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.
(TOL) bigwig is getting more than $17 million and its stock is down almost 50% in the past year and a half! Are these big bonuses are good for America and the market?
Tobin: The big money is going to the Wall Street execs and it is purely based on profits. So it this is not bad news for stocks and the country.
Adam: Soak the rich.
Pat: The size of bonuses/pay packages make the headlines, but they aren't the real issue, since some highly paid CEOs deserve every penny they receive. The problem is that most don't deserve it. The real issue is the structure of exec comp, not the size of anyone's pay package. Exec pay should be clearly linked to long-term shareholder value, but all too frequently, pay packages are determined by subjective factors.
Gary B: These big bonuses are good. It shows that free enterprise rules. The only people who should be unhappy are the shareholders if they're not being enriched.
Patricia: When it comes to compensation there is no shame in the corporate boardrooms. There are very few great CEOs, who make a difference and few are worth the kind of bonuses being given.
Scott: Over the top compensation is obscene and disgusting because managers don’t create anything unique. It represents the epitome of an overheated and overvalued market, and may just be a sign of an impending market top—just like in the year 2000.
Stock X-Change
Rocky back and better than ever?!?! Who'd believe it? But that's nothing compared to what our guys say about their comeback stocks...
Pat: Whole Foods PlayStation, Xbox and the Nintendo Wii. These are flying off the shelves and games will follow.
Lea Goldman: I’m giving Steve Teva Pharmaceutical (TEVA) This company has a bunch of drugs in the pipeline.
John Rutledge: I’m giving Steve China Mobile(CHL). China Mobil is the fastest growing company in the fastest growing industry in the fastest growing country. Last month they added 5 million new subscribers.
thousands of points added to the Dow.
In Focus: A Merry Christmas for the Middle Cla$$?
Steve Forbes, Editor-in-Chief: The middle class is doing well. Balance sheets are strong, incomes are moving up, the economy is growing and jobs are being created. Overall, it’s good.
Lea Goldman, Associate Editor: I don’t want to be the scrooge here, but I wouldn’t interpret a trunk full of presents from Target and the Gap as a sign that the economy is roaring. First off, those presents are bought on credit. Second, I think the middle class thinks they have more cash because it didn’t take $80 to fill the tank and the real estate market didn’t crash like some thought. So it feels like you have more cash, but after the New Year, that’s all going to change.
John Rutledge, Forbes Contributor: We’re the richest, freest people in the world. American technology has pushed growth up and prices down. We have more choices and better health than ever before. We’ve got growth and profits up. The stocks markets are up. We have to stop whining and get back to work.
Elizabeth MacDonald, Senior Editor: The middle class in bearing an increasing share of the tax burden in this country: up to 19.5% since 2001 from 18.7%. I think the government really needs to get off the back of the middle class taxpayer.
Mike Ozanian, Senior Editor: Incomes have been rising faster than inflation, which is huge. Average hourly wages are where they were near the 1983 peak. Look at what the average middle class person has now: a 2-car garage and air conditioning. In other countries you’d be considered rich, only here in America are those things considered middle class.
Quentin Hardy, Silicon Valley Bureau Chief: I think in the heart of the middle class happiness is a better life for your kids. And if you’re a migrant who’s made it into the middle class, of course things are good. If you’re an American second or third generation, compared to 30 years ago, you have higher fixed cost in housing, education, healthcare and transport. You have less discretionary income.
*Makers & Breakers
• Capital World (CWGIX)
Dawn Bennett, Bennett Financial: MAKER
is a great fund with good international exposure and in the last 11 years it has only been down 2 times. (Minimum Investment: $250)
David Andelman: BREAKER
I don’t like this because they are missing all of the major octane from overseas.
Mike Ozanian: BREAKER
It’s too expensive for me. If you invest $10,000 in this fund over 5 years it will cost you $1,000 of that.
• Mutual Shares (TESIX)
Dawn Bennett, Bennett Financial: MAKER
This is a good defensive, large-cap play that has international exposure. Since 1976 it has had only 2 years in the red. (Minimum Investment: $1,000)
Mike Ozanian: BREAKER
I’m cautious about this because the fund manager has only been there a year and a half.
David Andelman: BREAKER
You could do so much better in that space with no load.
Bulls & Bears | Cavuto on Business | Forbes on FOX | Cashin' In
Cashin' In
Our "Cashin' In" crew this week: Wayne Rogers, Wayne Rogers & Company; Jonathan Hoenig, Capitalistpig Asset Management; Jonas Max Ferris, MAXfunds.com; Leigh Gallagher, SmartMoney magazine; Mike Norman, BizRadio Network; Stuart Varney, FOX Business News
Stock Smarts: National Health Care in 2007: Best Thing for American and the Market?
It might be the ultimate socialist program: national health care. But could a program that gave all Americans health insurance be a boon for both the economy and the stock market?
Mike Norman says that not only would national health care be good for both the economy and the stock market – it’s really a necessity. The cost for doing nothing will be tremendous to the private sector. As the baby boomer generation gets older, the need for health care is going to get bigger, and the government could get involved with a moderate level of spending to help create the jobs necessary.
Jonathan Hoenig thinks that on a practical level, the government can’t spend money better than the private sector. The reason socialized health care will not work is that there is no such thing as a right to health care. There is not a right for a person to get a “freebee” from someone else.
Wayne Rogers says that the government can’t run anything right, and there has to be a way to address this situation without involving the government. In the society that we live in, there should be a way to provide health care for everyone at a reasonable cost
Stuart Varney says that as a child of socialized medicine in Great Britain, he knows that American can’t afford a socialized medicine program; the tax increase would be far to great to have to support the cost of medical technology and an aging population.
Jonas Max Ferris thinks that American corporations should not have to be paying for health care. For a business to have to layout $4000 - $5000 for every new hire is absurd. These corporations are also competing against companies in other countries that are paying for health care. Help from our government would help businesses and stocks.
Leigh Gallagher says that General Motors spent $5 billion on health care in 2004. The amount of money corporations have to spend on health care each year is an unsolvable problem in our current system.
“Homes” For The Holidays: How Will The Housing Market Look Next Christmas?
2006 saw a slowdown, not a meltdown, in the housing market. So where will home prices be next Christmas, 2007?
Wayne Rogers says that in some areas of the country the slowdown has been pretty dire with price drops of up to 30%. He thinks that the real problem area in 2007 will be with secondary homes, not with primary residences.
Stuart Varney thinks that the Federal Reserve may put something of a “floor” beneath the housing market in terms of prices but cutting interest rates, which will in turn cut mortgage costs for many people.
Leigh Gallagher thinks that late 2007 could be a good time to buy a home. She says the Fed will probably cut rates in the upcoming year. She also thinks that while we aren’t totally out of the woods for a slowdown, we could see a lot of activity from first-time buyers.
Jonathan Hoenig says that real estate is a local story, and that he’s not really a bear on housing. He actually thinks that from an investment standpoint, international real estate is looking good right now.
Jonas Max Ferris says that since the housing peak in 2005, residential homes have been the worst performing asset class, and he thinks we are lucky that prices haven’t fallen more. The strong economy and low interest rates have helped, but we are still in for more drops in home prices in 2007.
Mike Norman thinks that all things being equal, the housing market is stabilizing. But if the Fed drags its feet in lowering interest rates, you could see the big slowdown in housing that never really materialized in 2006.
Best Bets: "Miss USA Gone Wild" Stocks
• Jonas’ Wild Pick: Brown-Forman (BF.B)
Friday’s close: $65.43
• Leigh’s Wild Pick: Starwood Hotels (HOT)
Friday’s close: $62.72
• Wayne’s Wild Pick: MGM Mirage (MGM)
Friday’s close: $56.33
• Jonathan’s Wild Pick: BanColombia (CIB)
Friday’s close: $31.45
• Mike’s Wild Pick: Gannett (GCI)
Friday’s close: $59.70
Money Mail
Question: “So many politicians and entertainers make big mistakes but end up coming back bigger than ever. Could the same thing happen with Miss USA?”
Wayne Rogers says absolutely. Donald Trump has a great nose for publicity, and the public loves a redemption story.
Jonathan Hoenig thinks that this is a non-story, and wants to know what the big deal is: a girl comes to New York and parties. It would be more of a story if she came to New York and didn’t party.
Leigh Gallagher says there is no such thing as bad press, and now she’s a household name.
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