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Bulls & Bears
This past week's Bulls & Bears: Gary B. Smith, Exemplar Capital managing partner; Pat Dorsey, Morningstar.com director of stock research; Tobin Smith, ChangeWave Research editor; Scott Bleier, HybridInvestors.com president, and Joe Battipaglia, Ryan Beck & Co chief investment officer.
Trading Pit: President Bush and the Stock Market
Now that Democrats control Congress, some on the left are trying to clip President Bush's wings. But what's Wall Street's message?
Gary B: It is a huge mistake to count President Bush out. The economy is clicking along and the stock market is going to have a fantastic two years coming up. Both the Dow and S&P 500 continue to be close to all-time highs, but some people forget that the Nasdaq is still way down in comparison to those two. All the good news that we have seen recently has been in the Nasdaq. We've seen it in Google (GOOG), Apple (AAPL), Yahoo! (YHOO), and Microsoft (MSFT ). I think the rest of the market will follow. It's an exciting time right now.
Joe: The economy and stock market are on their own for the next two years. The President is buried under the heavy burden of Iraq and will, at best, fight to a draw with Congress on just about anything else. His domestic agenda is very weak by not going after permanent tax cuts and not privatizing Social Security. Now, he's also starting to sound like a Democrat talking about how we need to be green and use ethanol. I'm afraid that over the next two years gridlock will rule.
Tobin: The Democrats are trying to get elected in 2008 and are trying not to screw it up. They have a majority, but it's a very slim majority. The President's veto is the key here. President Bush brought out a health plan, but it died on arrival. He's also not going to get any tax raises in. He is also now in legacy mode and he's going to be remembered for the economy. He won't do anything to mess that up. Right now, stocks are cheap, relative to homes or anything else.
Pat: Earnings growth is slowing. Earnings will be reasonable this year, but lower than the past couple of years. This means we will have a decent stock market, but not a rip-roaring one. The market reacts to a change in change, when earnings are accelerating or decelerating. This year earnings weren't great, but they will be ok.
Scott: This year's State of the Union tells me that President Bush is a lame duck and that nothing is going to get done in the next couple of years. He puts forth good policies, but they don't get anywhere. The Democrats are going to try very hard to get in 2008 and will fight to get healthcare and bio-fuels done. 2007 could be decent for the market, but 2008 will be very poor because of the Dems push to make progress toward the presidency. The market will be fearful of their anti-business agenda.
Wall Street Worried America Going Soft on Terror?
Bin Laden's number two releasing a tape mocking President Bush on the same day we learn of a new al Qaeda threat inside America. But you may not have heard about it, because neither story getting much play in the mainstream media. Is Wall Street worried that America is taking safety for granted?
Gary B: Wall Street is vastly underestimating what could happen. For example, a few weeks ago the TV show, "24," showed multiple terrorist attacks here in America. The characters in that episode were terrified because they didn't know where the next attack was going to be. It is conceivable that that same scenario could happen here. If this scenario happened, we would see the Dow go down to 5,000.
Pat: Terrorist attacks on our soil are way back in the past. Right now, people are treating many of these threats like hurricane forecasts. It's part of our backdrop now. It is something that is going to happen, but we just don't know when, so the market just shrugs it off. Another attack will be very ugly for the market. I don't think it will be devastating for the long term, however. 9/11 was terrible for human tragedy, but it didn't have a devastating impact on the economy.
Joe: Investors are not taking terror into account when they invest. It was shocking to me that a rival network's reporter was covering the President's speech, and talked about how it was quaint that the President was going on nostalgically about Usama bin Laden and the old story about 9/11. I felt very insulted and violated because it is a real threat. Our success in repressing everything from that day is making people feel comfortable. This is when it can come back and haunt you. Risk premiums need to be spread out and I don't see them showing up anywhere. That's a risk.
Tobin: Part of the market has told us not to overreact. We've done a terrific job and we'll continue to do that job in order to protect the United States. The market is becoming more rational about the ways that terrorists can attack us. However, they are not going to hurt us. If we are attacked, the market has shown us that it's a buying opportunity, rather than a time to sell.
Scott: I don't think we are underestimating terrorists. The market is acclimated to the fact that there are terrorists out there. That's a much different situation than back in 2001 when 9/11 hit. Terrorists can eventually strike and unless they pull off a colossal attack, it will not harm our economy for very long. Wall Street keeps moving along and it is calculating economics, not terror.
Each of the guys picked the best stock to own from 1 month to 5 years.
1 month stock: Tobin picked Diamond Offshore Drilling (DO )
6 month stock: Gary B. picked NASDAQ 100 Trust Shares (QQQQ )
1 year stock: Joe picked ImClone Systems (IMCL )
2 year stock: Scott picked WMS Industries (WMS )
5 year stock: Pat picked American Express (AXP )
Joe's prediction: I'm a Bear! Dow, Nasdaq, S&P 500 all down 5-7 percent this spring
Scott's prediction: President's healthcare plan helps Humana (HUM ) gain 50 percent
Gary B's prediction: ADM (ADM ) gets 20 percent boost from Bush's State of the Union
Tobin's prediction: Microsoft (MSFT) down 20 percent; Yahoo! (YHOO ) up 40 percent
Pat's prediction: Motorola (MOT ) "RAZR" sharp! Gains 30 percent by end of 2007
Cavuto on Business
On Saturday, January 27th, Neil Cavuto was joined by Ben Stein, "26 Steps to Succeed in Hollywood" author; Jim Rogers, "Hot Commodities" author; Charles Payne, Wall Street Strategies CEO; Adam Lashinsky, Fortune Magazine senior writer; Patricia Powell, The Powell Financial Group president; and Ben Ferguson, "The Ben Ferguson Show" radio host.
Neil Cavuto: The biggest tax hike in history: would President Bush let it happen to save Social Security? Lifting the cap on Social Security taxes could create the biggest tax hike in American history, forcing 11 million Americans to pay a lot more. Adam, would the President agree to that?
Adam Lashinsky: Yeah, Neil, I think he would. And not just to save Social Security but to save his own tax cuts. Social Security is the biggest accomplishment the Democratic Party has had in a hundred years. The President's biggest accomplishments were his tax cuts from several years ago. He is going to want to compromise with the Democrats in Congress to ensure that his tax cuts are extended beyond 2010. That's why I think he will deal.
Neil: So is the President saying something like this to the Democrats, "You protect my tax cuts, I will go ahead and hike your Social Security taxes?"
Jim Rogers: Well, I mean, if that's the deal, that's the deal. Who am I to know when it's going to happen? But tax hikes are not good for anybody, and certainly not good for America, so I don't approve of it at all.
Neil: What do you think, Charles? How far does this go?
Charles Payne: I know Bush has got to make a deal. During the State of the Union, I thought he was going to drop on his knee and give Nancy Pelosi a ring. The bottom line is, he must draw the line here. He must find his veto pen. So far, it's been in a glass box he's never broken open. But this is not going to go through. There are other ways to save Social Security. He's laid out this plan before, and I think this'll be a great time to reiterate it.
Ben Stein: Well, Social Security is on an actuarially unsound basis. We're going to have to raise taxes. There's no reason the rich shouldn't pay more Social Security taxes. There's no reason there should be a cap-and I say this knowing I am going to have to pay a hell of a lot more if they do lift the cap. But we must raise the retirement age and means test for benefits. It's an insurance program and we've got to make it sound the way insurance companies do. There's no excuse for fiscal recklessness of this kind. If Bush wants to fix it and the Democrats want to work with him-great! I would have preferred Bush's previous privatization program. Democrats won't let him do that. Let's do it actuarially sound some way.
Jim Rogers: But Ben, why not privatize it? You're saying, "Let's use a band-aid instead of solving the problem."
Ben Stein: I'd love for him to do that, Jim, but the Democrats won't let him do it. I would love to do it.
Adam Lashinsky: You know, we're talking politics as much as policy. It may be a fine policy idea, but politically it's just not going to happen, so it's not worth the President or us wasting our breath on it right now.
Neil: Pat, the issue is that raising the income threshold for Social Security is essentially raising taxes. Ben Stein is right in saying that you have to do it. You would think that the President then would get some sort of quid-pro-quo. Something on either privatizing or partially privatizing…is it so dead that he can't even venture it?
Patricia Powell: I don't think he is going to get anything like that on Social Security. I think he has to hold the line on this one because it's the right thing to do. He can't pander to the Democrats. This one is bad for America. We've done this fix before. Some of the people on the panel probably aren't old enough to remember, but I remember the Reagan fix, which was going to be a once and for all fix. What was the answer? Raise taxes. It was actuarially sound for about two years and we've been out of balance ever since. It is a disaster. We need to fix this system.
Neil: Ben Ferguson, now you're the youngest guy here, so you're definitely not getting Social Security. How much faith do young people have that this system, as it stands now, will be there for them?
Ben Ferguson: About zero. The reason why is because we know that the system is going to go broke for us. We know that Congress has been raiding the surplus, the money that is supposed to be saved for Social Security. We know that there is no return on our investment. They have been telling us every three, four, five, six years that Social Security is going to go bankrupt. The problem is if they don't fix it the real way. If they raise the cap the way they're talking about, it's only going to provide a fix for about six or seven years. Then they're going to end up saying, "Well, we need to change the age from 65 to 67." You have to fix the system and you've got to give young people the opportunity to invest. That's why private accounts work. The Democrats don't want it because they need Social Security to pander to their base. They need people to rely on them and depend on them for their retirement. If Social Security actually gets fixed, Democrats have nothing to offer.
Ben Stein: Ben, I'm with you! You and I appeared with President Bush to promote this idea, but the fact is, he's not going to get privatization through. He's got to do something. It's unfortunate. No one likes to pay taxes.
Jim Rogers: Let's just put in another stopgap measure. Are we going to do this every 5 years for the rest of eternity?
Ben Stein: If we have to keep doing it, we have to keep doing it. We can't let Social Security fail.
Neil: Charles, as it stands now…is it gone?
Charles Payne: As it stands now, absolutely. But from a political point of view, we're going off a slippery slope. If Bush falls into whatever the Democrats want to do, we can kiss the economy good-bye.
Head to Head
Neil: In the race for the White House, will the winner be the most qualified or the one who spent the most cash?
Ben Stein: I think it's amazing how little we spend on the presidential elections. We are essentially electing the chief executive officer of a $2.2 trillion enterprise, and we're going to be spending way less than 1 percent of that to elect them. It's amazing to me that I can give a thousand dollars, two thousand dollars-four thousand if my wife and I both give-and we can get an audience with a guy who's going to be President of the United States. Peanuts! I think that's the glory of a free society. It's an amazingly small amount, not an amazingly large amount.
Neil: Ben Ferguson, what do you make of that? The race is getting expensive, and to the victor usually come the costs associated with that.
Ben Ferguson: You can buy this election now. The reality is now it has become a big business. Look at the men and the women who have the money. Look at the CEOs and executives that throw the fundraisers. They want their backing behind a candidate they think can raise the money to have a chance to win. It's no longer about the best ideas. It's no longer about the guy getting on a podium and debating it. People no longer say, "Wow, that guy is a brilliant man with good ideas for the future of this country." It's can you raise the money needed to win the election?
Neil: Jim, the fact is that money doesn't always buy you the brass ring. John Connolly can attest to that, but others along the way had a lot of money and didn't win.
Jim Rogers: Ross Perot. You've got to have a lot of money to get there, but it doesn't mean you're going to win. It may get you to the top four or five…you'll make the cut, but that's not going to get you the election.
Charles Payne: I agree one hundred percent. At the end of the day, the message has to resonate. Whether the message is right or wrong is sometimes where the money makes a difference. You can get a bad message out over and over again and people will fall for it.
Patricia Powell: I'm somewhat in disagreement here about the money angle. Yes, you need money, but the Swift Boat ads couldn't be countered by money. John Kerry, D-Mass., faltered because he didn't have a good response to them-not that he didn't have the money to put out an ad. So I think you need money, but ultimately people go out and vote for Democrats or Republicans because there are some ideas they agree. If you don't have enough money, you don't get the nomination. But once you get the nomination, there's a lot of money in both parties.
Ben Ferguson: George W. Bush's dad was a former president. You talk about the best donor list in America… that man had it. That's why George W. Bush won the primary.
Neil: Does Hillary Clinton, D-N.Y., have the edge because she has the most money right now?
Ben Ferguson: Sure. She's got a huge shot at it because her husband has a great list of donors she can tap into. Yes, it may come down to ideas for the last leg. But to get to the big dance, you've got to have the cash at the very beginning of the night to get you there.
Ben Stein: Every other candidate can raise $200 million. Hillary Clinton can raise $400 million. That's the story. She's got it locked up on the Democratic side.
Patricia Powell: People are not going to vote for her because she raised $400 million dollars. There are people in this country who really do not like Senator Clinton. They are not going to vote for her and don't care how much money she raises.
Jim Rogers: Ben, you are suggesting that Hillary Clinton will win the nomination?
Ben Stein: I think so. Unless Barack Obama, D-Ill., shows that there's something to him besides a stuffed shirt. I don't get Barack Obama at all. I think she's going to wipe the floor with him in the debates, and that'll be the end of him.
More for Your Money
Everyone picked stocks they say will make you the biggest winner by Election Day! (If you want to watch what each had to say about their stock, click here.)
Charles: Lamar Advertising (LAMR)
Adam: Radio One (ROIAK)
Ben: Washington Post (WPO)
FOX on the Spot
Ben: Beware! Media attempting to overthrow Bush
Jim: Bush health insurance plan is revolutionary!
Patricia: Dems play conservative politics & win in '08!
Adam: Citigroup ousts CEO Prince within 6 months; buy now!
Charles: Chip mergers ahead; buy NVIDIA and Broadcom!
Neil: The budget gap will be closed in three years!
Forbes on FOX
"President Hillary Clinton": Good or Bad for Stocks?
Mike Ozanian, senior editor: A President Hillary Clinton would be a horrible thing. She would move us towards a Venezuelan model of state own businesses.
Lea Goldman, associate editor: She's dropped socialized medicine. It was a disaster. She gave it up. She's pro free trade and even Wall Street is giving her campaign money.
Elizabeth MacDonald, senior editor: The question is, will Hillary do the right thing and give the middle class a real tax cut and do social security reform. Or will we have a big government spending economy, which would be a very bad thing. I think she'll support the latter.
Quentin Hardy, Silicon Valley bureau chief: So the question is, can a Clinton clean up after a Bush and bring us prosperity? It's happened before.
Michele Steele, reporter Forbes.com: We have to look at her rhetoric and her record. Her rhetoric is, she's going to say what it takes to win the Democratic primary. Her record states that she's been on the board of Wal-Mart. I think she understands what business means and she's just saying what it takes to into office.
John Rutledge, Forbes contributor: Hillary is the poster child for class warfare. She's going to put price controls on health care, oil businesses, and she's going to put us on international trade. She's going to squash the global economy.
In Focus: "Proof" Dems Plan to Raise Your Taxes?
David Asman, host: During President Bush's State of the Union address he said we need to balance the federal budget, and that we can do it without raising taxes. The Republicans gave him a standing ovation, but the Dems stayed seated. Does this mean the Dems plan to hike taxes soon?
John Rutledge: This is 100 percent sure. The Dems plan on raising income taxes at the top, which is a tax on capital and small business. They'll also hike taxes on oil, drugs, capital gains and the death tax.
Victoria Barret, associate editor: I think it's predictable that Democrats wouldn't applaud the President's call not to raise taxes, but it doesn't mean they'll try to raise taxes immediately. If they win the White House in 2008, they will. But before that, they're going to be very cautious, because voters across the board don't like taxes.
Elizabeth MacDonald: I'm still waiting for the Dems to be more like Kennedy than Dukakis or Mondale. Around the world you see free market, low tax regimes taking hold in Russia, India, China and Croatia. Egypt is even flattening the corporate tax structure.
Mike Ozanian: The Dems hate success. Whether it's an oil company or Wal-Mart. If an individual is successful they want to punish that individual. And they do it through onerous taxes.
Quentin Hardy: Remember, it's the President who signs off on tax increases. It's going to happen, it has to happen.
Rich Karlgaard, publisher: What the Dems are really doing is setting the table to make an uncontestable issue if they win the Presidency and sweep in 2008. All that's needed is a majority to raise taxes. I don't think you'll see massive hikes in the next 2 years, but in the next 3 they will hike taxes and it's going to be bad.
Flipside: Best Thing for America: Raising Gas Taxes Now!
Victoria Barret: It seems like a distant memory when we were complaining about high prices at the pump. What we have learned from the period is that the American economy continued to soar. We didn't take the hit we thought we would. So I think now is the time for a gas tax. We need to reduce our dependence on foreign oil and this is the way to do it.
Rich Karlgaard: We don't need to raise the gas tax. We need to remove things, not add them. We need to remove the barriers on nuclear power. We need lower capital gains even more to spur entrepreneurs to develop the next new energy form.
Bill Baldwin, Editor: This country needs a very stiff tax on carbon and that would mean much higher gasoline prices. And I would rebate a good chunk of that to the working poor.
Mike Ozanian: Middle class and lower income people drive cars too, and raising the gas tax would hurt them most. And gas taxes account for 15 percent-20 percent of the cost of gasoline. So we have a big gas tax and it doesn't slow down the amount we use.
Neil Weinberg, Senior Editor: We need a gas-guzzler tax. Let's tax the big SUVs and the big oil burning machines.
Informer: Fire the Bo$$?
Michele Steele: Wal-Mart (WMT)
Neil Weinberg: Citigroup (C)
Lea Goldman: Elizabeth Arden (RDEN)
Bill Baldwin, Editor: Alcoa (AA)
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, and Tracy Byrnes, The New York Post.
Stock Smarts: Anti-Wal-Mart, Anti-Capitali$m?
Well, they are at it again: opponents of Wal-Mart salivating over a possible loss that would ban the retailer from opening banks in its stores. Is this fight against all things Wal-Mart really a fight against capitalism?
Tracy Byrnes, The New York Post: I think we should leave Wal-Mart alone. In many ways they have revolutionized the retail business. They will probably do the same for the banking industry. They are coming in, going to get in this and, if nothing else, I think it will help the consumer in many ways. It will knock off all those miscellaneous fees that your mortgage broker is charging you to get a loan those days.
Wayne Rogers, Wayne Rogers & Company: It's another idiotic idea. You are absolutely right. The banking laws are very special to the banking business. It's the only business in the world where you are guaranteed not to lose your money if you put it in as a deposit. There are special rules for the banking business. They should only be in the banking business. We have a whole history of banks getting into all of these other businesses; they don't know what they're doing. Then the public has to bail them out. It's a dumb idea. Don't let them do it.
Jonathan Hoenig, Capitalistpig Asset Management: It's discrimination, Wayne and you're exactly wrong on this one. Wal-Mart has the right to get into any business it wants to that it feels it can make a profit in.
Wayne Rogers: Oh sure, let them rob people. Why not give them guns and let them rob people? That works too. They can do that.
Jonathan Hoenig: Wayne, that's idiotic. They can't violate anyone else's rights, Wayne, but if they want to open a bank, they have a right to offer that service. And you know what? You have a right not to go there.
Jonas Max Ferris, MAXfunds.com: Jonathan, that's the idiotic point. By that logic, should a shoe store be able to open a bank and accept deposits?
Jonathan Hoenig: Of course, and I encourage you to go put your money there. It's a free market.
Jonas Max Ferris: Free market? That's a theory.
Wayne Rogers: Jonathan, you couldn't be more wrong. It is not a free market for banks. There is no free market for banks.
Jonathan Hoenig: As long as you and Jonas are running things, of course it isn't.
Dagen McDowell, FOX Business News: I will break this up. Jonathan, you are absolutely right. This is another way that the unions and the government are trying to vilify Wal-Mart. Wal-Mart does not even want to open a retail bank. It wants to be able to process credit card transactions. Target already got the ability to do that. So if Target can do it, then why can't Wal-Mart? It is unfair.
Terry Keenan: Anyone who knows how Wal-Mart operates knows that if you give it an inch, they take a mile.
Dagen McDowell: I'll take 100 miles for that because I want cheaper banking fees and Wal-Mart can deliver that.
Tracy Byrnes: Don't forget, we're focusing on people who don't even have bank accounts. It's not like stealing customers. Half of these people are low-income people. They don't have bank accounts. Wal-Mart is going to give them one? I think that's a great thing.
Terry Keenan: But Jonathan, to Wayne's point, these deposits are insured by the federal government. I'm sure you're against FDIC insurance, but it's a fact of life. We have to have it.
Jonathan Hoenig: Well, if Wal-Mart opens a bank, we'd see lower borrowing costs, we'd see higher savings rates, we'd see a terrific bank.
Terry Keenan: So they're putting banks in their stores so people will save money instead of spending it?
Jonathan Hoenig: Terry, they're putting a bank in the store because they think they can make a profit. And you know what? I wish Wal-Mart would open a school and a hospital because I think they'd be great services. This is just another Wal-Mart Watch or Wake Up Wal-Mart discrimination against what is a law-abiding company.
Wayne Rogers: Look, there are special laws for the banks. They are not operating in a business that is competitive in the same sense. You have no sense of history. Go back and read the Pecora Hearings from 1933. Read what happened. You ought to learn something from that.
Terry Keenan: You might learn about it at Wal-Mart University, Jonathan.
Jonas Max Ferris: Wayne is right; there is nothing more American than regulating banks. These bank laws go back to the 1800's. It's the oldest industry to regulate and there is good reason for that and again, I'm not scared of a Wal-Mart bank or a Home Depot bank. It's the Dunkin' Donuts bank or the bank down the street that is a shoe store.
Dagen McDowell: These laws are not being applied evenly.
Jonas Max Ferris: But once Wal-Mart gets a bank, anybody can get a bank.
Terry Keenan: Do we really need any more banks in this country? You walk down Sixth Avenue and there is a bank on every block.
Tracy Byrnes: If they want to dump money it's their problem.
Dagen McDowell: All these fees are at record highs; ATM fees are at record highs. You can't get anybody on phone. You want to pull your hair out every time you have to call a bank.
Terry Keenan: It's not because there's not enough competition in the banking industry.
Dagen McDowell: We need competition like Wal-Mart, not the kind that we have had.
Jonas Max Ferris: I think it's very American to regulate banks, there's good reason not to allow Wal-Mart and other retailers into banking. There are enough banks around already.
Terry Keenan: Jonathan, will we see the day of a Wal-Mart bank?
Jonathan Hoenig: I hope so, Terry, and the real overriding principle is that Wal-Mart has the right to open up a bank if it wants to.
Jonas Max Ferris: And so do you by that logic.
Jonathan Hoenig: Absolutely. I do run money, Jonas.
Jonas Max Ferris: You don't run a bank, though. You don't take deposits and insure them.
Wayne Rogers: I think you ought to let state insane asylums open banks too. That makes about as much sense. You don't have any sense of history, if you don't understand what the hell went wrong with the banking system when you allowed every Tom, Dick and Harry to go into it with no regulation and it ruined the American people. It's dumb if you do this.
Dagen McDowell: We're not saying that this bank would not have any regulation. It would be regulated, but you know, Wal-Mart saves 20 percent on groceries for people compared to other grocery stores. We need that in the banking industry.
Wayne Rogers: All due respect, I testified twice before the House Banking Commission, I know a little something about this business, I have started four banks. A local bank is the best thing you can have. Wal-Mart will not be a local bank. It will be terrible.
Jonathan Hoenig: Actually the truth comes out; you are talking your own position. You are a small community banker. Why would you want to have to compete with Wal-Mart and that's the real discrimination here.
Wayne Rogers: That's not discrimination.
Jonathan Hoenig: It is, Wayne.
Wayne Rogers: Listen to me a minute, Wal-Mart would not be competition, but they are multi-national. It's the local banks that do the good. It's the people in the community who get served by local banks. Large, major, central-organized banks do not help local people.
Dagen McDowell: So the billions of dollars in taxes that Wal-Mart gives to state and local governments every year that support schools and police departments, that doesn't amount to anything?
Wayne Rogers: You are talking about the banking business; you are not talking about the tax situation. You don't have any idea what you are talking about. Go do some homework.
Tracy Byrnes: You could say the same for the stores then for that matter. The stores shouldn't be around because they are eating out the ‘Mom and Pops.' I don't think this is going to be a bad thing at all and they still have to go through the process. We have nothing to say that they are actually in. So the laws are there to make sure they do it properly.
Cashin' In: Is a National Health Care Plan "Un-American"?
President Bush proposing giant tax breaks for people who buy their own health insurance, with many other pushing for a much bigger plan such as national health care. Jonathan, you say any government plan to provide health care is un-American, but this is the direction we are moving in.
Jonathan Hoenig, Capitalistpig Asset Management: Well, we are moving in that direction, Terry. I think it's terrible. Universal health care is kind of French for ‘Socialized health care'. I'm sure Bernie Sanders would disagree, but I happen to think that Socialism is very un-American. Start with the fact that it won't work. We are digging ourselves out of all these bureaucratic messes we have already made like Amtrak, the post office and Social Security. We are digging ourselves out of those messes. The real reason to oppose it is that it is amoral.
Jonas Max Ferris, MAXfunds.com: Jonathan, this Bush plan, which I think is Bush's best plan to date, I know that's not saying a whole lot, but the realty is it's not national health care, it's getting health care out of corporations, which is an idiotic system that corporations have to provide health care to employees, and it's moving to get all uninsured people who currently use Emergency Rooms as doctors offices to get insurance. So I think it's a good plan in that sense.
Terry Keenan: Wayne, do you agree or is the Bush plan just muddying the waters?
Wayne Rogers, Wayne Rogers & Company: Well, the Devil is in the details. I don't know the details honestly so it's difficult to debate this. Jonathan is ideologically is probably correct. I mean I hate to say his ideology as it extends to the banking part, but to that extent he is probably correct. If you are going to let the government into the health business completely, they are going to muck it up somehow and it will cost us a heck of a lot more money. There has to be some blend in here that works that we get some sort of universal health care.
Dagen McDowell, FOX Business News: You can't muck it up any more than it is and with President Bush's plan which is genius, unfortunately it probably won't go anywhere, it tries to level the playing field and give people who have to buy insurance on their own some break to do so. And then, basically, take some of the power and luxury away from people who have these Cadillac plans from their employers.
Terry Keenan: With is a Cadillac plan? If you have a good job are you being punished for good behavior? If you have a good job, you put in more money to buy the more expensive plan and then you get hit with a tax hike.
Tracy Byrnes, The New York Post: It's geared toward people who aren't covered at work so they do have a job but they aren't being covered and health care has to come out of their pockets.
Terry Keenan: But someone has to pay for it and the people who are going to pay for it are the people who have already taken care of their health care.
Tracy Byrnes: So the question is, ‘why aren't they being insured at work?' The problem, of course, is that if they don't have insurance, the odds are good that they are not coughing up the $1,000 a month to buy it on their own anyway. You have to put the money out in order to get the credit and the problem is that no one is putting the money out.
Terry Keenan: Except that this is a tax increase, isn't it, Jonathan?
Jonathan Hoenig: Terry, you can show me the most beautiful Power Point presentation on this grant plan for socialized health care. I'm sorry: it is not American. For life, liberty and the pursuit of happiness, my pursuit doesn't cost you anything but if have I to pay to keep you on a respirator for 10 years because you smoked your whole life --
Jonas Max Ferris: Lose the craziness, people have insurance and they don't care how much it costs to go to a doctor. The more of the health care costs that you have to deal with yourself, the less of a Cadillac plan where you don't care where you go because it's all paid for by the corporation. There are 30,000 Web sites to let you shop for the best price on a flat screen TV. You can't even research doctors for what they pay for a basic thing because nobody cares.
Dagen McDowell: We need to consume less health care in this country. Certain people should not be able to go out and get their teeth straightened because they have this giant plan at work. This levels the playing field.
Terry Keenan: But if the company is paying for the health care, what's wrong with that, Wayne?
Wayne Rogers: I don't think there is anything wrong with it, necessarily. I'm saying again, though, there has got to be some way to do this that makes logical sense. That you are not stealing from one side to pay for the other who is one of the one of free riders. There has to be a way to make this work and I think there is some blend between private and public that will make it work.
Jonathan Hoenig: It's called a free market, Wayne. You might want to Wikipedia it and learn a little something.
Terry Keenan: Tracy, any chance this plan will go through?
Tracy Byrnes: No, there are a lot of loopholes in it. But 1 in 7 people are uninsured. Something has to happen. At the same time, though, if it's for free, they are going to take advantage for it. That's the problem. There needs to be a happy medium.
Dagen McDowell: Rich executives are going to get taxed, people are really going to feel sorry for them.
Cashin' In: Wall Street's Message to Chavez: "Go to Hell!"
"Go to Hell, gringos!" That is what Venezuelan dictator Hugo Chavez said about America recently. Meanwhile, we do spend billions every year on oil purchases from his country. Should Wall Street's message to Chavez be equally as strong?
Wayne Rogers, Wayne Rogers & Company: Even stronger, I think. We shouldn't be doing business with a dictator. Listen, Citgo, which is the retail arm of the Venezuelan Petroleum Company; we should boycott it, shouldn't be doing business with them. If anything, if we could sanction them without really announcing sanctions, we should do it. Absolutely.
Dagen McDowell, FOX Business News: Great in theory, Wayne, but in practice it's not going to work because we are in bed with that country. We need the oil and investors are not going to like it if we cut off oil supplies from that country because the economy would crater because of it.
Tracy Byrnes, The New York Post: And to Dagen's point, big companies have billions of dollars invested there, like Exxon Mobil (XOM), Chevron (CVX) and BP (BP ). They are not just doing to pull out.
Terry Keenan: Well, they might be nationalized.
Wayne Rogers: They are not going to pull out; they are going to take it away from them. They are already doing it. He is not going to compensate them.
Tracy Byrnes: But they have money there, they are going to have no choice not to work with this guy.
Terry Keenan: He has been nationalizing some of the industries like telecom. Verizon is getting hit pretty hard.
Jonathan Hoenig, Capitalistpig Asset Management: The question is neither the money nor oil. The question is what is really going on in Venezuela. Chavez is remaking the country into a dictatorship. That's fine; the real problem is he's getting in bed with Mahmoud and Kim Jong Il. These people are real threats to America. I think we're starting to see a real new Axis of Evil here. He hates America and he is aligning himself with those who would do America harm.
Terry Keenan: Jonas, you are shaking your head, but we have gotten a bunch of socialists elected in South America the last couple of months, as in Ecuador.
Jonas Max Ferris, MAXfunds.com: Latin America is on the direction of Socialism, no question. However, from a Wall Street point of view, I think we could use more countries like Venezuela.
Jonathan Hoenig: Jonas, why don't you move there?
Jonas Max Ferris: I know the guy has a lot of blustery comments, but it's to get votes and it works. He wins elections by huge amounts on that. The reality is that corporate America loves doing business there. Venezuela is a much better trading partner to us than many countries, including China. We are their number one exporter to that country. I wish other countries were like that with us.
Wayne Rogers: I don't understand it when you say ‘corporate America' has a big investment. That doesn't make it right, you know? This guy is out to get us. He is doing business with the North Koreans. He is doing business with all these people. We should get rid of this guy if we can.
Terry Keenan: We tried and failed, unfortunately, back this 2002.
Dagen McDowell: Maybe this country will get scared straight enough to have a decent energy policy for the next 50 years so we don't have to buy energy from countries like this. But for the time being, we don't have a choice.
Terry Keenan: Jonathan, $20 oil would be best way to get rid of him. Have of his population is in poverty.
Jonathan Hoenig: It's dropping fast, Terry, but to say that corporations love doing business with Venezuela is retarded. Look at the land confiscations that Chavez has done. That's capitalization under Hugo Chavez.
Best Bets: Our Crew's Next Buys
So what is our crew buying next? Time for our best bets! Wayne what do you like?
WAYNE'S NEXT BUY: Quanta Services (PWR)
Friday's close: $20.91
Wayne Rogers, Wayne Rogers & Company: Well I like Quanta Services. They are a construction company for power networks. And the net was up 74 percent in the third quarter so I think it's very solid. It's got a good chart.
Terry Keenan: That's Wayne's next buy. Jonas what do you think?
Jonas Max Ferris, MAXfunds.com: It just hasn't been growing enough top line over the last few years over a boom. What's going to happen if there's a recession? I don't see where the growth is coming. I know the bottom line is OK, but not at this time in the economy.
JONATHAN'S NEXT BUY: Mizuho (MFG)
Friday's close: $14.75
Jonathan Hoenig, Capitalistpig Asset Management: It's a Japanese bank; I like a lot of these Japanese financials actually. My Japanese isn't that good, but I know I like the Japanese banks. We have a position in MFG already.
Terry Keenan: Jonas, the Japanese market has left a lot of broken hearts.
Jonas Max Ferris: I went to the Tokyo stock exchange when it was at Nikkei 40,000 on a trip once. I would say that I believe in the recovery of Japan. I've recommended a lot of Japan picks here. I don't think the banking industry is the way to play that. It's the highest risk/lowest return way to play that.
Wayne Rogers: I love it. The name in Japanese means ‘fresh harvest of rice.' It's fruitful, so I like it. I think it's a great pick.
JONAS' NEXT BUY: Vanguard Growth Index Fund (VIGRX)
Minimum Investment: $3,000
Jonas Max Ferris: Vanguard Growth Index Fund. I'm buying this on Monday. I'm not really amped about stocks, but I have to say you have to be with what has underperformed the most over the last five years. To me, that's large-cap growth stocks. Names like Intel (INTC) and Microsoft (MSFT ). I recommended the individual stocks; this is what I am buying on Monday.
Terry Keenan: Wayne, growth coming back here?
Wayne Rogers: You know what I like is that the symbol of this looks like Viagra. That means growth. I guess it's good.