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 Bill Fleckenstein, president of Fleckenstein Capital.
It seems like nothing can stop the running of the bulls on Wall Street (search). Not the post-war pain in Iraq. Not the latest taped message from Saddam. Not even the prospect of American troops in Africa.
Nothing has slowed the market's phenomenal 4-month run. Since the lows for the year on March 11, 2003, the Dow is up 21 percent and the Nasdaq has gained an amazing 36 percent.
Tobin thinks the bulls can keep ruling Wall Street, but the market needs to pull back a bit and cool down. He said that after 1934-35 bear market, which was the worst one of all time, the market made huge gains. Also, in 1974, after ten years of going nowhere, it gained 55 percent. And even if we are in another 10-year period where stocks go nowhere, there are times to own stocks, and he believes that time is now. In fact, Toby thinks there will be good times for stocks for the next 6-8 months.
Bill, who runs a short fund, believes there is nothing left in this rally and he is ready to start heavily shorting stocks in the next month or two.
Gary B. charted the Nasdaq’s performance since May of this year and thinks the pull back the Nas had last week may be it. He said right now momentum rules, and the market is looking strong.
Scott disagreed with Gary B. and believes investors are getting too bullish right now. He thinks the Nasdaq has been too hot and really needs to pull back. Also, he advised investors to wait for things to cool down before putting any new money into the market.
Pat also thinks investors need to wait before putting their money in the market. He said even though the economic numbers are getting better, it’s not enough to keep up to the gains by the market.
Scott, Tobin and Bill each chose a stock that will run with the bulls.
Tobin’s bull stock was Andrx (ADRX), because it has not moved with the market. The company recently reworked its management and he thinks its new drug, which is a time-released form of Lipitor, is going to be a big hit. Scott agreed that the company did have bad management, but Andrx has already made a run and he would only buy it at a cheaper price. (Andrx closed on Friday at $21.31.) Bill said the stock sounded interesting to him.
Scott chose Vintage Petroleum (VPI) because we are in an energy crisis. He believes it is better to buy small oil exploration companies like this, instead of the big multi-billion dollar oil companies. He admitted Vintage Petroleum hasn’t done very well in the past, but believes it is turning things around and is now well run. Scott likes that it has a yield and thinks it can gain 50 percent. (Vintage Petroleum closed on Friday at $11.68.) Both Tobin and Bill like the stock.
Bill said short (anticipating a stock will go lower) Intel (INTC). He thinks there’s no need for high-end PC’s right now and its business is skewed to the wrong place. Toby disagreed and doesn’t investors should short Intel just yet. Scott agreed with Toby and added if the stock reaches the high $20s then short it. (Intel closed on Friday at $23.34.)
Gary B. and Pat just missed making baseball’s All-Star team, so instead they both picked all-star stocks.
Gary’s all-star stock was KLA-Tencor (KLAC). The stock just broke out after spending a month working off a rise it made in late May and early June. Gary thinks it’s now headed to $60. (KLA-Tencor closed on Friday at $47.90.) Pat said KLA-Tencor dominates a profitable niche of the chip-equipment industry, but companies are not buying chips right now. Pat labeled the stock a prospect, but no all-star.
Pat’s chose Markel (MKL), as his all-star stock. He likes that this insurance company avoids price competition, has great management, and superb track record. He admitted it’s not cheap, but is definitely worth the price. (Markel closed on Friday at $261.37.) Gary likes that the stock just made a new high, but warned that Markel has gone straight up and could pull back. He recommended to sell the stock if it fell below the uptrend it’s been in since late June.
And what is an All-Star game, without the fans? The fans of Bulls & Bears who write in to us (you can send your comments or questions to: firstname.lastname@example.org) wanted to know about Amazon.com (AMZN). Gary said Amazon.com has had a great run, but it gapped down on Thursday, and that really hurt. He thinks the stock is still fine, but recommended to get out, if it falls below the uptrend it’s been in since late April. (Amazon.com closed on Friday at $37.65.) Pat said free shipping and discounting have helped the company and stock, but it won’t be a high growth business forever. He said the stock would have to be at $15 (a drop of 60 percent!) for him to be interested in buying it.
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