DISCLAIMER: THE FOLLOWING "Cost of Freedom Recap" CONTAINS STRONG OPINIONS WHICH ARE NOT A REFLECTION OF THE OPINIONS OF FOX NEWS AND SHOULD NOT BE RELIED UPON AS INVESTMENT ADVICE WHEN MAKING PERSONAL INVESTMENT DECISIONS. IT IS FOX NEWS' POLICY THAT CONTRIBUTORS DISCLOSE POSITIONS THEY HOLD IN STOCKS THEY DISCUSS, THOUGH POSITIONS MAY CHANGE. READERS OF "Cost of Freedom Recap" MUST TAKE RESPONSIBILITY FOR THEIR OWN INVESTMENT DECISIONS.
Bulls & Bears
This past week's Bulls & Bears:
• Gary B. Smith, columnist for RealMoney.com
• Pat Dorsey, Morningstar.com director of stock research
• Tobin Smith, ChangeWave Research editor
• Scott Bleier, president of HybridInvestors.com
• Bob Olstein, president of the Olstein Funds
• Charles Payne, CEO of Wall Street Strategies
Trading Pit: Iraq Election Rally
Elections in Iraq last week were a major victory for democracy.
But will it be a victory for the market? Is this what Wall Street needs to send the Dow past 11,000 and even higher?
Tobin Smith: Yes! This is great news! Iraqi voters turned out in huge numbers and they are getting farther down the road towards democracy. This tells the naysayers like Howard Dean and Congressman John Murtha, D-Pa., that we are not pulling out. As our exposure goes down, stocks will go up. However, the Fed will have a bigger impact when they let us know when they will stop raising interest rates.
Gary B. Smith: I agree with everything Toby just said, but the market will go down. It's sad to say, but the market is not focused on Iraq right now. We're losing track of all these elections. However, each one is great progress for Iraq and the Bush administration. As for the stock market, I think it will trend down in December, and get plain ugly in January. I'd start selling stocks and have only about 3 percent of my money in stocks right now.
Scott Bleier: The market is done going up for now and these elections won't send it higher. The good news is that the end game is finally in sight. But for the market, the bad news is that defense and other stocks have begun to anticipate it and the $100 billion stimulus is about to end. Also, the tax cuts need to be made permanent or the stock market will lose 5 percent immediately.
Bob Olstein: Iraq has been an important psychological barrier for the market, but stocks are still focused on cash flow. The stock market is about 5-6 percent undervalued. Investors need to focus on cash flow and clean accounting and I think we'll see single digit returns. It's hard finding cheap stocks right now and we have 10-11 percent in cash.
Pat Dorsey: A decreased U.S. military presence means the deficit should start going down and that will definitely be a positive. But these longer-term issues like the deficit, what the Fed does, and earnings are bigger issues to the market.
Chartman
The Chartman and Charles each pick their best stocks of 2006.
Gary B. Smith: I really like gold producer, Newmont Mining (NEM). I was a skeptic on gold, but this is one way to play it. The stock just cracked a multi-year high and is heading to the $60s. (Newmont Mining closed on Friday at $50.50.)
Charles Payne: Fundamentally, this is not a buy because it's lagging the industry. The chart does look good, but if something goes wrong with gold, Newmont will be the one hit hardest.
Charles Payne: My first pick is Tellabs (TLAB). The telecommunications boom is starting to come back. Sales have been going through the roof. It's on the verge of making a huge breakout. Our clients own this stock. (Tellabs closed on Friday at $10.96.)
Gary B. Smith: Tellabs had a great run, but is about to hit resistance. When it does, sell.
Gary B. Smith: I'm crazy for Yahoo! (YHOO). The stock just broke out from a long sideways pattern. The stock is set to go to the $50s in 2006. (Yahoo! closed on Friday at $42.32.)
Charles Payne: I like the company, but it bothers me because the stock should be higher than it really is. It makes you wonder why it hasn't broken out.
Charles Payne: My other pick is Charles Schwab (SCH). I think individual investors are going to come back to the marketplace. Next year will be a huge year for the stock market and it will be good for Charles Schwab. (Charles Schwab closed on Friday at $15.09.)
Brenda: Some critics say the company does not have a focused strategy and doesn't know whether to be an online brokerage or full service brokerage.
Gary B. Smith: But Charles really is in charge! This stock has been a steady riser and recently broke its summer slump. I also like it.
(Note: When this show aired, this stock traded on both the NYSE and the Nasdaq. Beginning Tuesday, December 20, Charles Schwab will only trade on the Nasdaq and its ticker will change to SCHW.)
Stock X-Change
It's the 10th anniversary of the Olstein Financial Alert Fund (OFALX). In that time Bob has beaten the S&P 500 by more than 60 percent. So, what are the best stocks he likes right now?
Bob Olstein: Tyco's (TYC) at the top of my list. I've owned the stock for quite a while and still think it is undervalued. The company knocked down its debt and I really like that it generates a lot of cash. The stock is going to $35-40. (Tyco closed on Friday at $28.38.)
Tobin Smith: I like it.
Pat Dorsey: Solid company with great businesses and wonderful cash flow, but I'd rather get it cheaper.
Scott Bleier: I like it too, but it needs to increase its dividend and increase shareholder value.
Bob Olstein: Next up, AIG (AIG). This insurance company has been under a cloud due to its accounting scandal. I really like that it's well diversified in life, property and casualty insurance. The stock is heading up to $90. (AIG closed on Friday at $65.15.)
Scott Bleier: It's exactly back to where it was before the scandal. I don't like it.
Tobin Smith: I love it. I want to buy it now.
Pat Dorsey: I love this company and have been recommending it since the low $50s. It's a great core holding.
Bob Olstein: I also really like Tupperware (TUP). In August it made a major acquisition of Sara Lee's beauty division. I think the stock is worth $30. (Tupperware closed on Friday at $23.06.)
Tobin Smith: This isn't my style of stock, but it has good value.
Scott Bleier: I like it and their businesses are going to do very well.
Pat Dorsey: The only thing you're going to get on this is the dividend. There are better businesses out there to own right now.
Predictions
Tobin Smith's prediction: New home prices fall 20 percent in 6 months
Scott Bleier's prediction: Troubles with Iran escalate; oil pushed to record high
Gary B. Smith's prediction: Altria (MO) still smoking! Gains 30 percent in 2006
Bob Olstein's prediction: Funds take more active role in the stocks they own
Pat Dorsey's prediction: Avon (AVP) calling! Rises 30 percent in next year
Charles Payne's prediction: Tech stocks Sanmina (SANM) and Solectron (SLR) are big buys
Bulls & Bears | Cavuto on Business | Forbes on FOX | Cashin' In
Cavuto on Business
Neil Cavuto was joined by Jack Welch, president of Jack Welch LLC and author of "Winning"; Ben Stein, author of "Yes, You Can Still Retire Comfortably"; Jim Rogers, author of "Hot Commodities"; Gregg Hymowitz, founder of Entrust Capital; Meredith Whitney, executive director at CIBC World Markets; Mike Norman, founder of Economic Contrarian Update.
Bottom Line
Neil Cavuto: Democrats snatching defeat from the jaws of victory with a highly public split over the war in Iraq. Some even saying it's a war "we can't win". But elections there by most accounts were a big success Thursday (December 15) and now President Bush is gaining in the polls.
Is all this good for Wall Street?
Jack Welch: While we've had courageous Joe Lieberman making a split, for the most part, the Democrats are together, from the extreme of Howard Dean and Pelosi to the more moderate Presidential candidates like Clinton and Biden. These people are going to come together in an anti-Iraq position. And what the President has to get in Iraq is a sustained strength there and a good economy. And then their conversations won't mean anything.
Neil Cavuto: Gregg agrees with everything you just said.
Gregg Hymowitz: As always Jack, I always agree with you. I do agree with something Jack says and that is, Democrats are together on this. And they are pointing out what a failure the Iraq policy has been.
Neil Cavuto: Even with the elections?
Gregg Hymowitz: Even with the elections. The amazing thing about CEO leadership is admitting when you've made a mistake at some point. And what we haven't heard is the mistakes that he has made. I think the American people would appreciate a list of the mistakes and failures. I mean isn't that what a good CEO does?
Jack Welch: Gregg, he's acknowledged errors. This war is a work in progress. He's making moves and some work, some don't.
Jim Rogers: But Neil, the election is 10 months away. We're sitting here and having the election in December when it's 10 and a half months away. History shows that the party out of favor, in this case the Democrats, will probably gain somehow in November.
Neil Cavuto: Although they didn't gain in the last mid-term elections.
Jim Rogers: No, no. It's the second term of the president that they usually do well, the party out of power.
Gregg Hymowitz: I'm sorry I have to go back to this with Jack or whoever. Just tell me what we got from going into Iraq?
Ben Stein: We got rid of the most dangerous man in the world in the most dangerous place in the world. We installed a functioning democracy, the only one in the Arab world. We've allowed the 25 billion people a chance to express their preferences or Democracy. This Iraq policy has been a smashing success. Yes, there are a few thousand terrorists who are intent on killing people but the overwhelming majority of Iraqis want a Democracy.
Meredith Whitney: And that's the story that's not being told. There was an article in the newspaper this week about the approval rating in Afghanistan. The rating in Iraq is actually very high. The Republicans have messed up a whole lot, and most people would be able to steal that with a huge win. But one thing Jack talks about in his book, "Winning" is candor and integrity, believe what you're boss is saying. Where does Hillary Clinton really stand out? And let's think about where the Democrats stand. You've got Hillary and Lieberman divided. And you've got goofy Howard Dean who's not representing anyone.
Mike Norman: When the elections went smoothly, the market reacted in a positive way. The Democrats just don't get it. Even if most Americans right now don't think the president has an exit strategy, they do not want to cut and run. They do not like this defeatist attitude.
Gregg Hymowitz: We've accomplished nothing.
Neil Cavuto: Mike, would there be a market fallout be if we set a timetable of sooner rather than later?
Mike Norman: Initially you might get a positive market response. But the long term would be bad.
Jim Rogers: You're saying if we left Iraq the market would go down? You're crazy. The market would go through the roof.
Mike Norman: I just said the initial response would probably be a rally but it wouldn't be sustained.
Neil Cavuto: Is there a feeling, Jack, that in order for the market to get out of this back and forth of hitting 11, 000 or not that it needs to see clarity in Iraq?
Jack Welch: Of course it does. And the entire economy will benefit from that. Clarity in Iraq is something we need and we're getting. You guys, Gregg, aren't giving any credit to remarkable accomplishments in these elections.
Jim Rogers: Then why don't we come home? If we've done it and won it, why don't we come home?
Ben Stein: There's more work to be done, Jim. We've taken the most un-free country in the Middle East, except for Israel, and we've made it the freest.
Meredith Whitney: It took this country a very long time to secure Democracy and you guys are being really short sighted.
Gregg Hymowitz: I think we're going to leave Iraq a lot faster than you all think but it's not going to be because of Democrats pushing for it. Republicans are staring at this next election and thinking if they're not out of Iraq in this next election, they are done.
More for Your Money
Neil Cavuto: Would we all be better off if more companies were like Wal-Mart? Time to go head to head. Ben, what do you think?
Ben Stein: Wal-Mart is the best friend of the American since Henry Ford. It's essentially taken mass production and brought it to retailing. I was in Louisiana last week. It is amazing to see the Hurricane Katrina victims stocking up and shopping there, knowing their dollar goes the farthest there. It's true Wal-Mart doesn't pay the same kind of benefits they pay at Goldman Sachs. But they get a lot better benefits that are paid in usual small town shops. And they have an opportunity to move up the corporate ladder and make money off the stock.
Gregg Hymowitz: It's shocking that anyone would make the case that America would be better off if companies were like Wal-Mart. The largest most significant position at Wal-Mart by headcount is the sales associates. They make today about $2,000 below the poverty line. This was the company that was served the largest class action suit ever. One million former female employees sued this company for discrimination.
Neil Cavuto: Have you ever shopped at a Wal-Mart? I bet you haven't.
Gregg Hymowitz: I've shopped at a Wal-Mart. Last year, Wal-Mart employees were entitled to $2.5 billion of Federal subsidies. Why? Because they're paid so low they qualify for those kind of financial programs.
Jim Rogers: Gregg, nobody forces anybody to work at Wal-Mart. Nobody forces anybody to shop at Wal-Mart and nobody forces anybody to sell to Wal-Mart.
Gregg Hymowitz: When Wal-Mart comes to town, often times people have no other choice but to work there.
Jack Welch: Wal-Mart is one of the greatest companies that have ever existed. This is not about Wal-Mart. This is a union fight. Gregg, why don't you take a look at General Motors today? General Motors was in the same position Wal-Mart was in. They unionized and management got together.
Meredith Whitney: Wal-Mart has been one of the pioneering companies in terms of accepting and innovating technology. The average wage for Wal-Mart is actually much higher than elsewhere. The poverty line is set by a family of four making below $23,000.
Jim Rogers: Gregg, a lot of them work part-time and that is why they are below the poverty line.
Gregg Hymowitz: One out of every 40 people who work at a large firm and are uncovered by health insurance, work at Wal-Mart.
Inside Jack's Head
Neil Cavuto: When Jack Welch talks even the leader of the free world listens. Now he's got some new advice for President Bush.
Jack, what should the president do now?
Jack Welch: It's clear to me that the president has to go out and lay his credibility on the line. He needs to put his great accomplishments in perspective. Now he has to step forward and go out as commander-in-chief and energize the troops and the nation. This is a commander-in-chief that has to be out there with a passion.
Neil Cavuto: Are you troubled though that he may not have that ability?
Jack Welch: When he's on the line he's out there. He shows his humanity. He's out there selling his stuff. If he energizes people around him, we will turn this game around.
Neil Cavuto: We all get excited after an election with heavy participation. Everyone seems to think the country is coalescing. Then we get more insurgent attacks. How does he handle that inevitable course of events?
Jack Welch: He lets them know that it's going to happen. The potential for that is always there. There's always a bump in the road. And this President, by talking the real talk about where this war is going, can change the game.
FOX on the Spots
Jack: Bush is back! Approval rating rises to 50 percent by November.
Gregg: Jack's wrong! Bush's rating goes down, not up.
Meredith: Stocks rise on record mergers in 2006!
Jim: Don't count on your pension; it won't be there!
Ben: Bank on Bear Stearns (BSC) in 2006!
Neil Cavuto: Don't believe doomsayers, we're going to see one of the strongest Christmas shopping seasons in years! Consumers are a lot more confident and happier than official media portrays them to be. That's a good sign going into the New Year!
Bulls & Bears | Cavuto on Business | Forbes on FOX | Cashin' In
Forbes on FOX
In Focus: Ban on Torture: Bad for our Safety and Stocks?
Rich Karlgaard, publisher: Nobody likes torture but we need torture as a tool, just like we need to have a nuclear arsenal as a tool. We don't want to use it, but we need to have it. Unfortunately, under the new rules of how we can interrogate, it's an aggressive interrogator who discovers that someone might be harboring an atomic weapon in Manhattan that can be arrested for a crime. I think this has gone too far.
Quentin Hardy, Silicon Valley bureau chief: That's a preposterous argument. If someone had a nuclear weapon of course people would break the law and do what it takes. That's not what torture is about. The President made a speech earlier this week and he admitted that bad intelligence got us into Iraq. The part he didn't talk about was that the Iraq/Al Qaeda connection came from torturing someone in Egypt, who under massive amounts of pain, told them anything they wanted to hear and said Iraq and Al Qaeda were in with each other. That's one of the reason's we are in Iraq. Over a huge mistake caused by torture.
Jim Michaels, editorial vice president: This whole thing is a big red hearing. The out of control liberal media is looking for anything to beat President Bush with and they're throwing the word torture around. But I haven't any idea what the meaning of torture is. Sleep deprivation is torture, should that be made illegal? I don't care if some scumbag gets ruffed up a little if it's going to save American lives. Torture means something different to me, it's not pulling people's fingernails off or cutting peoples hands off. We don't do this and we never have.
Elizabeth MacDonald, senior editor: This war in Iraq has been a battle of the hearts and minds of people overseas. When we talk about torture as a tool, it really undermines our credibility over there. We're going to lose our souls in this debate. We're better than this. Torture is goonish and it's immoral.
Jim Michaels: We're not using the word torture. It's our enemies and critics that are using that word. Nobody advocates real torture.
Victoria Barret, staff writer: There is a fine line between beating someone up because you don't like them and using controlled torture to get good information. In this war on terror, information is ammunition. You can't just write off torture as a mechanism for getting information.
Steve Forbes, editor-in-chief: This whole thing is a torture of logic. We're not talking about pulling out people's eye sockets and things like that. It's about aggressive techniques, disorienting people and breaking their morale to get information. That is perfectly legitimate. What our critics don't want is for us to get that information. Information is critical. That's how you win wars. Congressman Duncan Hunter who heads up the Armed Services Committee hopes to insert language to allow this form of aggressive interrogation. If he doesn't succeed the terrorists have won a victory.
Quentin Hardy: John McCain, a Senator who was tortured in North Vietnam, is the one spearheading this campaign.
Steve Forbes: That was real torture he suffered and not the kind that we are doing in Iraq or elsewhere.
Quentin Hardy: We outsource our torture to Egypt and to Saudi Arabia. It comes back to haunt us. It hurts our international image.
Steve Forbes: We're talking about Army personnel, CIA personnel doing interrogations. This puts a huge cloud over them. Now they're going to get in trouble if they use aggressive techniques like sleep deprivation.
Rich Karlgaard: When the British were fighting the IRA in the 1980s they would stage these mock executions. They would put a bag over people's head and take them up in helicopters and threaten to drop them out. And they did, from about 2 feet up. There was a public outcry and then the British said they've never got as much good intelligence again. So Quentin is wrong to say that you can't get good intelligence using psychological warfare.
Elizabeth MacDonald: I don't know what proof you all have that we're getting good intelligence. All you know is about Khalid Sheikh Mohammed from a Wall Street Journal editorial. Torture is extremely unreliable and it corrupts the institutions that do it. We have tortured people in our custody to the point of death. The bigger problem here is that we are undermining our credibility overseas.
Steve Forbes: This is about survival not popularity. Using techniques like sleep deprivation is perfectly legitimate.
Elizabeth MacDonald: It's hard to define what torture is. People who behead people are not enemy combatants and we do need to take care of them, we need to take them out!
Victoria Barret: From a public relations point of view it looks like the White House is doing the right thing. We're the most advanced nation on the planet yet our policies toward torture are the most backwards in many senses.
Steve Forbes: If we get another terrorist attack like 9/11 Wall Street will take a hit. That's why intelligence is so critical.
Flipside: The More CEOs Make the Better for Your Stocks!
Mike Ozanian, senior editor: More CEOs are getting paid based on their companies' performance. So the better a company does the more a CEO gets paid and the more a CEO gets paid, the more the market goes up. It happened in 2003 and 2004. Whereas, in 2002 and 2001 CEO pay went down and so did the stock market.
Steve Forbes: Often times it has nothing to do with long-term performance. You saw it with Disney. The first 10 years Michael Eisner did a sensational job. The next 10 years with a huge amount of pay, the stock and company languished. Boards have got to do more. We also need to allow these raiders to make these bids against companies.
Dennis Kneale, managing editor: We have to stop being down on CEOs and their pay. Thousands of companies didn't have scandals. Many CEOs are honest, they're working hard and have earned their pay. CEOs are not bad. They're heroes of capitalism.
Rich Karlgaard: I couldn't be happier when Bill Gates, Warren Buffet or the Google founders become billionaires because they actually created something from scratch and added shareholder value. And we were allowed to go along for the ride. The problem is people like Carly Fiorina, the former CEO of Hewlett-Packard, who destroyed shareholder wealth but got an $80 million pay package. The fact is, there is not a strong correlation between CEO pay and shareholder performance.
Quentin Hardy: There is no relation. The stock market is up 2 percent this year. Are CEOs going to get a 2 percent raise?
Mike Ozanian: We only talk about the bad cases. How about the CEO of Best Buy who actually gave back some of his pay back to the employees.
Lea Goldman, staff writer: It's a red hearing. The pay for performance notion is bunk. There's no correlation. Between 1994 and 2004 the companies that have had the highest paid CEOs have under performed the S&P by in large.
Steve Forbes: Part of the problem is that raiders are not allowed to raid companies anymore. In the 1980s, if a company was not performing or the board of directors was not doing their job, someone from the outside would come in and throw them out and start over again. The "poison pills" have largely done away with that. The real problem is when directors aren't doing their job, there aren't enough avenues for outsiders to correct it.
Quentin Hardy: This year the stock market is going to be up around 2-3 percent. Does anyone think that CEOs raises are going to be only 2-3 percent? I don't think so.
Mike Ozanian: It's not a direct correlation, but profits this year for the S&P 500 are going to be up 14 percent. Guess who created those profits? The CEOs! Let them make their profits.
Informer: No. 1 Fund For 2006?
Lea Goldman: I like the Legg Mason Value Trust Fund (LMVTX). This baby has beaten the S&P for the last 14 years. It's had an average return for investors of about 19 percent over the last decade. Bill Miller, the manager, is like Babe Ruth. He knows how to pick them.
Mike Ozanian: Even Babe Ruth struck out a couple of times, especially later in his career. I don't like this fund. Two of his biggest holdings are Google and eBay. This is supposed to be a value fund. Those are expensive stocks. I like Franklin Rising Dividends Fund (FRDPX). I think dividends will still be a huge story in the stock market. It's very tax efficient.
Victoria Barret: I challenge Mike to pick a more boring mutual fund. What I don't like about it is there's a load. That's an upfront fee that's totally unnecessary because they are going to charge you management fees on the backend. I'm looking to Asia for growth in 2006. I like Matthews Pacific Tiger Fund (MAPTX). I like it because its diversified in different countries like China, Japan and South Korea. It's had a great run.
Dennis Kneale: They're up 100 percent in the past couple of years. You've got to wonder if they can keep that going. I like a little fund run by a father and son team, Bruce Fund (BRUFX). It's only a $100 million fund but they consistently beat the market. If you put $10,000 in this fund 10 years ago you would have $66,000 today. That's 10 percent better than what the market did.
Jim Michaels: With the exception of Victoria's China fund, I don't like any of these picks. I think people are overusing funds. Funds are basically not good investments. They're tax inefficient, the management charges are too high and they're not run with the best interest of their investors. I would encourage investors to start buying ETFs, exchange traded funds. They have very tiny management fees and they achieve the same results. I like the NASDAQ 100 Index (QQQQ).
David Asman, host: Why not just buy the stocks in the ETF?
Jim Michaels: Buying the ETF is a more tax efficient and much easier way to do that.
Makers & Breakers
• eBay (EBAY)
Jim Fisher, senior portfolio manager Univest Corp: MAKER
eBay is e-commerce, period! No one comes close to eBay. They're going to blow open the Chinese market. The stock is down from its 52-week high. It's a great time for investors to get in. They have a foothold in China and they're going to grow there in a big way.
David Asman: You're saying it can go up to $55 in one year. (Friday's close: $45.94)
Jim Michaels: BREAKER
I love the company but if everything goes perfectly for the company in the next 10 years the price will be worth what it is today. Too rich for my blood.
Elizabeth MacDonald: MAKER
The numbers of people supporting this stock on Wall Street are declining so that's suppressing this stock. They made a brilliant acquisition of Skype Technologies, an Internet phone business. 66 million people who use Skype Technologies in Europe and Asia will really open up the market for eBay.
• EMC Corp (EMC)
Jim Fisher: MAKER
Storage is not sexy, but every company needs it now and will need it more so in the future. EMC is the leader in the storage industry. The item at the top of the list for technology spending for 2006 is storage.
David Asman: You think it can hit $20 in one year (Friday's close: $13.71)
Elizabeth MacDonald: MAKER
We've been waiting for EMC to turn around with it's restructuring, to get a better improvement in its gross margins. That just happened in the most recent quarter and storage software sales are up too.
Jim Michaels: MAKER
The company has the wind at its back. It's loaded with cash and free cash flow. I wouldn't stand in its way.
David Asman: It hasn't moved much in two years?
Jim Fisher: It got hit with the technology bubble burst back in 2000 and it really fell under the radar screen. It hasn't gotten the visibility that some of the other tech companies have.
Bulls & Bears | Cavuto on Business | Forbes on FOX | Cashin' In
Cashin' In
Our "Cashin' In" crew this week:
• Wayne Rogers, Wayne Rogers & Company
• Jonathan Hoenig, Capitalistpig Asset Management
• Dagen McDowell, FOX Business News
• Jonas Max Ferris, MAXfunds.com
• Rebecca Gomez, FOX Business News
• John Layfield, "The John Layfield Show"
• Tom Adkins, Re/Max Property Center
Stock Smarts: The $ecret Weapon in the War on Christmas!
Is capitalism the secret weapon that will conquer the "war on Christmas"? It's beginning to look a lot like Christmas again, and not because of the weather. Feeling the financial pinch, retailers are putting Christmas back into their ads.
But in the end it's all about shopping. Are money and capitalism the secret weapon that will win the war on Christmas?
Jonathan Hoenig, Capitalistpig Asset Management: Absolutely. The stores are idiots not to promote Christmas. They're fools. Christmas and capitalism go together. I don't celebrate Christmas. But I love it. When this season comes around, I want to see jingle bells and gingerbread houses, and the stores filled with wonderful things to eat, and people enjoying themselves. Let's not forget that Montgomery Ward invented "Rudolph the Red-Nosed Reindeer." Historically, stores have been all about Christmas. And they should be. It's a great time of the year.
Terry Keenan: It is. But you know, John, the people who are talking about this war on Christmas aren't talking about Jonathan in his Santa hat, or snowmen. They're talking about the manger and the nativity scene and putting the "Christ" back into Christmas.
John Layfield, "The John Layfield Show": Yeah. And this is as dumb as not celebrating Martin Luther King Jr. Day because we're not all black. This is horribly disrespectful. 79 percent of Americans believe in Christmas. They believe that Jesus is the Son of God. It's just ridiculous that the rest of the people try to impose their will upon us. And you have a spineless corporate culture that gives in to these people. This doesn't have that much to do with Christmas sales. Christmas sales have to do with how much money is in people's pocketbooks, and that has to do with energy prices.
Wayne Rogers, Wayne Rogers & Company: I think you made a good point, John. Hanukah literally means 'rededication.' What are we going to do, call it 'Rededication Day'? Why? It's insane. It's taking political correctness to a stupid level, I think. No one wants sales to be affected by this anyway.
Dagen McDowell, FOX Business News: But John touched on something, Wayne. 'Happy Holidays' versus 'Merry Christmas': Americans don't care what they hear when they go into a store. They're going to look for the cheapest prices, so this war on Christmas, when it comes to the stores, doesn't matter when you're going out for a Christmas gift.
Terry Keenan: The only word I want to see is S-A-L-E.
Rebecca Gomez, FOX Business News: Yes and no. Lowe's (LOW), for example, received 1,000 complaints, because right in front of their store, they had 'holiday trees'. Come on. They are Christmas trees. All of a sudden, you can't use the "C" word. Walgreen's, Target (TGT) and Lowe's are all succumbing to this pressure because they know retail sales are so competitive.
Dagen McDowell: But Macy's switched back this year to Christmas. You hear it in the ads, you see it in the windows down at Herald Square. Guess what. Federated (FD) sales were down in November. That has not helped their sales so far this Christmas.
Terry Keenan: Who's not going to buy a Christmas tree because it's called a Christmas tree? It doesn't make a lot of sense.
Jonas Max Ferris, MAXfunds.com: Terry, this isn't some recent phenomenon. The war on Christmas is good for retail sales and it has not been fought by some fringe leftist group trying to be politically correct. It's been fought by these spineless corporations who invented all these things that Jonathan has been talking about. Santa Claus was popularized by Coca-Cola with a pinup artist in the 1930's.
Jonathan Hoenig: Jonas, that makes them spineless?
Jonas Max Ferris: My point is that corporations have been removing Christ from Christmas and turning a religious holiday into a consumer pagan holiday for all practical purposes.
Jonathan Hoenig: Let the Reverend Billy Graham put the Christ in Christmas. I want Target to give me a big, fat candy cane, and like Terry said, 20 percent off on a new DVD player.
Jonas Max Ferris: That's the modern Christmas that you're talking about and that's the one corporations invented.
Jonathan Hoenig: That's the one I celebrate, Jonas. And that's the one the stock market cares about.
Jonas Max Ferris: The "Coca-Cola Christmas", I realize that.
Rebecca Gomez: Retailers are saying 'if this is going to help us win customer loyalty, even if it's a minority of the customers who are thinking this is a big deal; anything that's going to help my bottom line, why not add Merry Christmas along with Happy Hanukah or Happy Holidays?'
Terry Keenan: Wayne, is it that or is it the fact that snowmen and little penguins and snowflakes sell things better than a nativity scene?
Wayne Rogers: I just think that we have a whole tradition of Christmas. You have a tradition of the Christmas tree, you have a tradition of toys and you have a tradition of Santa coming down the chimney. That's been going on for a couple of centuries. You're not going to destroy that overnight. Jonathan's absolutely right. What difference does it make? It's going to increase sales. Everybody is going to have a happy time. They want to have a happy time. It's the time of the holiday. It's much ado about nothing.
John Layfield: Absolutely. Jonathan is right. Christmas is an attraction-oriented shopping season. You have the iPod, the Motorola RAZR, you have the Xbox 360. That's what's going to drive sales. That, and the deep discounts from Wal-Mart (WMT) and Target and some fashion sense from Abercrombie & Fitch (ANF). That's what's going to drive holiday sales this Christmas, not whether you have just a few people giving in to the fact that you have a very small group of people out there who don't want to say 'Christmas'.
Dagen McDowell: One of the reasons that the retailers have switched to 'Happy Holidays" is because they roll out the signs and the decorations in October, and if they've got 'Christmas' on the signs, it's embarrassing. At least 'Happy Holidays' includes Halloween and Thanksgiving.
Terry Keenan: Jonathan, let's get to your religion; the religion of making money. How are we going to make money off this holiday season?
Jonathan Hoenig: Well, I think you could look at some of the retailers, Terry. Look at a stock like Dress Barn (DBRN). I don't know who wants to shop in a barn, but this is a hot stock right now. AnnTaylor (ANN) has been hot. Some of the other ones like Pier 1 (PIR) have been 'dreck'. Wal-Mart, to me, has been a really lame stock, so even amongst the retailers, I think you have to pick and choose. The S&P is not far from a four-year high, so people are making money.
Terry Keenan: Is it going to be a good Christmas, Jonas?
Jonas Max Ferris: I think it's going to be good, considering how high energy prices are. Yeah, it's better than everyone thought it was going to be, that's for sure. It's not going to be super-great, but it's good for online retailers, particularly. As long as they don't get the 'Christ' back into Christmas, I think you'll see good sales. The Jesus element is bad for sales because it's not very capitalist, when it comes right down to it.
Wayne Rogers: Well, retail sales, we know last month, were up 6.9 percent over the previous year, so you've got to say that there's something going on here that's good. I don't think it matters one iota. People are committed to Christmas, they're committed to it for generations, and they're going to celebrate it.
Dagen McDowell: If you're committed to it for religious purposes, go to church. Don't go to the mall.
Wayne Rogers: People are probably going to go to church and go to the mall. And, maybe like Jonathan says, somebody's church is the mall. Who knows?
John Layfield: The only thing that's going to put a damper on Christmas is the heating bill. The first big heating bill is coming out right before Christmas and that could hurt it. Wal-Mart and Target, who are used to deep discounting items, will do extremely well.
Money Mail
Question: "I think the oil industry is totally rigged, basically extorting consumers. What can be done?"
Jonathan Hoenig: The oil industry lost money for decades. There wasn't any talk about price-gouging then. The truth is that in a free market, the only monopoly is the government, which of course, has a monopoly on the use of force. Oil companies are making money. We want them to make money. It's not easy to get oil from Alaska down here and get it at your local 76. So let them make money. It's good for consumers, it's good for the market as well.
Wayne Rogers: Well, you've got to temper that a little bit. Ten years ago there were 8 major oil companies. Today there are four. The government allowed 8 to merge into four. Are they a cartel? Possibly. Do they control pricing? No. Do they control supply? Yes. We haven't had a refinery building this country in the last 30 years. There is an element of influence, if you will.
Terry Keenan: Yeah, compared to other companies, their profit margins may not be as high as a Microsoft (MSFT) or a Starbuck's (SBUX).
Wayne Rogers: They obviously are not.
Dagen McDowell: Wayne, I disagree with you. Jonathan is right. It's all about demand. If you don't want to pay high oil and gasoline prices, switch to smaller cars. If everybody in this country did it, oil and gas prices would go down.
Wayne Rogers: But it's not about demand. It's about supply, because the demand has stayed steady for the last 10 years.
Dagen McDowell: Demand is up.
Wayne Rogers: No. Demand as a percentage of what that does to the price is not that strong an influence.
Question: "I bought the NASDAQ 100 shares (QQQQ) this year at $38.55. What do you think about the pick and tech in general?"
Wayne Rogers: I like tech. Once again, I think you can't just go and say, 'I'm going to buy tech as a segment.' You've got to pick out certain stocks in that.
Jonathan Hoenig: But Wayne, it's been so long since tech has actually worked that you say to yourself, 'can tech be working?' The truth is that this guy has a winner on. Worry about the losers. The winners take care of themselves. Let it ride.
Wayne Rogers: By the way, that's true whether you're in tech or not.
Dagen McDowell: Tech can be good next year if the economy will switch to business spending from consumer spending. Tech is where it's at.
Question: "I bought Colonial Bancgroup (CNB) when it was at $17. It's now in the mid-20's. Thoughts on the stock now?"
Dagen McDowell: It's not a buy or a sell, but a hold, simply because this stock has done so well over the last 3 years. The company has been growing great guns for a decade. It's in some really hot areas in this country like Nevada and Florida, so stick with it. Just don't buy any more.
Wayne Rogers: I agree with Dagen.
Jonathan Hoenig: Despite everyone saying that the flattening yield curve was going to hurt the banks, something is working here, Terry. The gang is on to something here. As long as this isn't 5, 10 or 15 percent of his portfolio, hold the winning trades. I'd certainly use a stop order if this were a big part of my overall kitty.
Best Bets: Wayne's Superstars: "Walk of Fame" Stocks From Hollywood Royalty
Wayne Rogers, fresh from getting his very own star on Hollywood's Walk of Fame, is back with the stocks that he says could be super for you.
• Wipro (WIT)
Friday's close: $11.61
52-wk High: $12.85
52-wk Low: $8.80
Wayne Rogers: Wipro is an Indian technology company. It's headquartered in Bangalore. It's one of the greatest recipients of outsourcing in the last 10 years.
Terry Keenan: But it hasn't done that well, considering how hot the Indian market has been.
Wayne Rogers: No. Well, the stock has done fairly well just this last week.
Jonathan Hoenig: You know, Wayne, you and I have been preaching these foreign emerging markets for years. I'm torn, because tech is hot and India is hot, but do you think the story is out, though, on emerging markets?
Wayne Rogers: No, I don't think so. I said that this stock has moved about 6-7 percent in the last week.
Jonas Max Ferris: I like the outsourcing story, but I think that story is out more than emerging markets. The stock is expensive and they have some very weird business lines that they should probably get out of. I think they're in soap and oil businesses.
John Layfield: They are a little richly valuated, but they've got very little debt. They've got tons of cash. They make a lot of money. I think it's a great pick. And with the mergers and acquisitions going on in the world today, this could be a takeover pick.
• Conseco (CNO)
Friday's Close: $23.10
52-wk High: $23.15
52-wk Low: $18.80
Wayne Rogers: I've talked about Conseco in the past. It came out of bankruptcy a couple of years ago, it's a big insurance company. They've turned the business around. Earnings are up this last year. I think it's ready for a move.
Terry Keenan: It's moved up nicely since you recommended it here a while back.
John Layfield: I think insurance stocks have been overlooked to some degree by investors. I like AIG (AIG) and maybe MetLife (MET) a little better, but this is not a bad pick.
Jonas Max Ferris: I think the kind of mistakes that got this company into bankruptcy are in some of its other business lines, so I don't think it's over. I'm not positive on the stock.
Jonathan Hoenig: I wouldn't fight insurance. I worry. There's a gap on the chart, Terry. I would probably wait for a pullback, but Wayne's been in this thing and he's been making money.
Genesee & Wyoming (GWR)
Friday's close: $35.32
52-wk High: $36.50
52-wk Low: $22.70
Wayne Rogers: It's a railroad. It's got half of its railroad assets in Australia and the other half are in the southeast. It has earnings up 64 percent over last year. I think it's a strong one.
John Layfield: Go with a star in this sector. Don't go with a 'Hot Lips' or a 'Radar' of the sector. Go with something like Canadian National (CNI) or Canadian Pacific (CP).
Cashin' In Challenge
If you think you can match wits with our Cashin' In crew, starting in just a couple of weeks, you're going to get your chance. Log on to foxnews.com/challenge. Coming soon, you'll be able to sign up for the 2006 'Cashin' In Challenge' powered by SmartMoney.com and go head-to-head with our experts.
Face-Off: Housing Market 2006: New Highs or Bubble Burst?
Is 2006 going to be another banner year for the housing market or are we looking at a bubble about to burst?
Tom Adkins, Re/Max Property Center: This is going to be an exceptional year for real estate. I'll tell you why. First, the Fed is pretty much done hiking rates. Long-term rates are actually dropping. They're not going up. If anything, they're going to continue fall slightly. When you raise short-term rates, the long-term rates tend to go down. And, we're looking at record net income levels. It's still going up 5, 6, 7 percent. If you combine those two things, people have more money to spend and the cost to buy doesn't change, prices go up. It's going to go up a lot this year.
Terry Keenan: It's gone up so much, John, that a lot of people can't afford their house. I think only 17 percent of the people in California can buy the house that they live in right now.
John Layfield: Yeah, there's a reason that real estate has gone up. Money goes where it's rewarded. In 2001, money quit being rewarded in the stock market. It was rewarded in real estate. You've got a confluence of factors with a lower interest rate and this creative financing going on. Homebuilders had their high in July. They all, but Toll Brothers (TOL), had their low in October. New homes and new starts are going to be down going to be down 5 percent next year. The numbers simply don't add up to this. Money is going where it will be rewarded and it will not be rewarded in real estate.
Tom Adkins: 5 percent is not that much of a change and you're looking at fall and winter.
John Layfield: But you said it was going to be going through the roof. Going through the roof is not 5 percent. That's headed to the basement.
Tom Adkins: It's snowing outside. I'm here in Philadelphia; one of the cities and the states that's going through an amazing renaissance. It's snowing out there. Everything slows down when it snows. There is one more thing that's important. I like anecdotal stuff once in a while. I was sitting down with one of my clients I sold a house to a year and seven months ago. His wife says, 'hey Tom, how about if you buy that bigger house over the ridge over there?' It's been a year and three quarters and she wants to buy a new house already.
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