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, columnist for RealMoney.com; Pat Dorsey, director of stock research at Morningstar.com; Tobin Smith, founder and chairman of ChangeWave Research; Scott Bleier, president of HybridInvestors.com; Bob Beckel, Democratic strategist, and Joe Battipaglia, chief investment officer of Ryan Beck & Co.
Social Security needs to be fixed or else the economy will suffer! That's what Fed Head Alan Greenspan said last week.
But many Democrats still insist nothing needs to be done right away.
So who's right and who’s wrong: Greenspan or the Dems?
Gary B. Smith: The Dems are wrong! Social Security is putting a huge tax on economy that is only going to get bigger. Just the interest payments alone are a burden. The Democrats are still trying to play Mommy & Daddy to everyone with their key plan from FDR. They’re just getting in the Republican’s way, and it’s slowing us down.
Bob Beckel: Democrats are getting a bad rap. Democrats aren’t saying that Social Security is fine. We know that the fund will be in trouble. It just won’t be in trouble as soon as Bush has said it will. If the president wants to fix it, why hasn’t he offered some plan? And as for Alan Greenspan, he’s the biggest hack in Washington! He’s too old, too lame, and is a bad politician.
Joe Battipaglia: Democrats are going about things indirectly. There’s a congressional election in 2 years. Dems are thinking if we stall long enough, we can blame everything on Republicans and try to get back some seats. The weakness with this strategy is that the public realizes there is a problem. The Dems are not providing leadership, but are just saying no to everything. This strategy failed for them last election and it will continue to fail.
Pat Dorsey: I’d like to throw some bipartisan blame around. Democrats are wrong for saying that there’s no problem with Social Security. Republicans are wrong for saying taxes cannot be raised to pay for the problem. And the President Bush is wrong for implying that private accounts, by itself, will solve the problem. Private accounts won’t fix anything, unless benefits are reduced or taxes are raised.
Tobin Smith: The Dems aren’t trying to tank the economy—they don’t know how it works! Social Security is the redistribution of wealth. Rich Democrats are embarrassed for being rich. And the Dems that aren’t rich don’t want to be, because they think they can solve the problems with Social Security by giving other people’s money away.
Scott Bleier: Democrats are deathly afraid the President Bush is trying to destroy Social Security. But he must tax the rich to save it. The Democrats just don’t get it.
March Madness isn’t just for basketball! The first annual "Bulls & Bears" stock tournament! Each guy picks his favorite stock and you vote right here at FOXNews.com for the best pick. (You can vote for the stock you like the best on this page.)
Joe: I’m going with Sony (SNE). The board isn’t happy with the way things have been going, but the company has new management. It also has a new portable PlayStation that is to be released on March 24. There’s been a lot of buzz surrounding this and it’s already sold out. This stock is going to be a winner. (Sony closed on Friday at $41.19.)
Scott: Sony’s fat and lazy. The new board isn’t going to help. The company needs to re-innovate. It’s getting beat by Samsung. I don’t like it.
Scott: My pick is Creative Technology (CREAF), based in Singapore. It is a leader in digital products, including digital audio players like the Zen MP3 player. This is an underdog stock and has been decimated from $17 earlier in the year. Now, it’s cheap and going to $14. I own it. (Creative Technology closed on Friday at $10.30.)
Gary B.: This is a huge underdog! Scott may be right, but the stock’s going into single digits before it hits $14.
Pat: I like Diageo (DEO). If you’re drinking it, this company probably makes it. It is the leading spirits maker in the world with names like Johnnie Walker, Guinness, Smirnoff, and Tanqueray. It’s cheap and looks ready to hit $70. (Diageo closed on Friday at $57.86.)
Tobin: This stock just doesn’t grow. It’s cheap, but sometimes cheap is a trap; a value trap that doesn’t go anywhere.
Gary B.: I’m cruising with Royal Caribbean (RCL). The chart shows that the stock finally broke the back of a downtrend line last Tuesday. It’s ready to go higher and it’s time to get on board. (Royal Caribbean closed on Friday at $48.10.)
Joe: This stock won’t sink, but it is expensive.
Tobin: My pick is Patterson-UTI Energy (PTEN), which provides drilling units for oil and natural gas. It just bought part of First Energy. The company’s earnings are going to double in the next year and I’m betting the stock goes up $5. (Patterson-UTI Energy closed on Friday at $25.40.)
Pat: This is a decent company in a tough industry. But if oil doesn’t stay high, you’re dead.
Spring Break is in full swing and Gary’s gone wild with stocks ready to break out.
Gary B.: First up, Plantronics (PLT). The stock recently broke out, and then got sucked back by the market. Now, it’s ready to bust out and is going back to the mid $40s. (Plantronics closed on Friday at $37.16.)
Joe: This is an early cycle play. There’s no momentum and the stock isn’t going anywhere.
Gary B.: Next, I like Ventiv Health (VTIV). Ventiv just broke to an all-time high, but also got pulled back by the market. It’s ready to party and is headed back to the $30s. (Ventiv Health closed on Friday at $23.73.)
Joe: The business is right and the multiples are good. This could do well.
Tobin's prediction: Oil peak $65; Dow sinks! Then: oil falls to $45, Dow surges
Scott's prediction: Time Warner (TWX) spins off properties; gains 25 percent
Gary B's prediction: GM (GM) falls $3 more bucks then revs up $13 from there
Pat's prediction: Sonic Auto (SAH) gains 30 percent in next 2 years
Joe's prediction: Ishares MSCI Emerging Mkt Index (EEM) up 20 percent by 2006
Cavuto on Business
Neil Cavuto was joined by Jim Rogers, president of JimRogers.com; Gregg Hymowitz, founder of Entrust Capital; Herman Cain, chairman of T.H.E. New Voice; Ben Stein, author of "Yes, You Can Be a Successful Income Investor!"; Meredith Whitney, executive director at CIBC World Markets; Leigh Gallagher, senior editor at SmartMoney.
The Bottom Line
Neil Cavuto: Is there a war on in Washington with one side trying to stop you from buying stocks? If you are an investor in the stock market, odds are you'll vote Republican. That's what polls have shown. So do Democrats want to keep new investors out of the market to hold on to their voter base?
Herman Cain: I think absolutely they want to keep investors out. They want to keep people ignorant of what I call, elementary economics. They don't want the spread of intelligent investors because then they will wake up to a lot of the empty rhetoric that the Democrats have been using to diffuse the President's concept of personal retirement accounts.
Neil Cavuto: That's exactly what Gregg has been saying for weeks!
Gregg Hymowitz: That's the silliest rhetoric I've ever heard in my life. If you look at the amount of money, the trillions of dollars invested in the equity markets, most of that money comes from pension funds. Pension fund money comes from blue-collar workers.
Neil Cavuto: But there is a bit of a disconnect between the individual workers and that money in the market, right?
Gregg Hymowitz: Absolutely not, those individuals are so concerned about their money in the markets and they're so much more informed than anyone around this table, particularly Herman, realizes. They appreciate owning stocks, and they know that that is how to get ahead.
Neil Cavuto: So, why do you guys make it so difficult to own stocks?
Gregg Hymowitz: We don't make it difficult at all.
Neil Cavuto: I'm just kidding.
Herman Cain: What they're doing is spreading dis-information by calling it privatization. It's personalization. They're trying to scare people.
Meredith Whitney: With all due respect, this whole thing sounds like a conspiracy theory. That's just ridiculous that Democrats want to keep people out of the market. But I would say that most blue-collar workers are tied up with doing their job and not stock jockeying. So there is a correlation.
Jim Rogers: Neil, it's a good theory and there probably is something to it, but I can't figure out why they're against it. We all know Social Security is broken.
Ben Stein: I don't think for a minute there's a conspiracy. There are a great many Democrats on Wall Street. There are an enormous amount of terribly rich Democrats in the stock market.
Neil Cavuto: Like Gregg.
Ben Stein: There's no hint that the Democrats are anti-stock market. The Democrats just want to fight President Bush.
Gregg Hymowitz: It's not about fighting President Bush, Ben. To speak for all Democrats, we don't believe that these personal savings accounts is the right way to fix Social Security. Ben. To speak for all Democrats, we don't believe that these personal savings accounts is the right way to fix Social Security. We think that this notion of personal savings accounts is just the first chip at the block to ending the entitlement programs.
Neil Cavuto: When Bill Clinton was pursuing this a little more than a decade ago everyone had signed on to it then. So why is it such a bad idea now?
Gregg Hymowitz: It's not that it's a bad idea. We just think there are other ways. I've always said that if you think the returns on the Social Security trust fund are in danger, then let's have the government or somebody invest this money in things other than Treasury securities.
Herman Cain: That's ridiculous. He keeps talking about these other ideas. What are these other ideas? The only idea that they have brought forth is raise taxes and decrease benefits.
Gregg Hymowitz: I just gave you another idea. Change the way we invest the money that is in the Social Security trust fund and invest some of that money in equities.
Jim Rogers: Gregg, you have to be kidding. The government is going to invest my money? The people who run the post office are now going to get my money? The government never gets anything right.
Gregg Hymowitz: The government is already investing your money. I'm saying, change the way they invest your money.
Herman Cain: What's wrong with individuals investing that money?
Ben Stein: They're already allowed to invest their money. They can invest their money any time they want. As to you Gregg and your conspiracy theory that the Republicans are trying to end entitlements, Mr. Bush just added an enormous new entitlement for the Medicare drug program. So the idea that Republicans are against entitlements is just nonsense.
Neil Cavuto: Meredith, do you think though that what this is leading to is investor class warfare? Regardless of what position you take, it's going to be the Democrats on the side of the little guy saying the little guy's going to get gouged in this process. And the Republicans saying go ahead, let the little guy try.
Meredith Whitney: Well, wasn't that Kerry's campaign stump? The further his campaign got along, to the dismay of his advisors, he went back to rich versus poor. The unity that the Democratic party has right now is only anti-Bush and that's what it was with Kerry in the last election.
Gregg Hymowitz: Let's just say we have these personal savings accounts and everyone is allowed to put in a maximum amount of $1000 a year. Tell me what that actually does for anyone? Twenty years later that person would have saved $20,000. Who is retiring on $20,000? So there has to be another agenda here.
Herman Cain: There you go again trying to get people off focus. It's to take four percentage points, which would be more than that over a period of time.
Gregg Hymowitz: No, the maximum amount according to what has been proposed is $1,000.
Jim Rogers: What's wrong with that?
Neil Cavuto: Gregg, you're a successful hedge fund manager. Let's say it is $1,000 and it accumulates over the years. You do the math. I'm sure it's significant.
Herman Cain: What about the compounding interest?
Ben Stein: Gregg is right here. $1,000 a year, even compounded at 8 percent for twenty years, is not going to be a huge amount of money.
Neil Cavuto: Will it be better than you're doing right now?
Ben Stein: Yes.
Neil Cavuto: End of story. End of story.
Ben Stein: It will be better, but you have to save a heck of a lot more than a $1,000.
Jim Rogers: But $1,000 for 45 years, if you start when you're 20, that's a lot of money.
More for Your Money
Neil Cavuto: Stocks that are making headlines. If you buy them now will you get more for your money? First up, Disney (DIS): big news last week — Michael Eisner will be out by October, a year earlier than expected. Is it time to buy?
Ben Stein: I love Disney and I actually love Michael Eisner. This company is a powerhouse. ABC is clicking on all cylinders. I love this company and I own it.
Gregg Hymowitz: The theme parks continue to be weak and there's some risk with Iger now coming on board. I agree with Ben, but there are risks out there.
Neil Cavuto: All right. What do you make of American International Group (AIG)? Maurice Greenberg was ousted last Monday.
Gregg Hymowitz: We think this is a perfect contrarian play. AIG has been through a lot of pressure. But we love the company and we own a lot of stock here. These companies are much bigger than one person. Yes, the Greenberg family has been involved for a long time, but they have a dominant share in Asia and a dominant share in the United States.
Jim Rogers: Gregg, I hate to say it, but if you own a lot of the stock, you're going to lose a lot of your money. There's so much fraudulent accounting. You can't believe how bad it's going to get now that Greenberg’s gone and all the truth is going to come out.
Gregg Hymowitz: You think everything but sugar is filled with fraudulent accounting.
Neil Cavuto: Ok, Hewlett-Packard (HPQ). Carly Fiorina was forced out on February 9th.
Leigh Gallagher: A lot of people are down on Hewlett because there's so much mystery as to who will replace Carly. And what's going to happen with the PC business and the Compaq merger. I don't think you should cast this company aside just yet. They really are sitting on a jewel in the printer business.
Ben Stein: They make an incredible printer and they manufacture money with their printers. They should never have gone into the PC business. If HP splits off its printer business I'd enthusiastically buy that.
Neil Cavuto: And Boeing (BA). The CEO, Harry Stonecipher, was ousted early this month over a sex scandal with another employee.
Gregg Hymowitz: This was a total exaggeration. He shouldn't have been let go over this.
Neil Cavuto: Democrats say that about all sex scandals.
Gregg Hymowitz: I'm not going to comment on that. That is just ridiculous. Boeing on the fundamentals, on defense, continues to be strong. We don't own the stock, but we like it.
Leigh Gallagher: You know the company is in trouble when the extra-marital affair between the CEO and an employee is the least of its problems. I agree they shouldn't have let him go, but this company is in trouble.
Jim Rogers: I have to say that Boeing is a better buy than a sell – though I am doing neither right now.
Head to Head
Neil Cavuto: He played dumb and now he's going to prison. Former WorldCom CEO Bernie Ebbers said he was clueless about the corruption inside his own company. The jury didn't buy it. Ken Lay from Enron plans to use the same defense. Could it work this time?
Herman Cain: It does not work. Integrity starts at the top. If you're the CEO you have to ask the right questions and create a culture of integrity.
Jim Rogers: He's exactly right. As CEO you're supposed to run the company and know exactly what's going on. Either they were lying when they were going around saying: “buy my stock, buy my company,” or if they didn't know what was going on then they were running the company under false pretenses.
Ben Stein: They have a fiduciary duty to run the company in an efficient way. They're breaching that duty if they don't know what's going on. It's highly unlikely that a person like Ebbers would not have known every detail of what was going on. It's an insult to the jury, and I must say Mr. Ebbers was not well served by his lawyer.
Neil Cavuto: Herman, I'm not trying to make excuses for them, but when you become a big cheese at a big company that becomes much more involved and intricate than you ever thought possible, you delegate a lot of stuff. You push your people to make numbers. And you assume that they're making the numbers legally. And then you're surprised to find out that they're not doing so illegally.
Herman Cain: You do delegate, but you surround yourself with people who challenge you as CEO if anyone in the organization might be lying. I don't think the attorneys had any other way to defend this. So they went to the "duh, I don't know" approach.
Ben Stein: WorldCom was a house of cards from day one. It was a fraud from day one. It was conceived as fraud. It's finally caught up with him as it should have.
Jim Rogers: If you're a CEO and even if you delegate, you've got to understand the numbers. Bernie Ebbers sold $11 billion worth of bonds in May of 2001 because they didn't have any money. It never occurred to him to say, "What happened to all the money?"
Herman Cain: And where was the board of directors. They have a responsibility also.
Ben Stein: Conmen really don't pay attention to reality. Conmen often forget to think and live in a dream world.
FOX on the Spots
Jim Rogers: U.S. invades Venezuela to "restore democracy."
Meredith Whitney: Congress softballs Social Security to play baseball hardball!
Herman Cain: Personal retirement accounts pass within 2 years.
Ben Stein: Forget scandals! Market is oversold & ripe for buying!
Gregg Hymowitz: Interest rates rise; more risk in the market.
Neil Cavuto: Oil stocks. I think they're priced for nirvana and there's nowhere for them to go but down, and the very fact everyone's recommending them tells you to get out of 'em!
Forbes on FOX
In Focus: Is the Homeland Security Department Wasting Your Tax Dollars?
Lea Goldman, staff writer: I think we are grossly misspending our tax dollars. Over $90 billion has been allocated to Homeland Security type spending since 9/11. A big chunk of that goes to state coffers without any regard to threat levels. So what you see is states like Wyoming getting $61 per person and states like California getting $14 per person. And what is the result? Our airports are not as safe as they should be, our boarders are totally under funded, our ports are overlooked and chemical facilities are an after thought.
Jim Michaels, editorial vice president: Lea, you're like the kind of people who say crime is way down so lets abolish the police department. Crime is not only way down, but that type of crime has been eliminated. We have not been hit since 9/11, and not for lack of trying. Usama's put out the call and they haven't been able to do it. You can't say it's all a waste.
David Asman, host: So we haven't been hit, so the money has all been well spent?
Quentin Hardy, Silicon Bureau chief: I don't buy that at all. It's a good thing Richard Reid put the bomb in his shoe because if he taped it to his chest we'd all be taking our shirts off at the airport. We do these absurd things that make no sense and have no reference to the real problem. When President Bush said we busted a terror cell in Buffalo, NY and they never made that charge stick, I understand. And when Ashcroft said Jose Padilla was a big threat and they haven't put a charge to him, I kind of understand. It's incompetence at this point. Case in point, a tiny little college in Pennsylvania has been doing a no bid contract with the Department of Homeland Security to train intelligence analysts. Now is it just a coincidence that this college is in Tom Ridge's hometown?
Elizabeth MacDonald, senior editor: I'm so tired of the people in the media criticizing what these great people are doing to protect America. You can confuse the pork spending that's been going on with the fact that we haven't been attacked since 9/11. Yes Congress has treated spending on Homeland security like another pork transportation bill, there's been a lot of waste. That's a valid criticism. But look, I think we're doing a really good job.
Victoria Murphy, staff writer: I chatted with some law enforcements officers this week and their concern is what's going on in the Middle East, in Iraq and Afghanistan, is a distraction. And that's where terrorists are focused right now. And as we pull out of the Middle East, terrorists again will refocus their efforts on the United States.
Chana Schoenberger, staff writer: Actually the best thing about all of this Homeland Security spending is that it has reminded Americans that we have a problem right here in our own country. We use to think that the biggest problem was the "Unabomber" Ted Kaczynski. No, the biggest problem is people trying to blow up our office buildings. And now that we have started thinking of America as a battle ground, people are more vigilant, the police are more vigilant and there's more security everywhere. I think it makes us all safer.
Jim Michaels: Any government program in a democracy is going to be loaded with pork. But a lot of this spending you are talking about would have taken place anyhow, because a lot of these agencies which were funded under the Homeland already existed and were already spending money. What we have now is better coordination between them.
Lea Goldman: I think it's a specious argument to say that we would have pork barrel spending anyway. We have a great opportunity right now to focus on things that need to be focused on. For example, I think we are allocating $200 million to ports, when they need over a billion. Instead, Wyoming has a bomb detonating robot. Why can't we put more money into the areas that really need it.
Elizabeth MacDonald: I think in some situations, no news is good news. I think we have no idea what intelligence gatherers are doing to stop these terrorist cells. And the fact that we haven't heard anything in a while is a real win for us.
Quentin Hardy: I'm sorry, but if you can't measure it, you can't judge it and you can't change it. And if they're saying, trust us, we're catching a lot of stuff, we're effectively saying that our open democracy is just not up to this kind of work. And that kind of secrecy leads to recruitment posters like the Abu Ghraib abuses.
Chana Schoenberger: You know what, we have spent a lot of this money and private enterprise has spent even more of this money from venture capital developing new technologies that will help us to fight terrorism. That's what we should be doing
Elizabeth MacDonald: The best thing that's come out of this is the 9/11 commission said we have to imagine how terrorists are going to try and attack us again. In other words, we have to re-shift our thinking. Also, the intelligence sharing that is going on is a vast improvement over what's happened in the past.
Victoria Murphy: I think the pork is a tragedy. You look at the port system in particular. New York accounts for 12 percent of cargo ships but only got 7 percent of anti-terrorism port funding. Yet Martha's Vineyard is getting funding. It's ridiculous, especially when we could be focusing on technology. Creating a new national ID system.
Flipside: Kill Mortgage Tax Deduction to Help Us Save More Money!
Bill Baldwin, editor: In the old days, people saved money by paying down their mortgages. Now they are doing the complete opposite. Last year Americans sucked $500 billion out of their houses via their mortgages. This is all being subsidized by the tax code, which gives you this deduction for your mortgage interest. There are three tax incentives for homeowners. I am in favor of all three of them. One of them is you don't have to count as income the rental value you get from your home. It's like a tax free dividend. The second is no capital gains for most people. The third one is you deduct your property taxes. I'm in favor of all those things. But not the home mortgage tax deduction which urges people to buy homes they can't afford, which causes them not to save more.
Rich Karlgaard, publisher: I think Bill just has this one wrong. In 1939 Congress enacted the mortgage rate deduction and along with the GI bill it was one of the great engines of middle class growth in the United States. The thing that distinguishes us from almost all other nations on earth is the size and vitality of our middle class. I'm not persuaded that this is damaging this great engine in the US.
Jim Michaels: There are some abuses in the system. I don't see why we should be subsidizing second homes. $3 million mortgages on trophy homes should be excluded. The fact is we have the highest rate of home ownership in the world. Despite what you say Bill, housing is the biggest savings people have. Most people accumulate capital only through their home.
Quentin Hardy: Homes are good savings bases. Bill has some excellent ideas. I think feeling good about a tax deduction is like smiling at a mugger who tosses you $10 out of your own wallet. If we want this system gone and done, we're going to have to give up on some of the perks they give us and get rid of all the really bad things they are doing to us. Frankly, this is something nice that the middle class get. The poor don't get it. The whole system is corrupt. We have to give it up too.
Rich Karlgaard: Thirty five percent of Americans owned their home when this was enacted in 1939, now 75 percent do. Above all you do no harm. If you take away this one, maybe you get some little efficiencies but you're going to cause a lot of ripple and a lot of harm in the economy.
Bill Baldwin: I think Rich is just wrong on this. A subsidy is not an incentive for home ownership. It's a subsidy for not paying down your mortgage. It's a subsidy for taking money out of your house and spending it on SUVs and vacations.
Jim Michaels: The home is the only piggy bank those people have and it's the biggest. Anything that discourages home ownership and makes it more expensive is going to break this piggy bank for these people.
David Asman: 37 million Americans deduct an average of $9,044 each year from their home mortgage.
Rich Karlgaard: This is one of those things that makes citizens better citizens. There's probably no thing that turns kids into adults more than signing up for a 30-year home mortgage. I think Bill and Quentin are completely underestimating the positive effects of this American institution.
Quentin Hardy: We're talking about getting rid of a deduction style. What Bill is talking about is getting them to pay down their mortgage, have more savings and build up their equity.
The Informer: Bully CEO Buys!
Jim Michaels: You can be a tough CEO without being nasty, arrogant or abrasive. The point is, there is nothing wrong with your celebrity CEOs. A celebrity CEO can be an asset to a company. Most great companies are in the shadow of one great CEO anyhow. Where you go wrong is when the CEO stays on too long or when the CEO gets out of touch with the world.
Lea Goldman: I like my CEOs to speak softy and carry a big stick. And what I have noticed with these celebrity CEOs is that there's a shame for it on Wall Street. They love it when these guys stumble. I think that's what happened to Disney's CEO, Michael Eisner. They just beat him to a bloody pulp, every day.
Rich Karlgaard: I think the arrogant CEOs get all the attention. People like Michael Eisner are good CEOs. But Coleman Meyers of Gillette and Ken Iverson of Nucor Steel, who we hardly even recognize produced better returns with this quiet servant style of leadership.
Victoria Murphy: We're in Silicon Valley and there are lots of not-so-nice CEOs. Oracle's Larry Ellison certainly comes to mind. He walks with a very big stick and not so quietly. He just made a bid for PeopleSoft and now he's in a bidding war with SAP over this smaller software company Retek. I think he is doing the right thing. He's getting Oracle into the application process.
Jim Michaels: My roll model is Warren Buffet. Beneath that folksy image, that guy is tough as nails. His stock is Berkshire Hathaway (BRK.B). He's made thousands of people rich.
David Asman: I have to say I own a couple of these shares.
Rich Karlgaard: I hate to bet against Warren Buffet, but I think this time, Warren Buffet's bet against the dollars is going to be wrong.
Victoria Murphy: I like Microsoft (MSFT). Steve Ballmer is not known for being timid. I think he is aggressively taking Microsoft into new markets beyond the PC, Windows and Office markets. I think the stock is undervalued.
Jim Michaels: I think Microsoft is a great company, but these tech behemoths are market performers now, I don't think it's going to out perform the market.
Lea Goldman: I like Sam Palmisano from IBM (IBM). In an industry dominated by big brassy personalities like Bill Gates, Carly Fiorina and Larry Ellison he really stands out. He's a leader. He booted the PC division, he's taking a big bet on Linux.
Jim Michaels: Again, it's a good company but it's going to be a market performer. It's not going to stand out.
Rich Karlgaard: I like Dell (DELL) and Michael Dell. He brings in humility. He shares power. Right now he shares power with CEO Kevin Rollins, Dell is the chairman. Michael Dell is the Sam Walton of the 21st century. The stock is valued high but it still has growth ahead of it.
Jim Michaels: I hate to be a naysayer because I love Dell, I think it's a fantastic company. But, it's selling at three times revenues, 30 times profits. It's an expensive stock.
Makers & Breakers
• EnCana (ECA)
Rob Lutts, Cabot Money Management: MAKER
EnCana is one of the most successful energy companies in Canada. Big focus on natural gas. We like it because we think the prices in energy are going to stay high for a considerable period of time.
David Asman: You think EnCana is going to go up to $90 within 12 months. (Friday's close: $69.93)
Peter Newcomb: MAKER
I'm a maker on this one. It delivers 45 percent operating margins and trades at a 20 percent discount to the market. Love it.
Jim Michaels: BREAKER
It's already reflected the good news. The stock is way up. I wouldn't buy it.
• Starbucks (SBUX)
Rob Lutts: MAKER
Starbucks is a great growth company. It reminds us a lot of McDonalds from back in the 1970s. Always expensive, but keeps on growing.
David Asman: $65 is your 12-month target. (Friday's close: $52.52)
Jim Michaels: BREAKER
I won't pay $3.50 for a Frappuccino and I won't pay thirty times earnings for a stock
Peter Newcomb: BREAKER
I don't like it. I think same-store sales (stores open at least one year) are down.
Rob Lutts: They have a tremendous product that has succeeded day in and day out. 20 percent growth, we think it's going to happen!
Stock Smarts: $teroids and Stocks
Congress was throwing fastballs at Major League Baseball last week, grilling superstars like Mark McGwire and Sammy Sosa about steroids.
But why is Congress spending time on sports when Social Security is at such a critical stage in the public debate? Are members of Congress just wasting our time with the national pastime?
Dagen McDowell of FOX Business News says that many lawmakers will do anything to avoid dealing with the Social Security issue, especially if they are facing re-election in the fall. And it’s a shame, because the economy is really going to suffer in the next ten years if Congress doesn’t start to come up with solutions for Social Security. If the Democrats could recognize the fact that there are problems with Social Security, the issue would be resonating more with the American public. Another thing to watch in Medicare — Social Security is an easy fix compared to this one.
Wayne Rogers of Wayne Rogers & Company thinks that members of Congress will “do anything” to get re-elected, which is part of the reason for having the showboat type hearings on an issue like steroids. In terms of the oil issue (which was discussed in the segment), he thinks that the problem comes from the fact that there are no new refineries in America. No matter how much drilling we have, without new refineries, it doesn’t matter. And there seems to be so much outrage over Congress with the panel, he wonders where the outrage is with the American public.
Jonas Max Ferris of MAXfunds.com says “it’s a ‘roid rage!” but seriously wonders why Congress isn’t using committee power to actually investigate how it can finance the Social Security program in the future. And the reason why the steroids debate has been resonating is because Congress has framed the issue as “saving the children”. Social Security should be the ultimate “saving the children” issue — that would give it traction with the American people.
Mike Norman of the Economic Contrarian Update says that there are so many important issues that we have to deal with — a war in Afghanistan, a war in Iraq, saving Social Security, fixing Medicare — that this whole Congress/steroids thing is such a joke. And it speaks to a larger point of more government regulation coming in on private business, and that is never a good thing for the stock market.
Jonathan Hoenig of Capitalistpig Asset Management says that this is terrible for the market; the move government involvement there is in business, the worse things are for investors. There is plenty more for Congress to be doing than to look at the steroids scandal. Too few people understand the role of government, which is to protect the rights of its citizens, and not to interfere with business. Let it (business) alone.
Gary Kaltbaum of Kaltbaum & Associates thinks that the markets could be in trouble here. Not only do we need more focus on Social Security, we need to focus on “$57 oil” — if there is anything that is going to kill the market, it is the fact that no one is talking about oil. But what the administration needs to do is show the public just how well the stock market has done over the past 100 years, so that voters can see what kind of returns they could have been getting with a different approach to Social Security.
Best Bets: Cinderella Stocks
With the NCAA basketball tournament in full swing, expect to see some “Cinderella” upsets. And our crew has the “Cinderella” stock picks that could surprise you and your wallet!
Wayne's Cinderella Stock: STATS ChipPAC (STTS)
Friday's Close: 7.07
Wayne admits that this pick is a “shaky one”. This is a company that operates out of Singapore and is in the business of testing computer chips. The stock has been on a bit of a rough ride, but thinks it has bottomed out, and he does like it to go up around 15 percent from where it is now (Wayne owns shares of STTS). Jonathan wonders about all those stocks that seem like they’ve “bottomed out” and have gone nowhere. He just doesn’t like anything in the semiconductor sector and thinks this is a “lame stock.”
Gary's Cinderella Stock: Ivax (IVX)
Friday's Close: 19.21
This pharmaceutical company has been “dormant” for about five years, but it has a couple of things that Gary likes in a stock right now. Insiders have been buying shares “left and right”, and it reported earnings that beat estimates, in addition to a strong outlook for the rest of the year. Wayne also likes the stock.
Jonas' Cinderella Stock: JetBlue (JBLU)
Friday's Close: 17.37
This is a stock that Jonas used to think was overpriced, but now with all the oil fears and the baggage that is surrounding the airline industry, he thinks JetBlue is under priced and could get up to $25. Jonathan wants to know why Jonas has to always go for the weakest stocks in the market.
Jon's Cinderella Stock: Stillwater Mining (SWC)
Friday's Close: 11.48
Jonathan says that a lot of the commodity plays have been really strong, but palladium mining has not been part of that rally. That’s why he likes SWC. If the hedge funds, which have been playing oil big time, get in on the palladium mining, it will be huge for this stock. Gary says that Jonathan’s theory is the same one he was talking down in terms of Jonas’ JetBlue pick (picking a laggard).
Wayne, Dagen and Jonathan answered some of your questions.
Question: "The answer to Social Security insolvency is to scrap the current income tax and replace it with a National sales tax. Thoughts?"
Wayne doesn’t think this is such a terrible idea. He mentions the “value added tax” that is in place in Europe, which does the same sort of thing as a sales tax. The problem is that it is such a political thing, in that there is a debate that it doesn’t tax the rich, or that it doesn’t tax the poor. But overall, it’s a good idea. Jonathan thinks it is a fantastic idea, but one that will never happen. He likes the fact that it isn’t a progressive tax on income. We spend so much money on tax preparation; a national sales tax would save us on those expenses. Dagen says that the danger could come if we end up having a little of both — income taxes and a national SALES TAX. But a national sales tax would encourage savings, which is something the country needs.
Question: "I bought United Defense Industries (UDI) in 2002. Now that it is being bought by BAE Systems, should I sell?"
Dagen says you should hang on to those shares, as the company is being bought out at a great price ($75/share). Wait and collect the money when the deal closes. Wayne agrees — hold on to the shares then take the money and run.
Question: "I just bought shares of Extreme Networks (EXTR), which makes computer networking equipment. Thoughts?"
Jonathan wants to know “why didn’t you ask us before you bought the stock”? Jonathan would avoid anything related to computers or communications. Use a tight stop-loss order with this one. Dagen says this company competes with giant Cisco, so that makes it a tough play.
Question: "With the growth of High Definition TVs, is Corning (GLW) a good stock to own?"
Wayne doesn’t like Corning yet. He thinks it’s too volatile right now. Until it builds up some kind of a base, he wouldn’t touch it. Jonathan says that GLW is just stuck in "nowhere land" right now, and it just isn’t one on his radar.
Cashin’ In Challenge
Check out the crew’s picks and standings on our “Cashin’ In Challenge” Web site: www.foxnews.com/challenge
Stock of the Week
Last week’s pick was Devon Energy (DVN) from John Curran. For the week of March 11-18, the stock was up 3.4 percent
This week’s pick is Annaly Mortgage (NLY) from Mike Norman (he owns shares of NLY). This is a mortgage-based real estate trust, and he likes this one because of the recent spike in bonds. He also says that the Fed meeting this week will give us another rate hike, and that should help the pick. Jonas says that Mike is always such a great contrarian stock picker — and anything that has to do with real estate goes so against that grain. A debt crisis could really hurt this stock.