Neil Cavuto was joined by Gregg Hymowitz, founder of Entrust Capital; Jim Rogers, president of JimRogers.com; Ben Stein, economist; Jenny Anderson, NY Post reporter; Charles Payne, CEO Wall Street Strategies; Carlos Watson, Democratic Strategist.
Neil Cavuto: A hurricane over America and storm clouds over Wall Street. Isabel (search) hit, did her damage and moved on. And so did Dick Grasso (search), the NYSE chairman moving on after feeling the heat over his controversial pay package. Now that he is out, should investors come back into the market? Jenny, better for investors coming in now that Grasso's out?
Jenny Anderson: There's still big questions. What do you do with the board that approved his package? What's going to happen to the regulatory function of the stock exchange?
Jim Rogers: As far as the market is concerned, it's irrelevant. The market could care less. Anyone can run the stock exchange.
Jenny Anderson: Not true, not true. There are companies now considering not listing there because they're concerned about what's going to happen there.
Jim Rogers: That's not what I'm saying. The stock market could care less who runs the exchange.
Jenny Anderson: Dick Grasso would not appreciate that comment.
Jim Rogers: I don't care. Dick Grasso is not a good guy.
Gregg Hymowitz: At the end of the day the board is responsible for this. How can these guys say that they didn't know how much he was being compensated? It was their job to oversee it. Someone needs to put pressure on the board and make these guys accountable for what they've done.
Jenny Anderson: There is already a lot of pressure on these guys. The CEO of Goldman Sachs is saying take the securities industry directors off the board.
Ben Stein: The most culpable director was Carl McCall, who's not in the securities industry directory. The compensation committee screwed up on an incredible scale.
Neil Cavuto: Do you think Carl McCall should resign?
Ben Stein: Absolutely. But I don't think this is going to become a relevant matter for investors. It doesn't have an effect on profits or discount rates of the stocks that are listed.
Gregg Hymowitz: What it shows again is the utter failure of these corporate boards. Whether it's Enron, WorldCom and now the NYSE, the corporate board governance have significant problems.
Neil Cavuto: To be fair though, there's no criminal activity here -- just a guy who got a lot of money.
Jim Rogers: How do you know there was no criminal activity?
Neil Cavuto: How do you know there was?
Jim Rogers: I'm saying you don't. No one knows.
Ben Stein: I question whether there was criminal activity or not. If the board didn't know about the total compensation figures, then that's straight up and down fraud.
Jenny Anderson: They didn't ask the questions. They didn't say, 'We don't get this.' They voted to approve it.
Neil Cavuto: Didn't this start when a guy from their finance department noticed something and said, 'Guys, do you know that we just paid this guy two-thirds of what we made last year.'
Jim Rogers: One year he made $30 million and the stock exchange made $28 million.
Gregg Hymowitz: I think investors don't really care because the only time they see Dick Grasso is ringing the opening bell, and banging the gavel at the end of the day, and they think that's the only thing he does. And maybe that is the only thing he does.
Jim Rogers: According to the Financial Times, the number of listings went down under his watch.
Neil Cavuto: I don't think that's right.
Jim Rogers: That's what the Financial Times reported.
Ben Stein: If you have a situation where the board of director scratches the chairman's back and the chairman scratches the board of directors’ back, there is inevitably going to be a conflict of interest. That's the situation we had here. Mr. Grasso regulated the people who regulated him.
Gregg Hymowitz: And they also serve on each other's board, which is amazing given what we've seen in corporate America.
Neil Cavuto: But if you remove the hypocrisy part Jim Rogers, and the appearance of just looking weird, would that make investors think the market is fair?
Jim Rogers: Investors don't care about who runs the stock exchange. They certainly care about false bookkeeping and impropriety, but as far as the exchange, most people don't know where they buy their shares.
More for Your Money
Neil Cavuto: The spotlight is on. The red carpet is out. It's time for the stock Emmys with the winners getting you more for your money. AOL Time Warner (AOL), soon to be just "Time Warner," by the way. The company's HBO unit has the most Emmy nominations this year-- including best drama for Six Feet Under and The Sopranos. And best comedy for Curb Your Enthusiasm and Sex and the City. Charles, does the stock Emmy go to AOL?
Charles Payne: AOL gets the Emmy for most undervalued company with the most potential long-term. It isn't the company I would pick out of all of them, but it is a good potential long-term bet.
Ben Stein: I am the only one among us who actually has an Emmy, which I won in 1999. I've worked for Viacom (VIA.B) in the past, and they are a very well run company. They're also very stingy -- which I like. I do own a little stock in the company, and I think they have nowhere to go but up.
Gregg Hymowitz: I agree. I think Viacom is the most attractive here. It's trading at 24 times earnings. They're stingy like Ben said, and they have a great management team.
Jim Rogers: I wouldn't buy any of the media companies right now. Time Warner is very leveraged right now. The technology is changing. Competition is pouring in. These aren't companies you should be investing in.
Neil Cavuto: General Electric (GE): NBC has the West Wing up for best drama and Friends and Will and Grace up for best comedy. Gregg, I'm just guessing you're a West Wing fan. Just a hunch. What about GE Ben?
Ben Stein: I love General Electric. It's an amazingly well run company. I think the stock price is still a little rich, and I would not buy it.
Jim Rogers: General Electric is an accounting game. I would not put a nickel of my money in it. I'm waiting to sell it short.
Charles Payne: I agree with Ben. I think it's bloated. I think it's got a lot of integration here, Telemundo, Vivendi and Bravo. The stock has made a pretty good move. I wouldn't chase it.
Gregg Hymowitz: It's not the most direct play in the media world but at 19 times earnings, I think it's an interesting play here.
Neil Cavuto: And our last nomination, Viacom -- its CBS network has C.S.I in the running for best drama and for best comedy, Everybody Loves Raymond. Ben, should everybody love this stock?
Ben Stein: If you want to make a media play, this is a company that is amazingly well managed. They have great exposure in radio, which is a money machine. I like this company.
Jim Rogers: I would pass.
Neil Cavuto: You don't like any of these.
Gregg Hymowitz: He doesn't own a TV. He hasn't even heard of these shows.
Charles Payne: Ben touched on the radio aspect, and Clear Channel (CCU), for me, might be the best media play.
Gregg Hymowitz: You're also going to see massive media consolidation depending on what happens with the FCC rules at the government level. And look, the economy is slowly improving and increasing advertising revenues. All these could be attractive at a price.
Head to Head
Neil Cavuto: When the ninth circuit court put the California recall vote on hold, did it also put our economy and stock market in jeopardy? Time to go Head to Head. Do you think this is just damaging California, Carlos?
Carlos Watson: I don't think the recall is the best idea in the world. The recall idea was devised back in 1911 to protect against robber barons.
Neil Cavuto: Wait a minute, your party used it against Ronald Reagan.
Carlos Watson: If it was wrong once, it doesn't mean it was right before. I know there's a bit of hypocrisy here. I'll admit that. I think what the judges did to postpone and do it right on March 2nd was the right decision.
Neil Cavuto: Where was that argument when I guess they had the same number of punch ballots or hanging chads and all that other nonsense last year when governor Davis was re-elected. I didn't hear a word from anyone.
Carlos Watson: I love you Neil but it's because you weren't listening. The truth of the matter is the ACLU and Common Cause back in 2001 went to the Secretary of State, a Republican, Bill Jones and said this is a problem. And Bill Jones said we can't fix it in time for 2002.
Neil Cavuto: They never said then postpone the election. Now that it looks like he's in trouble they say postpone the election.
Carlos Watson: They tried really hard to make this work and Bill Jones, a Republican, said let's wait till 2004.
Neil Cavuto: My point is this Carlos, when the law is on the books that you can recall a governor if you want, yay or nay, put him up for a vote and move on. But this protracted, let's push it back is silly.
Carlos Watson: We did get 12 percent of the voters, more than 12 percent actually to say that they want it. So we should do it. We should do it right not only to be fair, but it's really going to affect the economy if we don't.
Neil Cavuto: It is affecting the economy. Notes and bonds in California are trading at junk bond level status. I hear from a lot of investors there who don't know what's going on there. They don't know when the elections are happening, and it looks like a zoo right now.
Carlos Watson: What if you ended up with another fiasco in California? You don't think that would hurt California's economy?
Neil Cavuto: It's already like a den of thieves running the place. How could it get worse?
Carlos Watson: Ask Jeb Bush and Katharine Harris in Florida how it could get worse.
Neil Cavuto: You're saying that by delaying you're not hurting the California economy. I'm arguing everyday it's in limbo you are hurting the economy.
Carlos Watson: I'm saying it hurts. I'm saying California has a huge deficit. If we're going to fix it, do it right. March 2nd is the day to do it. Not October 7th.
FOX on the Spot
Jim Rogers: NYSE will become an electronic exchange.
Ben Stein: NYSE board member Carl McCall needs to go.
Gregg Hymowitz: Entire NYSE board needs to go!
Jenny Anderson: Arthur Levitt will be new NYSE chairman.
Charles Payne: Sell treasuries! Bond prices collapse!
Neil Cavuto: The economy continues to pick up.. which means Hillary Clinton stands down and doesn't run in 2004.
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