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, Exemplar Capital managing partner
• Tobin Smith, ChangeWave Research editor
• Scott Bleier, HybridInvestors.com president
• Bob Olstein, Olstein Funds president
• Adam Lashinsky, Fortune magazine senior writer
Trading Pit: Dow All-Time High
Six years ago on Saturday, January 14, 2000, the Dow closed at its all-time high of 11,722. On Friday, it finished at 10,959, 763 points below that level. A move of 6.5 percent and we'll have a new record. Will we get there?
Tobin Smith: We could make a new high in the next 2 ½ to 3 weeks with the earnings that are coming out. But a new high won't stick until we get some resolution concerning the nuclear situation with Iran. This will give us some type of indication of where oil prices are going.
Bob Olstein: I think investors need to avoid symbolic issues, like Dow 11K and a new all-time high. We should be able to get to a new high because stocks are still in a trading market, and the market should gain 5-7 percent. Some investors are concerned about interest rates, but between 1995-2000, the 10-year rate was 6 percent and markets went up. One last thing: We are in a stock picker's market!
Gary B. Smith: We'll absolutely make a new all-time high. The rally we had to start the year was not a head fake. When the market headed lower on Thursday and Friday, it was just a much-needed rest. Instead of selling off, it just kind of drifted down a little bit. I don't think investors are worried about Iran or oil -- they're worried about missing the next big move higher. This "fear" will fuel the rally and cause us to rip right through the Dow's all-time high.
Adam Lashinsky: The Dow will reach its record high because corporate earnings are up and the Dow hasn't kept pace. We don't need a lot to gain, just 6.5 percent. Actually the Dow should've reached it last year, but didn't for a number of reasons. We're going to be able to make it this year, just based on the fact that earnings are so strong.
Scott Bleier: Technically, all of the markets have been an uptrend for the past 3 years. Draw a line from just before the war with Iraq up to today, and you'll see a perfect uptrend line. We are still in a bull market. I think in the next year, the S&P 500 will gain the 15 percent it needs to reach a new high. And that means the Dow will be approaching 13,000.
Scott, Bob, and Tobin each picked stocks they think are ready to hit new all-time highs.
Scott Bleier: I really like AU Optronics (AUO), the third largest manufacturer of LCD flat panel screens. These screens are used in TVs, cell phones, computers and digital cameras. This area will continue to grow because everyone is going to have an LCD television in 5 years. Look for AU Optronics to surpass its all-time high of $28.50. (AU Optronics closed on Friday at $14.97.)
Tobin Smith: This stock could reach its all-time high. However, it will have to reach that level with its earnings power, because a big company like Sony (SNE) is not going to buy it out.
Bob Olstein: There's just too much competition.
Bob Olstein: My pick is Scientific Games (SGMS), the number one maker of instant lottery scratch off tickets. It's going to keep adding more states to its roster. I own it and think it's worth $35-40. (Scientific Games closed on Friday at $30.02 and its all-time high is $31.71.)
Scott Bleier: Bob should sell it now. It's expensive, but its closest competitor was bought out.
Tobin Smith: I would continue to hold onto this stock.
Tobin Smith: MEMC Electronic Materials (WFR) is really hot right now. It makes silicon wafers, which are the basic material chipmakers use to make semiconductors. Companies that need solar panels are buying them from MEMC. The stock is a little expensive here, but I recommend MEMC, and think it's going back to its all-time high of $55. (MEMC Electronic Materials closed on Friday at $25.20.)
Bob Olstein: I think Gary B's talking too much to Toby.
Scott Bleier: This company makes wafers for more than just solar panels. I like it.
Love cheap stocks? So does the Chartman! He and Adam each picked their two biggest bargains.
Gary B. Smith: General Electric (GE) doesn't get enough respect. Everyone talked about it 10 years ago, but not much anymore. It's a fantastic company. GE recently dropped down to an uptrend line it has been in since 1986. You'll never get a better chance to buy this stock. (General Electric closed on Friday at $35.10.)
Adam Lashinsky: This stock is compared to a mutual fund, but it's worse than buying a mutual fund. GE never goes up, it just stays there. It is a good company, but this stock is not cheap.
Adam Lashinsky: Deere & Co (DE) is a great bargain right now. This company is famous for its tractors and farm equipment. The stock is cheap and pays a good dividend. It's going to do well because farm spending is picking up. (Deere & Co closed on Friday at $69.60.)
Gary B. Smith: This chart stinks! It had a nice run from May to August, but then broke down, and has been moving sideways since. Stay away until it shows strength and breaks through a high around $74.
Gary B. Smith: I'm checking into Marriott (MAR). It's not that cheap right now, but it will be cheap soon. Buy on any close above $70. (Marriott closed on Friday at $69.55.)
Adam Lashinsky: Wait to buy until it does get cheap.
Adam Lashinsky: I also really like fallen internet angel, priceline.com (PCLN). It's inexpensive and moving to international markets. This stock has been hated because it hasn't grown as much as other internet companies have, but it spiked up in November because of good sales. (priceline.com closed on Friday at $22.31.)
Gary B. Smith: Priceline.com has promise. It's been in a long-term downtrend since last year. But wait to buy until it shows some strength and clears this downtrend.
Tobin Smith's prediction: Wal-Mart (WMT) pulls out of Maryland due to Health"Scare"
Scott Bleier's prediction: No trading range here! Nasdaq up 20 percent in 2006
Adam Lashinsky's prediction: GM (GM) falls 50 percent & gets kicked out of Dow this year
Gary B. Smith's prediction: Starbucks (SBUX) makes "Venti" gain of 30 percent by 2007
Bob Olstein's prediction: Stock Picker's Dream: Janus (JNS) up 20 percent by July
Cavuto on Business
Neil Cavuto was joined by Jim Rogers, author of "Hot Commodities"; Gregg Hymowitz, founder of Entrust Capital; Charles Payne, CEO of Wall Street Strategies; Leigh Gallagher, senior editor at SmartMoney Magazine; Rebecca Gomez, FOX Business News correspondent; Stuart Varney, FOX Business News contributor; Bob Froehlich, chairman of Investor Strategy at Scudder Investments.
Neil Cavuto: Outrage from the White House and the world as Iran defies a ban and re-ignites its nuclear program. Wall Street is keeping a wary eye on the showdown. What's the potential fallout for stocks?
Jim Rogers: If we go to war with Iran, stocks all over the world will cave in. The Iranians are nuts. We're nuts. Everybody is nuts.
Gregg Hymowitz: The idea of some kind of embargo with Iran, given where oil prices are, is not going to happen. The government doesn't have many choices, but I think they'll continue to keep it in the news because it keeps the focus off of other problems in Washington today.
Stuart Varney: We should not be attacking Iran in the near term. And we should not be imposing overall sanctions long term. It's bad for the market, and it's bad for the price of oil. If we had targeted sanctions we would bring the Iranian market to its knees. The Iranian market is not looking good at this moment. The mullahs are playing the nationalists' card. We can break that card with targeted sanctions.
Rebecca Gomez: It's going to take a lot for China and Russia to agree to these sanctions. They have so much economically that they're relying on Iran for. Ninety percent of their export economy relies on oil.
Jim Rogers: Sanctions have never worked against any country in the world.
Gregg Hymowitz: So then what are you proposing?
Neil Cavuto: You let them go nuclear?
Jim Rogers: Wait a minute. How do we know they're going nuclear?
Gregg Hymowitz: Well, they removed the monitors.
Jim Rogers: And they said they were going to do small scale testing. So let's go back and monitor them.
Neil Cavuto: Charles, if sanctions don't work and you really can't attack them, so away they go?
Charles Payne: You know, I have to disagree with a lot of what's already been said. Sanctions don't work, but the fact that these guys are broke and getting broker only helps them. You're saying let the sanctions make the country poorer. The poorer this country gets, the more they're going to blame America.
Stuart Varney: Their economy is already in ruins.
Charles Payne: And that's why we have the anti-American and anti-Israel sentiment. Whenever these people are doing poorly they blame Americans more. The sanctions Stuart talks about have never worked. They haven't worked in Cuba or South Africa.
Jim Rogers: Stuart, how can you say their economy is in shambles? Oil is at $60 a barrel.
Stuart Varney: Unemployment is sky-high. All they've got is oil.
Gregg Hymowitz: I think it remains on the front-page regardless of what they do because it behooves this administration to keep this country front and center.
Charles Payne: There's no way Israel is going to allow Iran to go nuclear. Everyone's going to take the diplomatic tact right now. The worst thing to do is the abrupt pullout of Iran. That's what's giving Iran the balls to do this kind of stuff.
Bob Froehlich: This is going to play out over a longer period of time. It may take not months, but maybe years. If the U.N. doesn't work, I think the U.S. will have its own coalition. This is so different from Iraq because starting from day one, we have Germany and France on our side. Yes, we have China and Russia on the other side. But I think the potential to do something from a diplomatic standpoint is much different.
Jim Rogers: Iran is three times the size of Iraq. If we attacked Iran it'd be a disaster for the U.S.
Stuart Varney: We are suggesting taking out nuclear facilities capable of producing a nuclear weapon.
Gregg Hymowitz: I don't see why in Iraq it wasn't possible, why diplomatic activities couldn't have been taken care of there? And Charles's point scares the heck out of me. I don't know how anyone wouldn't be afraid to hear talk of going into another sovereign nation and just whacking out their nuclear facilities.
Neil Cavuto: Did you say that when Israel took out Baghdad's nuclear facility in 1980?
Jim Rogers: That was 1981 and twenty-five years ago.
Gregg Hymowitz: I think under extraordinary circumstances, you have to react. But on your point about the timeline, we don't even know if they're going to have any materials in the next couple of years.
Rebecca Gomez: We've had this news on Iran all week, but still you had oil prices moving lower at the end of trading on Friday. In 2005, oil prices were up 40 percent and the economy still did well.
Bob Froehlich: I don't see this discussion on Iran really impacting our economy or corporate earnings.
Head to Head
Neil Cavuto: Lots of Catholic investors putting their money where their beliefs lie and investing only in those stocks and funds they say are "pro-life." Leigh, what is a "pro-life" stock?
Leigh Gallagher: These are stocks that go against certain religious precepts. For example, Johnson & Johnson (JNJ) markets birth control pills. That is completely off-limits for these funds that invest in these companies. Another example is American Express (AXP), which gives domestic partner benefits. That's a big no-no for many of these funds as well.
Gregg Hymowitz: People have every right to invest where they want with their money.
Stuart Varney: When I invest, it's to make a profit. I don't bring my moral scruples to the marketplace. But if you want to, then do it.
Bob Froehlich: If you're limiting the number of companies you can invest in, you're limiting the amount of money you're going to make. My next question is then where does it stop? If you're going to target Johnson & Johnson, then are you going to target Dell if they provide computers to Johnson & Johnson, and then if Dell shops at Staples for their supplies then you don't buy Staples either? Soon you can make a case that you shouldn't invest with anyone.
Jim Rogers: The more money you make as an investor, you can give it to the church. Many people would say drinking alcohol is immoral. We now have medical studies that show drinking two glasses of wine is good for you. So who's to decide on this?
Leigh Gallagher: But the question here is not whether this is permissible, but whether this is good investment strategy. And it's not, because it's investing with one hand tied behind your back.
More for Your Money
Neil Cavuto: Stocks that have already racked up big gains so far this year. Can you buy them now and still get more for your money? Charles, what do you like?
Charles Payne: I like Broadcom (BRCM). It's a semiconductor play. It makes money off of Apple. You know, I almost like any stock with "com" at the end of it in this kind of market to be honest with you. Broadcom is up 21 percent so far this year. It closed Friday at $57.25.
Leigh Gallagher: I think there are risks here. The semiconductor industry is notoriously cyclical.
Charles Payne: But when it's hot, it's hot.
Leigh Gallagher: Yes, the stock is very hot right now. It's priced a lot higher than Intel. And there's a bit of insider selling. That doesn't necessarily mean anything bad, but maybe some insiders think it's near the top.
Bob Froehlich: I like Focus Media (FMCN). This is a Chinese stock. Have you seen those flat-panel TV's with the advertising in them? That's what Focus Media is and they dominate China. The interesting thing is their #2 competitor was Target Media and they just bought them. Focus Media is up 26 percent so far this year. It closed Friday at $42.41.
Charles Payne: I happen to like it as a momentum play. But if we talk about fundamentals and real value, it's a $36 stock.
Leigh Gallagher: I'm a lifelong Macintosh computer user and everyone loves Apple (AAPL) now. It's up double digits this year. Obviously this is momentum from the iPod. Apple is up 19 percent so far this year. It closed Friday at $85.59
Neil Cavuto: This stock had a better percentage gain than Google did last year.
Leigh Gallagher: Yes, however I do think this is a stock for investors who are kicking themselves for selling Google at $200. It's one of those visionary companies.
Jim Rogers: This is a stock that's up 20 percent. It's been going through the roof. Didn't your mother teach you to buy low and sell high, Neil?
Neil Cavuto: She just said emulate Rogers.
Gregg Hymowitz: I have a stock that's up a lot, Pinnacle Entertainment (PNK). It's a casino company. It owns a bunch of casinos. They own casinos in Louisiana and ever since the hurricane, business is skyrocketing. It's up 100 percent year-over-year, but trades still at six times cash flow and that's what you really want to focus on. Pinnacle is up 8.5 percent so far this year. It closed Friday at $26.80.
Bob Froehlich: This company just does not make money. It has too much debt. And what I'm really scared about is its bet on the future is casinos in St. Louis, Missouri. It may be the show me state, but this company has shown you all it's going to do this year.
FOX on the Spot
Gregg: Political scandals rock D.C., but not stocks. Buy!
Rebecca: Dow 12,000 by the end of 2006!
Charles: Patriot Act renewal lifts stocks; buy security co's
Bob: Don't be fooled by U.S. rally; bet overseas in '06
Jim: Dec. surplus? Balderdash! Debt grows; stocks shrink
Neil Cavuto: Nothing. That's exactly what you'll get out of Congress this year. The Alito hearings made it clear, these guys are divided as heck. Expect no action on extending tax cuts or even attempting a fix of Social Security, or even Medicare. Good, if you don't like Washington doing things, bad, if you're like me, and think this time, they "should" be doing things.
Forbes on FOX
Would New "Cold War" With Russia Put a Chill on Stocks?
Neil Weinberg, senior editor: Russia is our biggest threat. They're the only other nuclear superpower. They're an oil and energy superpower. They're suppressing the press and putting their enemies in jail. And they're helping North Korea and Iran. Obviously, this is the biggest threat we face. What is the Bush administration doing about it? They're rewarding them. Bush is going to go to a summit in July of the big economic powers in St. Petersburg and we're pushing them with the World Trade Organization. We're rewarding them for bad behavior.
Steve Forbes, editor-in-chief: Russia is not the biggest threat. The biggest threat is Iran. If they get the bomb and a President who says he wants to wipe Israel off the map-that is the real threat. Russia is not going to drop a bomb on Tel-Aviv, London or New York. They've put in a flat tax. They have an economy that is beginning to revitalize entrepreneurship. Putin is going backwards in terms of political rights. But that is not a fundamental threat to the U.S. like Russia was during the Cold War.
Mike Ozanian, senior editor: Russia already has the blood of our marines on its hands with this oil for food scandal. If it weren't for Russia backing Iran, these other rouge nations wouldn't be so bold. We need to take a lesson from President Reagan, build up our nuclear warheads, and aim them right at Russia.
Jim Michaels, editorial vice president: The dumbest idea would be to put sanctions on Russia. Russia is not our enemy. Russia is a tragedy. They've had 70 years of socialist depression. Now they've got a gangster kind of capitalism. Give Putin a little slack. He's got to deal with a difficult situation. We should not interfere with Russia. We should give them all the encouragement and help we can.
Heidi Brown, staff writer: What are we be able to do about this? Our trade total with Russia is $15 billion. That's not much. That's actually less than what we have with Belgium. What could we change? Should we tell Morgan Stanley and Goldman Sachs, who just went to Moscow, to pack up their bags and come home? Moscow and Beijing are working on a closer relationship as we speak. Do we really want to push Putin away…into China's waiting arms?
Elizabeth MacDonald, senior editor: We only export to them. The exports are about $3 billion. I don't know how sanctions would play into this. Russia is a major energy player. They're the Saudi Arabia of natural gas. If we start irritating them, it will destabilize many governments and cause inflation in certain markets.
Neil Weinberg: We're hurting ourselves by not saying anything about this anti-democratic move in Russia.
Jim Michaels: If you don't like Putin, sanctions are not the answer. It will cause him to gain even more power because he'll say he has to fight American Imperialism. It would be self-defeating and harmful.
David Asman, host: Forbes has a personal reason not to like Russia. You guys lost one of your top editors, Paul Klebnikov, who was murdered in the streets of Moscow.
Steve Forbes: That was a huge tragedy. Paul Klebnikov was actually an optimist on Russia. He looked below the surface and saw the emergence of people who wanted freedom and who were going to make reforms in the future. Russia is a tragedy but it's not a fundamental threat like it was during the Cold War.
Mike Ozanian: I'm not for sanctions. It didn't work with Cuba; it's not going to work here. But Putin has been hiding behind this so-call capitalistic reform for years. The more we cozy up to him the more totalitarian he's become. This is a former KGB guy. He's bringing back more KGB people to run his country. This guy is a sleeping lion and he's ready to come out and tear the throat out of us. We better wake up to it right now!
Elizabeth MacDonald: He is moving towards more of a czarist state. We need Russia to deal with North Korea and China.
Heidi Brown: The Russians say one thing but do something else behind our backs. I agree on that, I just don't agree with isolating them. We have to make sure that we tread carefully as they get closer to China.
Neil Weinberg: I'm not talking about isolating them. I'm saying, let's use some carrots and some sticks. Why should we go ahead and support the things they want, like a summit in their own back yard and their application to the World Trade Organization when they're doing all these horrible things?
Steve Forbes: A little pressure from the W.T.O. would be a very good thing right now. But we must not take our eyes of the real threat, which is Iran. If they get the bomb, that is a real problem, not the rusty nuclear arsenal that Russia has.
Mike Ozanian: We have to stop treating Russia like Jimmy Carter did and start treating them like Ronald Reagan did.
Help All American Workers: Scrap All Pensions!
Victoria Barret, staff writer: Last week, IBM said it would stop funding its pension in two years. That's extremely significant. IBM is a bell-weather company. IBM gave us the computer revolution, IBM cut back management in the early 1990s and other companies followed suit. We're going to see lots of other companies doing this. That's great for workers because it gives them more control over their retirement. Companies aren't going to fund retirements anymore. 401Ks are the answer.
Neil Weinberg: This is a horrible idea. You don't fix your own car, do you? That's a complicated thing. We don't ask people to do those things so why should we ask them to do something as complicated as managing money for their retirement? People who manage the money in their 401Ks, get about 2 percent less a year than the professionally managed money in pension funds. Over years, that's a huge difference.
Steve Forbes: There's no point having a pension system where the promises are going to be broken. That's what's happening more and more in corporate America. 401Ks allow the worker to own the plan. You don't have to be a mechanic to own a car, you can hire people like fund managers. The federal thrift plan, covering millions of government workers, has worked very well by giving workers a handful of choices and good diversified funds.
Lea Goldman, staff writer: There's a big difference between a GM and a United Airlines versus an IBM. IBM is not doing it to save the company; IBM is doing it to raise the bottom line. So when we're talking about what's good for the American worker, what we really mean to say is this is great for the American investor. That's the difference. For the American worker, you'd have to win the lottery to get the kind of comfort and security that you would get from a pension.
Dennis Kneale, managing editor: Pensions threaten to derail the U.S. auto market. Neil is so smart and would never leave his retirement up to some pension fund manager. He's deeply involved in his own planning. Twenty years ago, half of the men over age 55 were at their company over 20 years. Today it's less than 10 years. When you leave a company, you can take your 401K with you. If you leave early with a pension plan, you get nothing.
Quentin Hardy, Silicon Valley bureau chief: Last time I checked, Neil Weinberg was one of the top financial journalists in the country. He's supposed to know about this kind of stuff. I don't think several hundreds of millions of Americans have his job and know about this stuff. However, these pension plans are not going to last. We need to scare the American worker into putting all the money they can into every savings plan because corporations will not be there for them. That's just a reality.
Victoria Barret: If pensions are so great, why do we have $218 billion in unfunded private pensions? Why do we have $700 billion in public pensions that aren't funded? The fact is, this is a broken system. Americans need to find a way to pay for their retirement. 401Ks are the way to do that.
Neil Weinberg: The accounting for pensions and the way that companies handle pensions is broken. But what we are really talking about is if this good or bad for the American worker? The answer is, it's bad. American workers are not going to benefit from this.
Steve Forbes: Why not have 401Ks that can be properly funded? Rather than dumping it on taxpayers, since pensions can't be funded the way they are promised. Where the worker owns it. When the worker leaves the job, the worker keeps it. If you want to have a real retirement, let the workers be in control of their money instead of the corporations.
Lea Goldman: It's not true that most Americans are savvy about investing their own money. We're talking about a nation of debtors, people who can't balance their checkbooks.
Quentin Hardy: It's just not true that we've become a lot smarter. People have $30,000 or $40,000 saved up and they think they're set for life. They're not. This is going to cost us way more than New Orleans ever did.
Steve Forbes: Give people a handful of choices, well-diversified funds, and they'll do fine.
Dennis Kneale: We can debate whether it's a good or bad thing but it doesn't matter. Pensions are disappearing. Get ready for your 401K. The IBM move shows it.
Na$daq Comeback Stocks!
Dennis Kneale: The NASDAQ will roar back this year. It's been down so long. The Dow has come back so much that it's only 6.5 percent off its all-time high. The S&P has come back too. The NASDAQ is still down 55 percent off its high. Look at Microsoft (MSFT), it's gone nowhere in 2 years. Everyone loves Google (GOOG). They think Microsoft is a has-been, but it's not.
Mike Ozanian: Microsoft is a has-been. It hasn't grown in 4 years. Bill Gates seems more interested in photo ops with Bono than coming up with new strategies for the company. He's got $40 billion in cash and he should start using it by buying back shares.
Rich Karlgaard, publisher: I agree with Dennis. This is an economy that favors the fast and nimble and you're going to find more of them on the NASDAQ. I like Garmin (GRMN). It is the leader in satellite global positioning. Mapping is a huge phenomenon now. This is a company that has excellent management and 5 years of earnings growth.
Dennis Kneale: The thing is, General Motors gives away that service away free for a year and no one signs up after when they have to pay for it. Also, Garmin is up 60 percent in 6 months and is much more expensive than Microsoft.
Mike Ozanian: I like Juniper Networks (JNPR). It makes networking equipment. It traded around $100 about 4 years ago, and now trades around $21. Its revenues are growing 60 percent.
Quentin Hardy: I think Juniper is on the right track but I'd go one better. I like Cisco (CSCO). Juniper has got twice the price per earnings of Cisco. Cisco is a beaten up warhorse. Cisco gets what's going on right now. It's much more consumer oriented. I think buying Scientific-Atlanta brings them right into the living room.
Elizabeth MacDonald: I agree with a big caveat. The story with Cisco is inventory buildup and inventory write-downs. Cisco has been plowing a lot into inventory and inventory hasn't really been moving a lot. We have to be careful about Cisco. With the NASDAQ you want to do macro-economic plays. In other words, energy saving devices. I like Energy Conversion Devices (ENER). They make the batteries that go in hybrid cars. Watch out for this stock. They have a very rocky profit picture. However, it has some solid assets and its cash flow is bumping up a bit.
Rich Karlgaard: A year ago this was a great pick. The stock tripled over the last 12 months, but it's hotter than a $2 pistol, so beware.
Makers & Breakers
• Partner Communications (PTNR)
Gregory Fossedal, chief investment officer, SRT Investments: MAKER
We like this stock because we like Israel. This is the best tradable proxy for the Israeli market. Israel is the vanguard of democracy in the Middle East. If the Arab countries in the region follow up on their historic opportunity to become democratic capitalists, Israel will benefit.
David Asman: You say in can go to $13 in one year. (Friday's close: $8.09)
Jim Michaels: BREAKER
Our success in the Middle East won't necessarily open Arab markets to Israeli trade.
Rich Karlgaard: MAKER
I have great faith in the Israeli entrepreneur. Look at great American companies like Intel and Qualcomm-there's a lot of Israeli technology there. If you liberate that huge intellectual talent to the private sector, you'll get rocket-like results.
• Telkom Indonesia (TLK)
Gregory Fossedal: MAKER
Indonesia is an emerging moderate Muslim country. They could be a leader in that region. Their economic policy moves have been solid.
David Asman: You say in can go to $46, up 70 percent in just one year. (Friday's close: $26.50)
Rich Karlgaard: MAKER
Indonesia shows us that you can be a moderate, pro-business Muslim country. I would put your toe in the water, and if they enact a flat tax, dive in.
Jim Michaels: MAKER
It's a great emerging market and this is a good way to get into it.
David Asman: But the government owns 51 percent of the company. Does this concern you?
Gregory Fossedal: Yes, but Indonesia is a well-run emerging democracy.
Our "Cashin' In" crew this week:
Wayne Rogers, Wayne Rogers & Company
Jonathan Hoenig, Capitialistpig Asset Management
Jonas Max Ferris, MAXfunds.com
Dagen McDowell, FOX Business News
Danielle Hughes, Divine Capital Markets
Chris Lahiji, DailyTrends.com
Stock Smarts: $Crap Congress?
Did we learn anything from the Alito hearings, or was this display final proof that Congress is a multi-billion dollar waste of taxpayer money?
Chris Lahiji, DailyTrends.com: I think it was more a waste of time than money, given the fact that this is becoming one of the best political TV dramas since "Law & Order." You have Senator Kennedy, who will show disapproval of anything, whether it comes from finding danish in the break room or not getting direct answers from Judge Alito. You have Mrs. Alito, who broke down. Her husband was repeatedly being called a bigot. I don't think this is going to be consequential. The guy is going to get in. And I think that the conservatives are going to have control for at least the next decade.
Terry Keenan: Dagen, you're a big "Law & Order" fan. Did it resemble that at all?
Dagen McDowell, FOX Business News: No. "Law & Order" is a lot more fascinating. This was just a bunch of windbags; both democrats and republicans; repeatedly talking to hear themselves talk. Frankly, it is disgraceful, the way they acted, because these hearings are important. It also illustrates the fact that Congress has not been able to get anything done on things that matter to this country; Social Security reform and fixing Medicare so that this country doesn't go bankrupt.
Jonathan Hoenig, Capitalistpig Asset Management: But Dagen, this is important. These guys are windbags and when I hear Ted Kennedy talk, I want to throw my TV through the window. When Congress meets on Enron, when they meet on steroids in baseball, or price gouging; then they are wasting time. This process of vetting Alito, as much as these guys love to blow hot air, this is a vital and important part of the ‘checks and balances' system.
Dagen McDowell: I agree with you on that, Jonathan. That's why I'm just appalled by their behavior.
Terry Keenan: Wayne, you and Jonathan expressed some reservations about Judge Alito, last week. Did you learn anything this week that would sway you, one way or the other?
Wayne Rogers, Wayne Rogers & Company: Well, I just learned that Jonathan and I agree again, that this is an important part of the process. We do live in a Republic and we have a balance of powers between the legislative, the executive and the judicial branches, and it's important that we vet all of this. I don't care if they make morons out of themselves up there and say stupid things. It is one of those things, as this bloc of programs is titled, and I've said it before, it is ‘the cost of freedom.' That's the democracy that we live in and that's what we pay for.
Terry Keenan: And is it worth it?
Wayne Rogers: Yes.
Jonas Max Ferris, MAXfunds.com: Well, I think it's cheaper than them doing other stuff. This is really their job and it doesn't really cost as much as when they meet with lobbyists. It's not really so much hot air. They couldn't win because the majority of senators are republicans, so their strategy, I think, was to get Kennedy and these guys talking for hours and hours until they would snap and say something ridiculous and then they'd have something on him. That's really their only strategy, is to wear them down. Jonathan, you would have snapped under Kennedy. That's what they were trying to do.
Terry Keenan: Dani, do you think these hearings were, in any way, a final straw? The poll numbers for Congress are at historic lows. Was this the final straw to get these guys to rein in their spending and to rein in what they're doing there?
Danielle Hughes, Divine Capital Markets: You know, I think these hearings are absolutely critical, but the value to taxpayers, like us, is to see the perspective that we're getting of not just Alito, but how Congress interacts with each other. They're a bickering, divided lot, which is a reflection of American society as a whole. It really just makes me think that we've got to get off our butts and vote. It's very important for us to put senators and representatives that are saying what we want out there. That just shows us to get off our butts and vote.
Jonathan Hoenig: Well, I mean, there's no question that so much of what Congress does is just tens of millions of dollars of wasted money. This is one of their few responsibilities that is actually enumerated in the constitution, so I say let them talk. If Ted Kennedy wants an executive session, or if Dick Durbin wants an extra hour to question him, I say this is what these guys should be doing. I think Dani is on to something here. It prompts a national discussion about the type of bench we want and the type of representatives we want.
Terry Keenan: Here we have Congress, both the House and the Senate, and the White House under one party, and as Dagen makes a good point, nothing has really gotten accomplished in the last year.
Chris Lahiji: It really hasn't, and especially in the last week. Alito really hasn't given any direct answers whatsoever and, under law, he's not supposed to.
Terry Keenan: Well, he answered a lot of questions more directly than lots of people, including Justice Ginsberg.
Dagen McDowell: How about some of these bozos asking him a question?
Chris Lahiji: I understand, Dagen. But you also have to realize that there are very important issues that are coming up. I still don't know what his stance is on abortion.
Dagen McDowell: But that's not surprising that he wouldn't come out and say, ‘gee whiz, here's where I stand on abortion.' That case might appear before him.
Jonathan Hoenig: Abortion is still everybody's hot-button issue. I think he's against abortion, that's pretty apparent. You're right. He's not going to come out and say, "I'm going to strike down ‘Roe v Wade,'" but there's no question that the court is moving more to the right. As we talked about last week, I think that's a dangerous infraction of personal property rights and I'm not thrilled about Alito's confirmation. It makes me nervous.
Terry Keenan: Wayne, let's get back to the topic here and Congress wasting our money. Are we going to make any progress on this? I mean the budget deficit is at an all-time high.
Wayne Rogers: Listen, first of all, you keep talking about waste. Here we are talking about it. Are we wasting the public's time? It's the same thing. There's a debate going on about it. It stirs up a debate. That's good for a democracy. It's good that everybody gets his opinion out. If he happens to make, as I said, an idiot out of himself by making a stupid statement, whether he's right, left or center is immaterial.
Jonathan Hoenig: Would you vote to confirm Alito, Wayne?
Wayne Rogers: I'm nervous. I'm like you, Jonathan. The one that scares me is not this thing about abortion, so much as that may be a problem. The one that scares me is the fact that he talks about presidential power the way he does. I get nervous about that. I'm a person who believes in the Bill of Rights all the way down the line, as you know. I'm a little like you, Jonathan. I'm on the libertarian side of that.
Question: "George Soros is predicting the housing bubble will burst and cause a recession in
'07. Wishful thinking from a Bush hater?"
Wayne Rogers, Wayne Rogers & Company: First of all, I once took a class in mind reading and failed, so I have no idea what George Soros intends here by saying that. Yes, there is something to what he says. Three or four shows ago I was talking about the Fed. That's what I'm concerned about. The Fed always exceeds itself. In other words, it's raised interest rates 13 times. You never know what the Fed is going to do. They always go to far. They always overdo it. This is what concerns me here. Yes, it's going to hurt the housing market.
Jonathan Hoenig, CapitalistPig Asset Management: And it could happen. If Soros is so bearish on the U.S., Terry, let him sell the S&P, the housing market and the dollar short, I think, at his own peril. They have a saying on the floor, "you don't have opinions, you have positions." If he's such a bear, he should put his money where his mouth is.
Dagen McDowell, FOX Business News: Wayne is absolutely right, though, Jonathan. Soros is not off by himself somewhere. He agrees, or at least is worried, about a recession the way that so many economists are or even investors. And it is a possibility. It's a small one, but still a possibility.
Terry Keenan: And Soros does agree with Wayne, whether Wayne likes that or not. He believes that if it did happen, it would be the Federal Reserve's fault for overshooting. Dani, what do you think?
Danielle Hughes, Divine Capital Markets: The Fed is not a proactive environment. They're a reactive environment, so they're going to continue to raise rates to put a lid on the steamy housing market, whether we like it or not, until they can take some speculation out of that market. And that will slow down and tighten the economy.
Dagen McDowell: They caused a recession in 1990 and they caused a recession in 2001, so there's reason to believe they could do it again.
Wayne Rogers: They always do it.
Question: ""What does the crew think about Intercontinental Exchange (ICE)?"
Jonathan Hoenig: I like it very much. The ICE goes directly against the NYMEX, that's the oil and metals exchange. I think the ICE is going to kick their you-know-what. They're an electronic exchange. The NYMEX is like the old-strips-of-paper-on-the-floor. You wait 10 hours for a fill there. ICE is strong. This is a great place to be. I think ICE is headed higher from here.
Terry Keenan: Wayne, you had a hot hand with the MERC (CME) stock. What do you think about this one?
Wayne Rogers: Jonathan is absolutely right again. He's on the money here. I still own NDAQ and ISE. I think there's a lot left in those stocks.
Terry Keenan: Dagen, you're shaking your head.
Dagen McDowell: I've never liked betting on exchanges or even brokers because it's like you're doubling up. You're betting on a stock and you're betting on a market.
Jonathan Hoenig: Well the brokers are pretty good lately.
Dagen McDowell: I can't bring myself to do it.
Danielle Hughes: These guys make money on transactions and the volumes have increased dramatically. This is the largest electronic energy market. I think they wrote 300,000 contracts last month, which was an all-time record. There's no sign of stopping yet. Energy markets are really hot, so I think the stock is a buy.
Question: "What is your opinion of Under Armour (UARM)?"
Wayne Rogers: I don't know. The stock has gone up like a rocket. It's hard to say how far this thing can go. They've increased earnings and they do have a good product. It's a fashionable product. But when it goes up that quickly, it scares me a little.
Terry Keenan: Fashion's always risky. Dani, what do you think?
Danielle Hughes: Fashion is always risky. This is a very, very volatile stock. Two of the underwriters that brought them public recently came out and said not to buy it, just because it's been so volatile and is a little overvalued. I would wait.
Dagen McDowell: Wayne and Dani are both right. It's too pricey. Even for me, who will spend a lot on handbags and cheese.
Jonathan Hoenig: I don't spend a lot of time on the football field, Terry. It's a hot brand and a super-hot stock. I don't think you stand in front of a freight train when it's going barreling down the track, but I wonder if this is a billion-plus-dollar brand. I'm leaning on everyone else's side. I think there are better places to make money right now.
Cashin' In Challenge
This is it! It's time to get our crew's new picks for the $10,000 "Cashin' In Challenge!"
• Dagen's Picks:
Fidelity Select Telecommunications (FSTCX)
Harbor International (HIINX)
Marsico Growth (MGRIX)
SSgA Yield Plus (SSYPX)
• Jonathan's Pick:
SSgA Yield Plus (SSYPX)
• Jonas' Picks:
PRIMECAP Odyssey Growth (POGRX)
SPARX Japan Investor (SPXJX)
Bridgeway Blue-Chip 35 (BRLIX)
Vanguard Telecom Services VIPERs (VOX)
NFJ Dividend, Interest & Premium Strategy (NFJ)
• Wayne's Picks:
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