Recap of July 26: No Saddam, No Usama, No Bull?

Stock Smarts: No Saddam, No Usama, No Bull?

On Tuesday, July 22, stocks were headed for a down day. Then news of the killings of Saddam Hussein’s sons Uday (search) and Qusay (search) hit the market and stocks responded with a rally. But the two big fish – Saddam himself and Usama bin Laden – are still out there.

Can we expect the Dow to go to 10,000 and beyond without Saddam and Usama in the bag?

Hilary Kramer of A&G Capital says we have to get both Saddam and Usama to get confidence back into the market, and when we do catch them she says we’ll see the “bull stampede like never before.”

Dagen McDowell of FOX Business News agrees with Hilary. She says more and more investors are starting to worry about American casualties in Iraq, and the amount of money it is costing us to keep soldiers there, and catching Saddam and Usama would be a sign we were making progress.

Gary Kaltbaum of Kaltbaum & Associates says he thinks investors have to be careful about anticipating a rally on the deaths of either Hussein or bin Laden. While he believes the market will rally if we capture either of them, he says that will be an event-driven rally that is not likely to last very long.

Wayne Rogers of Wayne Rogers & Co says he doesn’t think the market needs to see those two captured or killed to rally. He says the market is going to react to earnings and economic news, and it won’t make a difference whether we have Saddam and Usama. If earnings are positive and the economic news is good, the Dow will rally.

Jonathan Hoenig of Capitalistpig Asset Management says he began shorting the Dow last week (betting it will fall). He’s getting nervous about stocks, and he doesn’t think capturing or killing Saddam and Usama will make a difference. He says rising bond yields and the fact that gold and silver stocks are heating up again are making him wary of stocks.

Be$t Bets: The One Dow Stock To Buy For The Rest Of 2003!

Some Dow stocks have managed huge gains so far this year. But which ones are going up from here?

Jonathan's Dow Winner: International Paper (IP)
52-week high: $40.82
52-week low: $31.35
Friday's close: $38.20

Gary K. says IP needs to break out of the trading range it has been in for some time before he’d be interested. Wayne says he’s neutral on the stock. He says the chart looks dead to him.

Wayne's Dow Winner: Intel (INTC)
52-week high: $25.50
52-week low: $12.95
Friday's close: $24.91

Hilary is very bullish on Intel. She says Intel’s wireless chip will help boost profits. Jonathan does not like Intel. He says if he had to buy a semi-conductor stock, he would buy KLA-Tencor (KLAC) or Applied Materials (AMAT).

Hilary's Dow Winner: Microsoft (MSFT)
52-week high: $29.48
52-week low: $20.71
Friday's close: $26.89

Wayne likes the company, but he’s not sure Microsoft stock will see much of a percentage gain from this point to the end of the year. He thinks you’ll get a better rise out of his Dow pick, Intel. Gary K. says Microsoft is a laggard stock because it has not kept pace with the Nasdaq’s gains in the last few months, and he is afraid it could weaken quickly when the Nasdaq is tops out.

Gary's Dow Winner: 3M Company (MMM)
52-week high: $141.40
52-week low: $108.20
Friday's close: 141.40

Hilary likes the pick. She says the company is innovative and has some great products. Jonathan says 3M is not the stock for him.

Fund Face-Off: Cash For College

State colleges across the country have hiked tuition costs by as much as 40 percent to cover budget gaps. Private schools are up too – about 6 percent on average. It will take some smart investing to cover your child’s education when the time comes. So what should you buy? Dagen and Jonas faced off over their favorite “college” funds to help you save for your child’s education.

Dagen – Turner Small Cap Growth Fund (VSCEX)
Year-to-date: UP 31.9 percent
Minimum Investment: $2,500
Expenses: $12.50 for every $1,000 invested

Jonas – Vanguard High-Yield Tax-Exempt Fund (VWAHX)
Year-to-date: UP 2.3 percent
Minimum Investment: $3,000
Expenses: $1.70 for every $1,000 invested

Money Mail

Jonas, Jonathan and Wayne answered some of your questions.

First we took a quick look at the leaders and the losers on the Cashin’ In Challenge. To find out who’s ahead, check out the Web site at:

Question: “Wayne sold his shares of Enterprise Products (EPD) in the 'Challenge', but what does he think about the stock for the long-term?”

Wayne says he likes the stock long term, and while he sold it out of his shorter term Cashin’ In Challenge portfolio, he still holds it himself. He points out that 70 percent of the limited partnership is held by the partners, so their interests are allied with shareholders’ interests, and the stock offers a dividend of close to 7 percent right now. He adds that while oil and gas is a volatile industry to bet on, he thinks the company has enough pipelines to make it a good long-term play. Jonas is a little concerned about how the company would react to falling gas prices.

Question: “Back in January, the “Pig” said Pfizer (PFE) could be a single-digit stock. Does he still think that?”

Jonathan says he still thinks Pfizer could fall far enough to become a single digit stock. He says if he had to buy a drug company it would be Bristol Myers (BMY), which he says is a much stronger stock.

Question: “What do you think about International Gaming Technology (IGT)?”

Jonas says IGT is a very trendy stock that has attracted a lot of momentum players who have driven the price up too high, and he fears it could be in for a pullback. Wayne agrees. He likes the company and thinks management has done a terrific job, but he thinks the risk in the stock is to the downside and it’s not a buy here. Jonathan points out that Charles Payne had recommended IGT on Cashin’ In some time ago, and it certainly has been a great stock, but he wasn’t a buyer then and he’s not now.