Brenda was joined by: Gary B. Smith, RealMoney.com columnist; Pat Dorsey, director of stock research at Morningstar.com; Scott Bleier, president of HybridInvestors.com; Joe Battipaglia, chief investment officer of Ryan, Beck & Co.; and Mike Norman, founder of The Economic Contrarian.
Trading Pit
Summer's over and that means it's back to business!
And stocks are working hard already. In the short week since Labor Day, the Dow is higher, despite a Friday sell-off, and the Nasdaq (search) made even better gains. All this despite what many say was bad news on the jobs front last week.
Joe thinks the market can keep it up and head higher. He believes that jobs will be created and is surprised by analysts who are raising their earnings expectations, unlike the past two years.
Pat admitted there has been a lot good news for the market, but that news is not good enough to support the levels that stocks have reached. He thinks there is going to be a healthy pullback, especially in the tech sector, in the next few months.
Mike agreed with Joe and thinks the rally will continue. Although he did admit he is a little worried about so many people being bullish. He said it was easy to be a bull eight months or a year ago, because there was so much gloom and pessimism. Even so, he still hasn’t seen anything that will affect the momentum of this rally.
Scott said that the economic recovery can continue because bond yields came down, which makes the price of money cheaper. He advised investors to buy stocks when the market pulls back.
Gary B. charted the Nasdaq’s performance since May and said even though it is locked in an uptrend, he thinks it has come too far too fast and is due for a pullback.
Scoreboard
Once again it was time to add up all the right and wrong calls the Bulls & Bears have made. First, the good calls.
On October 12, 2002, Gary B. said Yahoo! (YHOO) was going up 50 percent. Yahoo! took off with the rest of tech stocks and is up an amazing 161 percent since then. (Yahoo! closed on Friday at $34.89.) But now Gary B. thinks the stock should be sold because it has peaked. He wouldn’t buy Yahoo! unless it closes above $37.
In the middle of October of last year, Scott took a little heat when he said Sears (S) was going up 25 percent in a year. Since then, the stock is up 94 percent! (Sears closed on Friday at $45.08.) Scott now thinks Sears is too expensive and investors should sell.
At the beginning of the year, Joe said to bank on Citigroup (C) and J.P. Morgan (JPM) in 2003. If you did, your bank account is thanking you—big time! Both have made very good gains since then. Citigroup is up 25 percent (Citigroup closed on Friday at $44.34) and J.P. Morgan is up 35 percent (J.P. Morgan closed on Friday at $34.19). Joe said if you bought these stocks when he recommend to, it’s time to take your profits.
In February, when Joe Millionaire got a million bucks, Pat suggested he should invest his money in Robert Half International (RHI). If Joe took his advice, he’d be doing quite well—Robert Half is up 54 percent. (The stock closed on Friday at $21.83.) Pat still likes the stock and said it’s one to hold on to for a long time.
In the middle of November, when Norsk Hydro (NHY) was trading in the $30s, Mike said it was going to $50. And it certainly did! In fact, since he recommended it, the stock is up is up 37 percent. (Norsk Hydro closed on Friday at $51.75.) But now, Mike thinks petroleum prices will come down, and investors should take their profits.
Then it got ugly…the losing end of the Scoreboard.
On December 28, 2002, Scott said investors should sell General Electric (GE). This wasn’t the best advice because since then General Electric is up 28 percent (General Electric closed on Friday at $31.04.) Scott thinks the stock is now fully valued and would neither buy nor sell it.
In March 2002, Joe said buy Altria (MO), then known as Philip Morris. It’s down 17 percent since that time. (Altria closed on Friday at $41.50.) Joe said due to its ongoing litigation risk, stay away from the stock.
Last September 21, 2002, Mike said inflation and interest rates will rise and the home bubble would burst. Interest rates did rise, but certainly the bubble did not burst because housing is still hot. Mike now thinks the housing market will continue to rise.
At the end of April, Gary B. said the Dow would hit 7,500 before 9,500. His charts betrayed him on this one, because the Dow hit 9,500 first. (Dow closed on Friday at 9,503.) Gary charted the Dow and said sharp rallies can be very surprising and are typical of a bear market. Even though the Dow has risen steadily since April, he doubts it is headed to 10K.
In the middle of March, Pat said Goodyear (GT) was a crappy company. But in the past six months, it has made a tremendous gain of 93 percent. (Goodyear closed on Friday at $7.58.) Pat still thinks the company is crappy and advised not to buy the stock.
Predictions
Mike's prediction: President Bush taps reserves; gas prices fall far and fast!
Scott's prediction: Housing keeps booming; Centex (CTX) going up 25 percent
Joe's prediction: It's time to buy newer pharmaceuticals; Amgen (AMGN) and Genentech (DNA)
Gary B's prediction: Slow down guys! Dow won't hit 10k until May
Pat's prediction: Too far, too fast for tech; Juniper (JNPR) falls 40 percent
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