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
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.
Democrat White House hopefuls headlining the "Take Back America" conference, but just what will they "take back"? Is "take back" really code for higher taxes?
GARY B.: This is the Democratic Party's platform: We're a bunch of really smart guys, much smarter than you! Give us your money and we'll put together these big smart guy programs." These programs have no chance of succeeding, but Dems will say these programs will succeed. This may all be very silly but it's going to be their platform. And it's all going to be praised as the whole class warfare.
ADAM: I didn't hear any code language for raising taxes. The taking back America that I heard was educating our workers so that our companies don't need to go outside of the country to get workers. Making sure that our workers have health care. Doing the right thing in foreign countries and raising the stature of the United States.
JOE: They've got it wrong. This was the "Take Out America" conference! Dems will raise taxes on everyone who creates jobs and is affluent. They will socialize medicine. We'll take on our major trading partners, insult them, and drive them away from doing business. All this for what? Knock down an unemployment rate that's already at record lows? Democrats are playing very dangerous with domestic policy.
TOBY: The definition of bureaucracy is when you take energy and turn it into solid waste. These guys are talking about taking some good ideas and screwing them up by trying to legislate good ideas. Good ideas come from the capital markets, from entrepreneurs, from Americans who come up with great ideas and implement them. This is what these Democrats have mixed up.
PAT: Republicans have already done a very good job already driving our trading partners away. Think back to the Dubai ports deal. A solid company was not allowed to buy some port infrastructure here. That was killed under a Republican administration and it has resulted a significant decrease in foreign investment in the United States. Both parties can do dumb things.
SCOTT: Who are the Democrats taking America back from? Guys who work hard for living? Middle class families that work all day long to support their families, to buy health insurance, to pay for their car, and mortgage? This pandering is purely an aim to get votes from the middle class.
Will "Magic" Fat Pill Make America Lazy?
Even GlaxoSmithKline admits its new diet drug alli isn't a magic bullet. But consumers sure hope it is! The pills flying off the shelves. So if people think a pill can replace diet and exercise, will Americans become lazy?
JOE: You have to read the fine print! If you don't exercise and eat right, this is not going to work. Americans will lose sight of that, and just like light cigarettes, they may become more obese because they think they are off the hook.
TOBIN: Americans are already lazy! They are trying to take a pill to become un-lazy? I don't think so!
PAT: The bottom line is this country is pretty obese. And it's going to go on being obese until exercise habits or diet habits change.
GARY B.: We are handing America a remote control and saying and you know what, you can use the remote control or you can get up and still change the channel. How many people are still getting up to change the channel? Of course people are going to do this, and of course people will get lazier!
SCOTT: I think this pill will be a disaster! I think nobody buys it after the first six months.
ADAM: I disagree with Scott, because people will keep buying it. It will be a hope against hope to help people lose weight. And yet, this is an example of how we've become a lazy country.
You've heard it time and time again on this show. A Toby Bottom. The worst is over and we're ready to rally. Now, he's brought his hottest stocks to buy right now!
Titanium Metals (TIE)
ISIS Pharmaceuticals (ISIS)
Energy Conversion Devices (ENER)
BigBand Networks (BBND)
Adam's prediction: Michael Moore's "Sicko" helps sell national health care!
Joe's prediction: Bloomie and Arnie! Dream Team for stock market and economy
Gary B's prediction: $ummer $chool! Barnes & Noble (BKS) up 30 percent by 2008
(On the show, Gary B. mentioned Barnes & Noble College Booksellers. This is a privately held company that operates more than 500 stores on college and university campuses across the United States and in Canada.)
Tobin's prediction: Don't buy Blackstone (BX)... yet! Falls below $30 then gains 50 percent
Scott's prediction: Chee$e! Internet photo shop, Shutterfly (SFLY), "snaps" up 35 percent
Pat's prediction: Sears (SHLD) on sale! Gains 50 percent in 18 months
Cavuto on Business
On Saturday, June 23rd, Neil Cavuto was joined by Ben Stein, "Yes, You Can Get a Financial Life" author; Charles Payne, "Be Smart, Act Fact, Get Rich" author; Laura Schwartz, laura.gather.com; Ben Ferguson, The Ben Ferguson Show; Leigh Gallagher, Fortune Magazine; and Rebecca Gomez, FOX Business correspondent.
Neil Cavuto: Getting paid cash for attending a parent-teacher conference, going to a doctor, passing an exam—some low-income families in New York could earn thousands of dollars a year by exhibiting some basic responsible behavior. Billionaire mayor Mike Bloomberg's entirely privately funded goal is this: break the cycle of poverty. Ben Stein, will it work?
Ben Stein: I think it works. People generally respond—I must say, if people don't respond to economic incentives this system is very badly screwed up. It is unfortunate that people have to be paid to do what is good for them, but some do, and I would like to introduce my nineteen-year-old son and about 10 million other teenagers as Exhibit A. The whole system is based on rewarding people with money, let's do it for poor people too.
Charles Payne: I don't think it works at all, it's a terrible idea. You're teaching people mediocrity as kids when they can just show up and get paid. We already have a real sense of entitlement amongst a lot of poor people. The bottom line is this will keep poverty going—it doesn't erase poverty, it makes poverty more comfortable. No one in the real world is going to pay you for being mediocre.
Rebecca Gomez: The point here is that these people need to learn a whole new way of doing things. Unfortunately not everyone is responsible like the people at this table—maybe these kids don't have parents like Charles. This would lead to positive behavior!
Leigh Gallagher: Bloomberg knows better than anyone that people respond to money. No one is saying this is going to work. It's a pilot program and we need to give Bloomberg credit—nothing else has worked so far, so let's give it a try.
Ben Ferguson: We're going to pay people $50 to get a library card!? Why are we rewarding people for below average lifestyles? Why are we just requiring people to show up to class to earn $100? We're already giving them a free education; we don't need to pay them to show up! This lowers the bar for every generation.
Laura Schwartz: It has been proven to work well in other places like Mexico and Brazil. They have seen an increase in grades, increase in enrollments and attendance, plus an increase in immunizations. Once you weigh in the health benefits, and consider the 7 percent drop in poverty among those involved, it's good. You have to find some way to break the chain of poverty, and this might work.
Head to Head
Neil Cavuto: What if I told you that immigrants legal and illegal were doing wonders for the American economy, even increasing your pay? Well the White House published a report saying essentially that—Ben Ferguson, what do you think?
Ben Ferguson: An absolute and total lie! It says that illegals are raising the pay rates for American workers. How is that even possible to believe? There may be a little positive push for the economy, but overall it will pull the economy down. Americans are losing jobs when illegal immigrants get jobs in this country. You can't tell me that American laborers have not lost their jobs because of illegal immigrants.
Rebecca Gomez: The report did mention that the incarceration rate for illegal [and legal] immigrants was lower than that of American citizens. It's always the argument that illegal immigrants are taking jobs, but we have record-low unemployment. Their presence has allowed other Americans to go back to school, to get higher-paying jobs instead of menial jobs. This is why our country is flourishing.
Charles Payne: I think illegals probably add to the economy, but by that same token, there are Americans out there looking for jobs who can't find them. Still, Americans should be aspiring to non-menial jobs. We should not turn our backs on immigration because we need it.
Ben Stein: It is very possible as a matter of economics that illegal immigrants may boost the economy. The problem with these illegal immigrants is that they create what we call externalities—costs like jail time, ruining public schools, ruining the health system, ruining the state of mind of the average citizen. These externalities are not included in this report, and that is a very dangerous thing.
Laura Schwartz: Look at the fact that they [legal and illegal immigrants] make up 15 percent of the work force. A bigger workforce means a larger output in this country and lower costs for good and services for us. But don't overlook the benefits of having immigrants and illegal immigrants in this country. Immigrants make up 40 percent of our PhD's. Americans are moving out of the labor jobs, and this shows a positive movement in our economy.
More for Your Money: "Evan Almighty" $tocks!
Neil Cavuto: "Evan Almighty" is drawing crowds at the box office. But, who needs divine intervention when you've got our guys picking even "mightier" stocks that could "flood" your wallet with lots of dough?
It's time to get "More for Your Money."
Charles Payne: Micron Technology (MU)
* Charles owns shares of this stock.
Ben Ferguson: Procter & Gamble (PG)
Leigh Gallagher: Novartis (NVS)
Ben Stein: iShares MSCI EAFE Index (EFA)
* Ben owns shares of this stock.
FOX on the Spot
Ben Ferguson: News agencies beware! Paying for Paris is bad biz!
Ben Stein: Economy is on fire! Bush deserves credit for it
Laura Schwartz: Rudy has peaked! Downhill from here!
Leigh Gallagher: Blackstone (BX) over-hyped; worth a lot less in 1 yr
Charles Payne: Chip stocks about to breakout! Buy Sandisk (SNDK)
*Charles owns shares of this stick.
Neil Cavuto: Media ignoring signs; Iraq troop surge is working!
Forbes on FOX
In Focus: "Independent" President: Good or Bad For Stocks?
Mike Ozanian, senior editor: I think an independent president would be great for American's bottom line. The more debate the better. When Perot ran as a third-party candidate it allowed Clinton to come in and become President. Two years after that, it allowed the Republicans to take control of Congress because Clinton was doing such a terrible job. And after that, the stock market went up 20 percent for the next 6 years.
John Rutledge, Forbes contributor: I don't think this is so good. It says something bad about the voters. The only reason they would elect a third-party guy is if they're crazy. And if they're crazy, it's probably security crazy and that's bad for the Gulf.
Dennis Kneale, managing editor: The fact that the candidates who haven't announced, Fred Thompson and Mike Bloomberg, are the ones that everyone talks about shows how disaffected everyone is. If Bloomberg runs it will be good for the markets right now, because it will steal more votes from Hillary than from anyone else. If he becomes President it will be good for Wall Street.
Neil Weinberg, senior editor: A third-party president would be bad for business. People say that gridlock is good, but the fact of the matter is, the next president is going to have a lot of problems with our health care system, Medicare, Social Security and our education system. We can't even get these solved when we have the same party in Congress and the White House.
Elizabeth MacDonald, senior editor: I don't think Bloomberg will win at all. He will steal votes though. But a third-party candidate will raise issues, like Perot did. Bloomberg is using the political 2 party system just as he did for mayor. He ditched the Democratic Party to be Republican. He's being a little politically expedient here registering as an Independent.
Quentin Hardy, Silicon Valley bureau chief: A third-party candidate would be outstanding for the markets. It would fix a lot of the busted stuff that neither party wants to fess up to. If you give Congress someone from the third party they can go in and get things done. Congress will have an excuse that they don't like the guy but he's President. In one term he can clean up the mess and that helps the country.
Flipside: $ex Between Coworkers Is Good For Business!
Bill Baldwin, Editor: Given how many journalists are married to other journalists that they met on the job, I think we're in no position to criticize. I think it's totally wrong to make a federal case against this. There is nothing in the Constitution that says we have to have statutes written by Congress regulating sex.
Michele Steele, Forbes.com Reporter: This is an awful idea. The way we get in trouble here is that you have people in positions of authority possibly exploiting people who are not in positions of authority.
Dennis Kneale: The boardroom is reaching too far into the private lives of its senior most employees. And we're firing CEOs and CFOs because of what they're doing off-hours.
Victoria Barret, associate editor: When it comes to sex in the workplace, things get a bit fuzzy. Was it consensual? Are there strings attached?
Elizabeth MacDonald: It could be problematic if it leads to harassment. But half of office workers according to a poll have had office romances. One fifth of them get married.
Lea Goldman, associate editor: This is terrible for office place productivity. If you're a worker and you have the option of working on a presentation or getting a little action in the office break room you're not concentrating on the presentation!
Should You Be Allowed to Sell Your Vote?
Quentin Hardy: We've talked about Mike Bloomberg getting into this race, and the only reason he can do that is because he's a billionaire. The reason you need a billionaire is because everyone else is raising hundreds of millions of dollars. Right now you're paying attention. People are calling you up and you're watching adds. Why shouldn't you get paid by the candidates in cash to read a position paper and make a decision on whether you should vote for them?
Lea Goldman: And then we'll be one step closer to the way things work in Nigeria, Egypt and Cambodia. Just what America should be like. It's flat out election rigging. If you believe that open and free elections are the cornerstone of a free democracy than buying a vote is the complete opposite of that.
Neil Weinberg: Unions sell their votes to whoever gives them the pork. Businesses sell their votes to whoever gives them the pork. Then we get these secret, under the table deals where they get favors in return. Why not turn it into real hard dollars. Instead of giving them favors, why not let the candidates give us money!
Mike Ozanian: First off, this would really drive up the cost of elections. And you would have no way to monitor the system. It totally wouldn't work.
Victoria Barret: I think it's sad that Quentin, who was in the past such a champion of the "little guy", is now advocating to let the big guy sucker the little guy into putting him into the White House.
Informer: Election Predictions
John Rutledge: Fred Thompson; Chevron (CVX)
Bill Baldwin: Hillary Clinton: UltraShort S&P 500 ProShares (SDS)
Mike Ozanian: Rudy Giuliani; Uranium Resources (URRE)
Michele Steele: Mike Bloomberg; Goldman Sachs (GS)
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; Stuart Varney, FOX Business News; Patricia Powell, Powell Financial Group; and David Sirota, Author of "Hostile Takeover."
Stock Smarts: Would National Health Care Be Worth The Cost?
Most estimates say national health care would cost tens of billions of dollars each year. Is it worth the money?
Stuart: Forget of tens of billions; it would cost us hundreds of billions of dollars. That's just one of the problems with national health care. I am a child of socialized medicine in Britain. Believe me, it is wildly expensive. If this goes forward, you put health care in the hands of politicians. What a disaster that would be!
David: I absolutely believe the government can provide us with national health care at the same level of quality as we have now. The idea that it will cost a lot more money is really a misnomer. Studies have shown that if we actually have a national health care system like every other industrialized country in the world, we will save hundreds of billions of dollars. Right now, our current system wastes about 18 cents for every health care dollar spent. In the rest of the industrialized world, 3 cents for every dollar is spent on administrative costs. If America can bring down its administrative costs, we could save $200 billion.
Jonathan: I'm already paying enough as it is. I'm sure you could show me a spreadsheet that says socialized health care works, but it is immoral. I don't have a responsibility to pay for everyone's AZT, respirators, and insulin. Socialized medicine is not some benevolent charity. They come to your house with and say, "Pay up or I'll put you in jail." I'm sorry, but there is just no right to health care.
Wayne: It's an ideological argument. Sooner or later, whether we like it or not, we will have national health care in some form or another and it is going to be expensive. Our job, then, is to try to figure out the least expensive way to make it work. In Britain, there is a 27 percent tax. In the U.S., the tax is around 12 percent. In Canada, it's even higher and they have to stand in long lines. We are eventually going to have to face it, so we might as well do it now.
Dagen: One of the proposals is to make sure every American has insurance. It sounds good to insure every American, but it will drive up the cost of health care even more. Plus, any government plan will wind up costing billions more than estimated. Right now, we've got to figure out a way for Americans to consume less health care and bring down costs. The average price per capita in the last 15 years has already doubled.
Jonas: Wayne's exactly right. America is going to have to do something. We just have to figure out the best way. I endorsed the national health care plans of Mitt Romney and Arnold Schwarzenegger, which basically mandate health insurance for the uninsured. To Jonathan's point, it is immoral that I have to pay for the health care costs of those insured right now, albeit indirectly. If we force those people to get insurance, it would be more fair in a free market way. The government might have to pick up some of the costs of premiums, but that is a private market thing.
Jonathan: In a free country, I don't see what's fair about forcing anybody to do anything.
Jonas: If you have ever had a drivers' license and registered a car, you had to have insurance. That is the law. If not and you hit someone, you would burden them with your costs. It's the same way with health care.
Stuart: We are talking about the cost of the government providing health care for vast numbers of people. It is breaking down in Britain because of costs. People in retirement are not paying taxes and they are living a lot longer and making huge demands. Are you prepared to take hundreds of billions of dollars from the American taxpayer to pay for others medical services?
Wayne: A state issue would be one solution. You can argue all you want whether it is unfair or not. It's going to come, so you better get used to it and we've got to find a way to deal with it.
Why Do Americans Feel "Entitled" To Cheap Gas?
When gas prices spike, Americans are outraged. When they go lower, we act like this is how it "should" be. Why do we feel we're "entitled" to cheap gas?
Jonathan: There's just something about cars. Ever since Henry Ford and Jack Kerouac, Americans have equated their cars with freedom. Yes, there is a sense of entitlement where people say, "Prices for everything like movies, food, and housing can rise but I should always be able to get gas for $1.25/gallon." Welcome to the real world! I happen to think that $3/gallon gas is cheap. It is at its inflation adjusted high and it's a bargain relative to productivity.
Pat: For years we have been trained to whine about this stuff. We have been trained that if we whine long enough and loud enough some politician is going to step forward and say, "I have the answer." What are you going to get? Big government. The problem is that it's not a political problem; it's an economic problem and you've got to think about supply and demand.
Wayne: Of course we do not have a right to cheap gas. It is a political problem because every program in the United States is labeled an entitlement program. We're not entitled to anything! Why do we have this entitlement program? The high price of gas is an economic thing, as it is based on supply and demand.
David: There are millions and millions who have to drive to work every day. When gas prices rise, it cuts into their disposable income they need.
Dagen: David, I don't want to argue with you, but this is something that has been going on for decades. As a nation, we have fostered and encouraged people to drive automobiles because the auto industry was once a great shining example of our power. It's going to take decades to reverse unless the government does something really drastic. That is not going to happen.
Stuart: We are reaping the rewards of all these conspiracy theories. "It's not the supply and demand that sets the price of gas. It's those wicked oil companies trying to screw the consumer."
David: It's not supply and demand because the oil companies rig supply and demand by reducing the refining capacity. There have been internal memos from ConocoPhillips and ExxonMobil showing that they deliberately reduce refining capacity.
"Kosher" For Israel To Use "Sex" To Sell Tourism?
A new ad campaign is using sexy pictures of Israeli women to lure tourists to the Holy Land. Some don't like it. Is it right to use sex to sell a country?
Wayne: I have been to Israel and would love to go to back. It's a great country. All tourism companies use pictures of sexy women and there's nothing wrong with that. Israel is a terrific country and there's a heck of a lot more out there than just those beautiful women.
Dagen: For a country whose history is rooted in religion, you don't find this a little bit objectionable? I wouldn't want the USA running ads with Paris Hilton or someone like that.
Jonathan: We have the Dallas Cowboy cheerleaders. That's just it. This can do for Israel what the Swedish bikini team did for Sweden.
Dagen: The Dallas Cowboys are a private organization, not a nation.
Stuart: I am going to visit the country that celebrates freedom and western values. I do not wish to go to a country that owns its women and forces them into repulsive burkas.
Pat: This doesn't bother me. We use sex to sell a lot of things: cars, countries. These advertisements were done in conjunction with Maxim magazine, so look at their target audience made up of men ages 18-35. Maxim was not targeting me.
Jonathan: Let me just say that I am in that age range and I agree. That spread was talking to me.
Pat: The men who read Maxim may also like women of substance, but that's not what they are looking for when reading that magazine.
Jonas: Of course travel companies use sex more than almost any industry. All travel magazines have women on the cover for no reason. This was a stupid move for Israel because it just doesn't make any sense. People aren't going to go to Israel just to see hot women. They can go to L.A. and South Beach for that. Israel should be selling itself as an extreme religion destination. Do you really go there for the women? That's a ridiculous idea.
Best Bets: Sex $elling Stocks
Pat: Wynn Resorts (WYNN) (Friday's Close: $89.55.)
Jonas: Mentor (MNT) (Friday's Close: $42.16.)
Jonathan: Sally Beauty Holdings (SBH) (Friday's Close: $8.92.)
Wayne: VimpelCom (VIP) (Friday's Close: $104.65.)