Internet users have.
Charles Payne: The bottom line is we’re talking less about God and business and more about God and being influential. The moral majority is not being heard anymore. I think they want to have their voice heard and that’s why it’s resonating in politics. We’re seeing it with Mike Huckabee. His poll numbers have gone through the roof because people are starting to resonate with the religious aspect of his message. It’s big. It’s undeniable.
More for Your Money: Hot Holiday $tocks!
Neil Cavuto: Christmas morning – just 72 hours away! Our guys say forget trying to find the hot gift that’s sold out everywhere; buy stock in the company that made it instead so you can get “More for Your Money.”
Click here to see which stocks should be on your Christmas shopping list!
Ben Stein: Apple (AAPL)
Charles Payne: GameStop (GME)
*Charles owns shares of this stock.
Adam Lashinsky: Hasbro (HAS)
Jill Schlesinger: Sony (SNE)
FOX on the Spot!
Jill Schlesinger: No Recession in 2008! Fed Will Keep Cutting Rates
Charles Payne: Solar Power Sizzles! Buy Cypress Semi (CY)
Adam Lashinsky: Don't Buy Financials; Buy Weyerhaeuser (WY) Instead!
Tracy Byrnes: Circuit City's CEO Needs to Go; Will Get Fired in '08
Ben Stein: Big Oil's Not the Enemy; Ethanol is a Bad Joke!
Neil Cavuto: Santa Says Get FBN! Merry Christmas!
Flipside: Why Wall Street Likes the Most "Unlikable" Candidate!
Victoria Barret, Associate Editor: America needs tough love right now. We need an unlikable candidate. We need to cut government spending and that’s not easy to do when you’re inside the beltway. There are a lot of programs we need to do away with. We also need to open up our trade policies and cut subsides. These are all things that are unpopular. I’m talking about challenging the system inside Washington. That’s what we need.
Steve Forbes, Giuliani Sr. Policy Advisor: Ronald Reagan challenged the system. He cut taxes, won the Cold War, reined in most domestic spending. He was also very likable and popular. By contrast look at Richard Nixon, not the most likable guy in the world. He increased spending, didn’t cut taxes and we all know what happened.
Quentin Hardy, Silicon Valley Bureau Chief: Wall Street is asking for the ultimate in likability. Free money, bailouts, and more tax cuts. Real unlikablity is what I wish they would go for; the real hard work of eliminating deficits and getting rid of gratuitous spending. Wall Street doesn’t seem to want that any more than most of the rest of the country unfortunately.
Rich Karlgaard, Publisher: Likable is the way to go. Look at the most popular Presidents in our lifetime. John F. Kennedy, Ronald Reagan and even Bill Clinton. They were all optimists. You know why? Kennedy and Reagan particularly trusted the American people more than they trusted government. That’s what people respond to. This refers to all the things Victoria was talking about, but you get there through optimism and likablilty.
Elizabeth MacDonald, FOX Business Network: Both Kennedy and Reagan dramatically cut taxes. They realized that when you raise taxes you wreck the economy. You have to put money back in the hands of consumers.
Mike Ozanian, National Editor: Likable. Because charisma and likablility helps a President get his agenda passed through Congress. To have that kind of influence is important. Steve mentioned Ronald Reagan. Reagan’s first 100 days were immensely successful. Largely because of his personality and likability. We need someone who’s likable who can get this corrupt Democratic Congress to do something right.
In Focus: Leno & O'Brien Return to Late Night: Proof Unions Are Obsolete?
Elizabeth MacDonald: This is a sign of the times. The studios are now hiring writers to replace the striking writers. Jay Leno and Jimmy Kimmel are going back on the air. I believe in a strong union but I want a union that is responsive to management. I’m talking automotive and airline unions.
Lea Goldman, Senior Editor: The writers’ union have given a shot in the arm to the unions overall in this country. They have exhibited enormous strength. Why? Because entertainment is America’s biggest export. It’s not cars or flat screens. The Writers Guild has brought Hollywood to its knees. This is an industry that can’t afford to lose all this money.
Steve Forbes: The writers strike has shown that unions can destroy but they can’t build. The auto union was very strong at one time. They brought Detroit to its knees, same with the Steel industry. So yes they can bring Hollywood to its knees but guess what? With a combination of technology and other talent their days are numbered.
Quentin Hardy: Conan O’Brien and Jon Stewart are comedians. They can do stand up and other spontaneous stuff. But without writers, other people on TV will have to resort to cheap seasonal gimmicks and even sensationalism. It’s not going to hold up for the rest of TV to behave that way
Bill Baldwin, Editor: Show me a successful union and I’ll show you a monopolistic industry. Back in the day when the government handed out scarce broadcasting licenses the broadcast union was powerful. Now that the Internet makes 200 million Americans into broadcasters the union has no power.
John Rutledge, Forbes Contributor: Unions are economically obsolete today. The only way you can have a union is if you confine the workers in a building. We have fiber optic today. Words travel at the speed of light at zero cost. Politically however, unions are very powerful. We’ve got AARP, the teachers’ union, the lawyers, the government unions, the AMA. They all have favors out with politicians. The biggest danger is that they will take those favors in the form of protectionism and that would collapse the world economy.
Debate: Why Men, Not Women, Will $ave the Holiday Shopping Season
Rich Karlgaard: The cavalry is going to arrive this weekend. The essential thing about men is that they feel guilty. They want to watch TV ball games and drink beer and eat chips. To assuage that guilt they are going to overspend at the mall. They’re going to do it quickly, they’re going to do it late and they are going to save Christmas
Josh Lipton, Forbes.com Staff Writer: Women are the spenders. Women reportedly spend $4 trillion annually and account for 83% of US consumer spending. If retailers are going to do well this year it’s going to be because ladies keep cracking open their purses.
Mike Ozanian: Once Josh gets married he’s going to change his opinion. Men spend more, but women shop more.
Steve Forbes: But the bottom line is that both men and women will save Christmas. Both like to spend. But the key is returns. Women like to return things. Men, if they don’t like it they still keep. They give it away or they throw it away.
Lea Goldman: I don’t think either men or women are going to save Christmas this year. At the end of the day people feel worse off than they did last year. Their homes are worth less, they feel they are spending more on gas. I don’t think this is going to lead to an increase in sales.
Informer: "Stock"ing $tuffer$ for Steve
If you want to hear what each panelist had to say about their stock pick click here
John Rutledge: BHP Billiton (BHP)
Lea Goldman: US Dollar Index Bullish (UUP)
Victoria Barret: Autodesk (ADSK)
Bill Baldwin: FactSet (FDS)
Our Cashin' In crew this week: Wayne Rogers, Wayne Rogers & Co; Jonathan Hoenig, CapitalistPig Asset Management; Jonas Max Ferris, MaxFunds.com; Leigh Gallagher, Fortune Magazine, and Gary Kaltbaum, Kaltbaum & Associates
Stock Smarts: “Santa” Hillary Clinton’s Big Government Gifts… Can America Afford Them?
Presidential hopeful Hillary Clinton playing Santa Claus in her latest political ad...She's promising to give Americans almost everything from national health care to universal pre-school.
But can America afford all her social programs?
Jonathan: I thought this commercial was disturbing. What it tells me is as our president, she doesn’t see her role as protecting the Constitution, but to give gifts at the expense of taxpayers. And it is this redistribution of wealth that is behind her whole message
Wayne: The commercial implies the idea of “gifts”, but what it ought to show are people writing out checks… like us! We are the ones that will have to pay for all these plans. It is very easy for candidates to say whatever they want to the public in order to get elected.
Leigh: It is no secret that this what Hillary has been pushing all along. But with foreclosures rising and the cost of energy rising - all of these financial stresses on the middle class, this is clearly where she is going for votes. And consumer spending is two-thirds of our economy, so these issues will be a potential problem going forward.
Gary K: This is all about votes. And remember – this didn’t just start with the commercial. She floated the idea of $5000 for every newborn baby; she floated the idea of the government giving everyone $1000 for a 401(k) plan – she is trying to win votes for by giving people money, and that is just not right.
Jonas: The country cannot afford another president who is fiscally irresponsible. If Hillary wants to play Robin Hood and explain where the money is going to come from, I think the economy could handle it. The problem is the idea of a spending increase without explaining where the other money is going to come from – either via a tax increase or cuts elsewhere.
Best Bets: Best Stock Gifts Under $10
Leigh: Warner Music Group (WMG) (Friday’s Close: $6.17)
Wayne: Sapient (SAPE) (Friday’s Close: $8.98)
Jonathan: Stewart Enterprises (STEI) (Friday’s Close: $8.43)
Jonas: Western Asset High Income Fund (HIO) (Friday’s Close: $5.81)