Recap of September 14: Stocks at War!
Brenda Buttner and was joined by: Gary B. Smith, RealMoney.com columnist; Tobin Smith, founder and chairman of ChangeWave Research; Scott Bleier, president of HybridInvestors.com; Adam Lashinsky, senior writer for Fortune; Brian Finnerty, senior vice president of Melhado, Flynn, & Associates; and Bob Olstein, president of The Olstein Funds.
A week of mourning and memorials for America, but once we marked the year after 9-11, the battle over doing battle in Baghdad began. On Thursday President Bush made it clear that there will be a showdown with Saddam…even if we have to go it alone. Stocks sold off.
Then on Friday, Wall Street woke up to news of a possible serious terrorist threat in Florida. The market never got out of the red all day.
So the clock is ticking for a war with Iraq and the nation is more nervous than ever about terrorism.
Brian believes the market has been already weighing these issues in and when we attacked Iraq in 1991 with operation Desert Storm, the market took off and never looked back.
Gary B. charted the Dow during another trying time, the Vietnam War. He summed up the Dow's performance then as 8 years of headway, punctuated only by sharp sell-offs.
Bob feels the war with Iraq will be short. He said we are going into an earnings market, look for an economic turnaround, and war is good for the economy.
Scott said war is not always good for economy, and one can look at World War II to see that. He also believes that the anticipation of going to war with Iraq is almost totally built into the market and if we do head lower, it will be short and brief.
Tobin warned that one should not confuse the economy with the war. However there is going to be a panic on Wall Street after the invasion, but the economy will come through it. Also, oil prices came down during Desert Storm.
The events of September 11th did not destroy the American way of life. In fact, companies that make and sell products most Americans use everyday are the top performers in the Dow in the last year.
Procter & Gamble (PG), the he nation's number one maker of household products is up 27% since the attack on America. The Bulls & Bears think this stock is just too expensive.
Also on the plus side since 9-11 is 3M (MMM). The Post-It maker has posted a nice gain of 20% over the year, but same story for the Bulls & Bears. The stock's just not cheap enough to buy now.
The world's number one retailer, Wal-Mart (WMT) has also been going strong, gaining 18% in the last difficult 12 months. Brian said the stock has made a great run, but can run up more because it has momentum on its side. Toby recommended not to sell the stock if you own it, but don't put new money into it. Bob and Scott both said the stock's to pricey.
Gary B. came back and was joined by old friend, Adam Lashinsky. Adam said he had found the two best tech stocks right now…So good in fact, that even Gary had to like them.
The first stock Adam found was actually an old tech favorite, Cisco (CSCO). Adam likes Cisco because its competition is toast, it has $21.5 billion in cash, and is investing heavily in new products. But Gary does not like what Cisco's chart has to offer. He said it has been in a huge downtrend and buying now is a gamble.
Adam also chose Ameritrade (AMTD) because this company is the 21st century Charles Schwab and is already a profitable dot-com! But again, Gary's charts disagreed. He said this stock has been pathetic since early 1999 and still isn't worth buying.