Brenda Buttner and was joined by: Gary B. Smith, RealMoney.com columnist; Pat Dorsey, director of stock research at Morningstar.com; Tobin Smith, founder and chairman of ChangeWave Research; Scott Bleier, president of HybridInvestors.com; and Joe Battipaglia, chief investment officer of Ryan, Beck & Co.
Trading Pit
The United Nations sent a clear message to Saddam Hussein on Friday-disarm now or face "serious consequences". But will he comply? If not, that means military action, and what does that mean for Wall Street?
Tobin thinks if we go to war with Iraq, investors will be presented with one of the best buying opportunities in the next year or two. He reasoned that Wall Street will have a negative knee jerk reaction, but the war is going to be quick and the United States will win. Also, a war will not change any of the good fundamentals starting to come into the economy.
Scott said the market has had a great run, but there is a lot of uncertainty because we have rallied so sharply. He believes the Dow is going to be stuck between 8,000 - 9,000.
Gary B. was not as certain this is a buying opportunity. He said there are a lot of loopholes with the resolution, so we may not know if we’re going to war until February. Also, if the market gains from here, war is not necessarily a buying opportunity. The market has spiked in the past when we’ve entered wars, but that’s because we were down so much before.
Pat said war makes Wall Street uncertain, and this is what it hates the most. He thinks there will be a sell-off if war is declared and investors should buy companies with great competitive advantages. He recommended buying Moody’s (MCO), Adobe (ADBE), Barra (BARZ), and Expeditors (EXPD) if the war starts because you’ll be able to buy them at a cheap price.
Joe stated the market has rallied in spite of the talk of war. He believes we are already in a state of war. We’ve already moved into Afghanistan and have been attacking various locations. Unlike the first crisis with Iraq, he thinks this administration is ready to pull trigger when the time is right, as opposed to orchestrating it over 3 months. He said buy right through this particular time because once this buying opportunity has passed and the economy has time to breathe, we’ll be off to the races.
Stock X-Change
Toby, Scott, and Joe all picked stocks that will benefit most now that the Republicans are in charge.
On last week’s show, Toby predicted the Republicans would win and the Dow would rally. He specifically thinks that packaging company, Sealed Air Corp. (SEE), will benefit most. Sealed Air has been hurt by asbestos lawsuits but Toby thinks the GOP will put a cap on asbestos liability. Joe seemed skeptical on the stock. Scott said it’s at a good price.
Scott likes GlaxoSmithKline (GSK) now that the Republicans are in charge because he thinks pharmaceutical companies are going to do better. He said the stock should gain 20 percent. Toby and Joe do not like the stock.
Joe thinks Boeing (BA) will get the biggest boost from the election's results because it is cheap right now and has a great defense business. Tobin and Scott both do not think the stock is a buy.
Chartman
We're fair and balanced here at Fox News Channel, so Pat found some stocks that are sure to lose now that the Democrats are on the outs in Washington, D.C.
He chose UAL Corporation (UAL) because it is a bad investment on many levels, has high labor costs and now faces a less likely bailout with the GOP win. Gary B. agreed. He said the stock had run up 150 percent in 3 weeks and he’d also stay away from it.
Another stock Pat said is at risk with the Republican victory is H&R Block (HRB). He admitted it is a good company at a reasonable price, but H&R Block is facing nuisance lawsuits and could be hurt if the GOP simplifies the tax code. Gary voted to stay away from H&R Block because it has broken all support. He said when a chart gets this ugly, get out of the way!
Predictions
Tobin: Baghdad falls early 2003; sparks big rally!
Gary B: Tech slips; QQQ falls 15 percent by year end
Joe: Forget the bond rally; stocks are the place to be!
Scott: Microsoft (MSFT) tablet a bad pill; stock loses 10 percent
Pat: Drugs work! IMS Health (RX) up 20 percent within year (Pat owns IMS Health.)
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