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
Brenda was joined by: Gary B. Smith, columnist for RealMoney.com; Pat Dorsey, director of stock research at Morningstar.com; Tobin Smith, founder and chairman of ChangeWave Research; Scott Bleier, president of HybridInvestors.com; and Bob Olstein, president of the Olstein Funds.
Trading Pit: $ocial $ecurity
Do you want the option to invest some of your Social Security money in the stock market? Right now, the answer appears to be no!
That's the word from a new FOX News/Opinion Dynamics poll. 47-percent say it's a bad idea; only 40-percent like it.
By almost any measure, Social Security would be in far better shape if it had been invested in the market. So what gives?
Gary B. Smith: The strength of our society is based on ownership—the ability to go out and do things on your own. Our country did pretty well for 160 years without Social Security. I think this is a good idea, but President Bush needs to “sell” his reform plan better.
Bob Olstein: Americans are ill equipped to do private accounts. I agree that there is a problem with Social Security as it is currently funded. But any type of reform is not going to go through until they figure out how it is going to work. You can’t allow the lunatics to run the asylum.
Tobin Smith: Private accounts is a good idea. The 47-percent against it are probably a lot of people who lost money recently in the stock market. Right now is a lousy time for Bush to try to convince people to invest in the market. But he shouldn’t emphasize the stock market. Instead he should focus on the ownership. With these accounts you can sell it, give it to your kids, etc. Also, these accounts are going to be invested in bonds or a very large index fund like the Wilshire 5000.
Scott Bleier: The reason the majority of people do not want privatization is because it is going to cost a lot of people a lot of money. Anyone who works for a living is going to get hurt. The only way to fix Social Security is to raise taxes.
Pat Dorsey: The reason this is losing support is that President Bush is now saying what he didn’t say in his State of the Union. Benefits are going to have to be cut or taxes are going to have to be raised. Benefits will have to be reduced somehow to pay for the transition to private accounts. In this case, young people win, but people getting benefits now lose.
Bob’s always saying that we’re in a “stock picker’s market,” so we made him the stock picker and gave him the whole market. (Bob owns all of these picks.)
Bob: My first pick is brewing company, Molson Coors (TAP). Molson and Coors recently merged and there’s a lot of room for cost cutting. It has lots of cash and I think the stock is worth $90. (Molson Coors closed on Friday at $71.65.)
Tobin: This is a lousy company. But Bob does well in these stocks because there’s so much bad news and people expect nothing. If it does anything good, it’ll go up.
Pat: I agree that there are a lot of cost cutting opportunities. It was an awfully run company before the merger. I don’t see as much upside as Bob. I think the stock’s worth $75-80.
Scott: I’m bullish on Molson Coors and agree that it’s worth $90.
Bob: Next, Diebold (DBD). The company is working to technologically upgrade its ATM machines. It has good earnings power and is going to $65-70. (Diebold closed on Friday at $53.56.)
Pat: This is a wonderful company and I also see a lot of upside. It is going through a huge upgrade cycle in ATM’s right now. Plus, there are a lot of opportunities for it in the international market.
Scott: Diebold is a great security business and has a great balance sheet. The ATM upgrade is huge.
Tobin: The other thing that hasn’t been mentioned yet is that election machines are also a big deal, which the company also is involved in. This could create a lot of growth.
Bob: I also like RadioShack (RSH), which also just had a bad quarterly report. There’s no other nationwide store like it. It has a lot of cash and I think the stock is worth $38-39. (RadioShack closed on Friday at $28.93.)
Scott: RadioShack has consistently disappointed Wall Street. This business is awful.
Tobin: I would wait until it’s about $10 cheaper before I’d buy it.
Pat: You guys are all missing the fact that it has new management, which plans to shut down stores. The company has one of the broadest retail reaches in the country. It’s going to do well.
Bob: Lastly, I’m picking Del Monte (DLM), which is going through a lot of change. The stock’s going to $15. (Del Monte closed on Friday at $11.30.)
Tobin: I like change and this is good change. Del Monte’s doing great things. I love this stock.
Scott: This is another constant disappointer. Transportation and fertilizer costs are very high right now and that’s going to hurt them.
Pat: 24 percent of the company’s sales are to Wal-Mart (WMT) and that will squeeze them.
Ask the Chartman
You’ve got the questions and Gary’s got the answers!
Dave from Michigan writes, "I bought Pfizer (PFE) late last year hoping for a comeback. Should I continue to hold or should I get out NOW?"
Gary: Dave, please don’t get out now! Pfizer finally broke the back of a downtrend it had been in since September. This is a keeper, definitely a stock you should own. (Like me!) (Pfizer closed on Friday at $26.85.)
Scott in Bethlehem, Pennsylvania, wants Gary’s opinion on Walgreen (WAG). He asks, “Can it get to $50 or more?”
Gary: Walgreen was just broke out on Friday. Now’s the time to buy. (Walgreen closed on Friday at $45.04.)
William Rittenburg is a small investor who owns Clorox (CLX). He wants to know if he should sell the stock or hold on to it.
Gary: What’s not to like here? Clorox keeps moving up. Sell only if it closes below $60.
(Clorox closed on Friday at $60.68.)
Jon in Wisconsin wants Gary’s thoughts on Symantec (SYMC). He knows that it has fallen hard since December, but is it a good buy at its current price?
Gary: Symantec has been stuck in a steady downtrend. Stay away unless it closes above $23. (Symantec closed on Friday at $21.21.)
Bette, a senior in Florida, is looking for a stock that pays a good dividend.
Gary: Anytime you buy a stock, you want to buy a strong stock, and the same is true for one that pays a dividend. If any stock with a dividend tanks, there goes the dividend. I think Intel (INTC) looks strong right now. It recently broke a downtrend line and is about to break through some resistance. This is a good bet for Bette when it closes over $25. (Intel closed on Friday at $24.68.)
Gary B's prediction: Martha Stewart (MSO) dips to $25 then soars to $50 when her show debuts
Tobin's prediction: Gary B's chart is upside down! MSO goes up to $40 & then falls to $12
Bob's prediction: Martha's Newsweek pic and stock are fakes! MSO hits teens in 1 year
Pat's prediction: Biogen (BIIB) sell off is waaaay overdone! Gains 50 percent in next few years
Scott's prediction: Bears take a bite out of Apple (AAPL); falls 25 percent by summer
Bulls & Bears | Cavuto on Business | Forbes on FOX | Cashin' In
Cavuto on Business
Neil Cavuto was joined by Dan Colarusso, business editor at the New York Post; Gregg Hymowitz, founder of Entrust Capital; Gary Kaltbaum, president of Kaltbaum & Associates; Jon Najarian, principal at PTI Securities; Jim Rogers, author of "Hot Commodities;" Ben Stein, author of "Yes, You Can Be A Successful Income Investor: Reaching for Yield in Today’s Market," and Meredith Whitney, executive director at CIBC World Markets.
The Bottom Line
Neil Cavuto: In Lebanon, protestors force the removal of an unpopular Syrian-backed government. In Egypt, the president — who in reality is a dictator — calls for open elections and in Saudi Arabia a member of the royal family says women may soon be allowed to vote!
Could a democratic revolution in the Middle East lead to revolutionary new highs for the stock market here?
Jon Najarian: Yes. The catalyst for a democratic revolution in the Middle East, of course, is our amazing success in Iraq and Afghanistan and the sweeping of democracy across the Middle East. It’s nothing short of phenomenal and the markets are paying attention. It’s virtually viral. A country, like Egypt, which hasn’t had a free election in 5,000 years, is now doing just as you say. We don’t want to stifle this, we want it to grow and help nurture it. Most certainly this is a very positive thing and the markets are embracing it.
Jim: I don’t think this revolution has happened because of what we did in Iraq and Afghanistan. TV is having an effect. People in the Middle East are now seeing TV that is not government controlled. They are seeing how other people live and are deciding they don’t want to live like that anymore. I don’t think it’s going to lead to great things, though. I also don’t think this is why our stock market has been going up. The market is going up due to cheap money and a good economy.
Meredith: What are we talking about? The market is flat for the year. I don’t understand what people are reacting to.
Gregg: We’ve only had a couple of months in this year. I’ll give the administration credit here, more than I would give credit to TV. Many people on my side of the aisle think we went into Iraq for the wrong reasons. But, it’s hard not to give credit to the Iraqi elections for causing all the improvements we’ve been seeing in the Middle East. In the long term, these revolutions are a positive for the equity markets. It won’t have an effect on earnings or in the short term.
Ben: It’s definitely not going to affect earnings or interest rates or dividends. It won't have an effect at all.
Gary: I agree with Jon. There is nothing there that can happen here. The more and more this happens, the more the “dominos” continue to fall. The people are dictating policy to these governments. This is good news and the valuations go up in the market because of it.
Meredith: The markets don’t go up or down because of “feel-good” effects.
Jim: You guys keep saying nothing bad can come of this. It can. If you start bringing down dictators, it often gets out of control. I’m not saying it will, but it can.
Jon: We have actual results and it’s showing right in the streets of Lebanon and Syria. We can’t have a better sentiment indicator than what we’ve just seen.
More for Your Money
Neil Cavuto: Which stocks will rise up in the Mideast revolution and will help you get more for your money?
Gregg: My pick is a long-term democratic, pro-capitalistic play. I like General Electric (GE). (General Electric closed on Friday at $36.12.)
Jim: GE is an accounting sham. No one can figure out the company’s balance sheet.
Gary: I like Yum! Brands (YUM). There’s something about democracy, freedom and pizza, tacos and fried chicken. The company’s doing well and looks like it could expand internationally. Plus, the insiders are buying here. (Yum! Brands closed on Friday at $50.07.)
Jim: If I see what’s happening in the Middle East and it continues in the rest of the world, I want to buy Vestas Wind Systems (VWSYF). It’s a windmill company and we need cheaper energy since the price of oil is going through the roof. Jim owns shares in Vestas Wind Systems. (Vestas Wind Systems closed on Friday at $14.55.)
Gregg: I would not buy this stock. Siemens (SI) is the new entrance in the marketplace and is taking market share. Plus, GE has already taken market share. Steel prices, which are Vestas’ main cost of goods, are up 25 percent. Run from this stock!
Ben: I like the iShares MSCI Emerging Markets (EEM). A great majority of growth in the next couple of decades is going to be in the developing countries. This is a very inexpensive way to play it. It focuses on the emerging markets in Turkey, Russia, Korea, Southeast Asia, and South America. Ben owns shares MSCI Emerging Markets. (iShares MSCI Emerging Markets closed on Friday at $220.40.)
Gary: This has already had an incredible run. When markets descend, the emerging markets descend even faster. The timing is not right on this one.
Head to Head
Neil Cavuto: Martha Stewart leaves prison even wealthier, 20 pounds lighter, and with two—count 'em two—new TV deals. Is this the start of bigger things to come…or the end of a good run?
Time to go head to head
Dan Colarusso, the business editor at The New York Post, thinks the diva is done and that it’s downhill from here for Martha and her shareholders.
Dan: Martha has 10 more minutes and then she’s done. Her time has come and gone. I believe that her time in prison actually extended her time in the spotlight. The magazine, Martha Stewart Living, is irrelevant. Her products are in Kmart (KMRT), probably the worst chain store. They’d do much better in Target (TGT).
Neil: If Kmart and Sears got together, they may have a big future. Also, Martha has never looked so strong. Her stock has more than tripled. She’s coming out and is going to return to be a guiding force for her company that seems to relish it.
Dan: This stock has had a spectacular bubble. Her guidance may actually take the company in the wrong direction. Look at how the business has changed since she’s been in jail. It’s been a real simple style. The company has been using a different lifestyle guru.
Neil: Yeah, but they’ve always used different people. Martha’s not a lovable person. She’s not even a likable person. But she makes great sheets, great soufflés and that’s where she has her legion of fans.
Dan: I don’t think she has a legion of fans anymore. If she had so many fans, why did the advertising for her magazine drop 29-percent?
Neil: Separate her from the company for a second. We all know Donald Trump’s casino businesses aren’t on fire, yet he has gotten a new lease on life with The Apprentice. Can the same happen to her?
Dan: I don’t think so. Trump’s real estate business is doing very well. He parlays that image into being able to sell real estate. The casino business is not a great business to begin with, so we can forgive for that failure. But, in his own way, he’s a charming, likable character. Martha just comes off as creepy.
Neil: You don’t think she could get ratings mentoring a show of Martha wannabe’s?
Dan: No. It would be a freak show.
Neil: Then why does she garner all this attention?
Dan: She’s in prison. She’s a rogue. Once we get bored with her, which we will, she’s done.
Neil: Then why does your newspaper give her so much attention?
Dan: We cover her. But we don’t think she’s on the verge of a huge comeback.
Neil: I think she’s going to be bigger than ever in a year. In fact, I’ll bet you a Martha soufflé that by this time next year; she’ll be bigger than ever!
FOX on the Spots
Gregg: Private accounts go down in flames!
Ben: Buy big when housing stocks dip on sales slump!
Jon: The longer oil stays above $50, the farther it falls!
Jim: Jon's wrong! Oil rises to $100 in the next 5 years!
Gary: Martha’s stock is over cooked! Drops 30 percent in 6 months
Meredith: Bono will run the World Bank before Carly!
Neil: Big gas pains ahead; prices spike $0.20 a gallon!
Bulls & Bears | Cavuto on Business | Forbes on FOX | Cashin' In
Forbes on FOX
The Flipside: Democracy in Saudi Arabia = Disaster for America and Market!
Elizabeth MacDonald, senior editor: If Saudi Arabia held true democratic elections, the Islamic Fascists would win and take over those oil fields. And they would try and stick it to the infidels with higher oil prices. Look, we know democratic reforms are always a good thing, if it's real, but it's called participatory government over there, it's not going towards real Democracy. Half the population is women and they aren't allowed to vote.
Dennis Kneale, managing editor: Democracy is good for markets and democracy is never coming to Saudi Arabia! President Bush is showing a lot of gall. Our occupation of Iraq was the single most dogmatically undemocratic action. So we are trying to divert attention from out own bad deeds by saying lets let democracy spread all over the world.
Chana Schoenberger, staff writer: There will be democracy and hopefully it will include universal suffrage, women as well as men, which is not the case there now. What's going to happen initially is fundamentalists will be elected because it's a reaction to the royals that are in charge now. This is bad for us because they are going to have radical fundamentalists policies. But in the long term the Saudis will get sick of this and they will vote in moderates and that will be good for us.
Jim Michaels, editorial vice president: Bush haters can't handle that Bush's Middle Eastern policies are actually working. We've had free elections in Iraq. We are about to have an independent Government there. Syria is one of our enemies and they are now on the hot seat. Iranians are also on the hot seat. We are winning there and we are winning because we are bringing democracy. No matter who runs Saudi Arabia, it could be the Communists, it could be the Wahabis, it could be anyone. But they will have to sell their oil to us.
Quentin Hardy, Silicon bureau chief: I would give the Bush administration a massive amount of credit for this. By the way, most of the hijackers were from Saudi Arabia and Egypt — which has basically no elections, no democracy. They have noticed that democracy is a very powerful force that just doesn't stop. Democracies just don't go to war with each other. When we support tyrants around the world it ends up blowing up in our faces. When we compel democracies, they don't go to war, we build markets for ourselves and we build peace for ourselves.
Dennis Kneale: Quentin just said democracies don't go to war, we're a democracy, what do you call Iraq? Oh... democracies only go to war against their enemies. Well, everyone goes to war against their enemies.
Quentin Hardy: Show me a time when one democracy went to war against with another. It is the most powerful force we know.
David Asman: What happens if we have democracy in Saudi Arabia and oil prices go up because the bad people get into power. What happens eventually? Isn't it eventually good for us?
Chana Schoenberger: Eventually yes. Eventually the moderate forces of the country will take over because that is what always happens. If you have a majority ruling, voting including women. Women, especially in Saudi Arabia, don't want to be ruled by fanatics longer than they have to.
Elizabeth MacDonald: Eventually it's a great thing for the whole world. Look, we're not saying that Saudi Arabia is going to turn into Tennessee over night. But these Wahabi fascists think that even the woman's voice is sinful. Now if these women are shut out of these elections you better believe that those Fundamentalists are going to take over those oil fields. I understand they need to sell the oil but they also want to be martyrs to go to heaven.
Jim Michaels: What are they going to do with that oil? They can't eat it, they can't drink it. Whatever they do they need that oil money. That's all they've got and they are going to continue to sell it.
Dennis Kneale: We're talking about OPEC like it's the Jimmy Carter era in 1979, and that OPEC can really control world prices. There are so many other sources now. There is deep drilling off the U.S. shore.
Elizabeth MacDonald: There is no spare capacity of oil, there's 1 percent of demand's spare capacity. That's far different the 1985 when there was 25 percent. We're talking about oil at $80 a barrel in the next two years. That's the oil shocks of 1979 and 1980. That's really bad.
David Asman: We've seen democracy spreading but it hasn't stopped the rise in the price of oil?
Quentin Hardy: If there is a democracy more people will have to be given jobs. More people will have to be listened to. They'll have to pump more. What happens when you get more supply? Prices go down.
Jim Michaels: It's not the Wahabis that are raising the price of oil, it's the demand. Demand has gone up faster than production.
Elizabeth MacDonald: Two thirds of the world's oil supplies are controlled by these crooked henchmen, these corrupt families from the Middle East. If these guys get control of the biggest oil field, which is in Saudi Arabia, that spells trouble.
Dennis Kneale: Democracy is indeed a good thing, but it's never coming to Saudi Arabia.
In Focus: Should Martha Stewart Be CEO of her Company Again?
Victoria Murphy, staff writer: I think Martha is going to be a little busy being a celebrity ex-con to run her company. She will probably pocket more money by going to prison than she would have had she gotten off the hook. That aside, I think that she should be able to run her own company. We don't ban felons from working at grocery stores, why should we ban them from running companies.
David Asman: She will be able to help run her company, at least in the beginning. But the Security Exchange Commission doesn't want her to be a director.
Elizabeth MacDonald: She is not just going to be a celebrity person on the air, she is going to be running her company, she's a hands on person. The SEC still has a civil insider trading case against her. It is a really bad thing to let a convicted felon run a company. It's sends a bad message to the market that it's ok to be above the law.
Quentin Hardy: I think that the justice system in this country is basically a revenge play. If you just say in every filing and release that there is a convicted felon running this company that's transparency, why not have that? Similarly, why not let felons vote? Why punish people for the rest of their lives after they've done their time?
Jim Michaels: Should Martha be able to run her company? Absolutely not! I want the people who run these companies to be above suspicion. There are plenty of people who can run these companies, you don't need people who have been convicted of crimes.
Dennis Kneale: I'm torn on this issue. On one hand I like Martha, I want to support her. On the other hand I feel like, hey you screwed up, you got convicted of a felony and those are the rules say you should not be the CEO. But it doesn't matter in this case. First of all, if she did manage to get back to being CEO it would hurt the stock of that company. Susan Lyne, the current President of Martha Stewart Living Omnimedia (MSO), is a sharp executive and I think Wall Street is glad that Martha's got her in there running it and Martha shouldn't mettle. She should focus on big broad things like color schemes for spring.
David Asman: We should mention that her stock is up 125 percent since the scandal broke in June fo 2002.
Lea Goldman, staff writer: The stock has been driven up while she was in prison. Why? Because stockholders are anxious to have her back. The plea is that she's doing to time for her crime and they have full confidence in her. Convicted felons can not only be grocery clerks, they can run for office.
Elizabeth MacDonald: Being a grocery clerk is far different than being the CEO of a publicly traded company. The problem right now with this stock is that it is a momentum play. This company is running record losses. If she gets in there and starts rumors, she's going to start to have fights with Susan Lyne and that's a problem, because she really wants to run the company. The controversy should stop, this stock needs to recover.
Victoria Murphy: Why not let shareholders decide?
Elizabeth MacDonald: We're talking about the fact that advertisers fled the stock and investors got hurt.
The Informer: Cash in on China!
Dennis Kneale: Lately we're hearing a lot of worries that China's a bubble, careful you're going to get killed, there's no good accounting rules there. The fact is, this is a trillion dollar economy. It's growing 9 percent or 10 percent a year. There are dozens or hundreds of U.S. companies that think that Chinese companies are good enough to do business with, so you should be doing business with them too.
Lea Goldman: The differences between China and India for instance is that China's government is ambivalent. And what you are going to see down the road is that they are going to draw a line in the sand and they are going to say we are going to allow this but we are not going to allow that.
Chana Schoenberger: I had breakfast this morning with the CEO of a big tech consulting company and he was telling me his plans to go into China. He was saying that there are major drawbacks, there is the risk of intelligence piracy that someone will steal your patent, that happens all the time there. Then there is the contract law, contracts are not really the same there as we understand them in the U.S. There are some serious risks, so buying Chinese stocks is a little bit risky.
Victoria Murphy: I like a company called Shanda (SNDA). I love their kind of gonzo capitalism. It's one of the biggest gaming companies in China. On-line gaming is huge in China. They recently started quietly acquiring a stake in this company called Sina (SINA), which is like the Yahoo! of China. So they are going to do some kind of takeover play and I think that is very admirable for a China company to do this. It's run by a very young Chinese CEO.
Chana Schoenberger: Shanda it's pretty high. While gambling is a profitable business on the web as it is everywhere, internet portholes are very risky. It's very 1999.
Dennis Kneale: I want to point something out. I've had some bad stock recommendations on this show however, every China stock I have recommended has gone up. My stock today is Netesase.com (NTES), it's at $45, it's way off it's 52-week high. It's only slightly pricier than the market. It's got 300 million registered users. You should buy it.
Lea Goldman: It's a good company but it's the same issue with Shanda. The government is going to come down and say you are a content distributor and we are censoring the content. I like Prudential Financial (PRU). This is a company that already sells insurance in Japan and Korea. The emerging middle class of China is going to need insurance and credit cards down the road very imminently. It's an easy bet.
Dennis Kneale: If you want a China play, play China. This is a silly recommendation. Do FedEx (FDX) or Wal-mart (WMT), if you want a U.S. play in China. Prudential is not even there at all. It's number four in most markets.
Chana Schoenberger: As usual, I have an ETF exchange traded fund, iShares FTSE/Xinhua China 25 Index Fund (FXI). It's a basket of 25 China stocks based in the country. You can track them all, you don't have to pick one which I think is way too risky.
Dennis Kneale: This is too.
Makers & Breakers
Energizer Holdings (ENR)
Chris Russo, senior VP of GunnAllen Financial: MAKER
They are the number two producers of batteries. They sell under the Energizer and the Everready name. They acquired Schick around two years ago. The company itself, well the story is probably as exciting as watching paint dry.
David Asman: Your 12-month target price is $71. (Friday's close: $61.00 )
Elizabeth MacDonald: MAKER
I'm a maker on this stock. The revenues are up 18 percent over a 3 year average. I think that's great
Jim Michaels: BREAKER
I don't want to be No. 2 to Procter and Gamble.
• Peabody Energy (BTU)
Chris Russo: MAKER
They are the No. 1producer of coal. This company has had major influx of volume over the last six months. We are at the infant stage of this commodity bull market — 20 percent easily by years end.
David Asman: You think it will go up to $112. (Friday's close: $98.72)
Jim Michaels: MAKER
I loved this stock when Patricia Powell recommended this stock to us at $55 a share last Fall. I still like it.
Elizabeth MacDonald: MAKER
This is another stock that's looking great, earnings up 65 percent over a three year average.
Bulls & Bears | Cavuto on Business | Forbes on Fox | Cashin' In
Stock Smarts: Target America
Usama bin Laden is reaching out to the man most responsible for the violence in Iraq — Abu Musab al-Zarqawi — calling for attacks inside the United States. Last Monday (2/28/05), the market fell even though many factors should have sent stocks higher, including a historic day in Lebanon that put that nation on the path for democracy.
Is Wall Street at all worried about this terror threat?
Jonas Max Ferris, founder of MAXfunds.com: I don't think Wall Street is worried at all. It used to be more worried about it when tapes would come from Usama bin Laden and it was a big deal. This week it was a big yawn. The markets had a good week. He (bin Laden) basically got upstaged by Martha. But Usama bin Laden is passing notes to his buddy in Iraq, the killer al-Zarqawi, about attacking the United States and, you know, maybe the market, I think, should be a little concerned about this and should have at least some risk premium there that maybe things could be bad.
Terry Keenan: Note passing may be more a sign of weakness than strength.
Charles Payne, founder of Wall Street Strategies: You want to talk about weakness, look at the small impact it had on the Iraqi elections. Obviously the biggest thing that can happen here is we become too complacent as we did before but to have it as a concern at the top of the agenda. Last year was worse because we had the presidential elections, Olympics, a lot of high-profile targets. It's not in the forefront of our minds. We'll never forget it, but it shouldn't hurt the stock market.
Terry Keenan: Wayne, are we being too complacent?
Wayne Rogers, founder of Wayne Rogers & Company: Yes. But I don't think you can be anything else. You know, the point was always made that if you disrupt your normal life, you can't function in this country. It's such a tenuous existence that we have anyway. If there is a threat, the threat itself, until it becomes a reality, we don't pay attention to it. Once we have it, yes.
Jonathan Hoenig, portfolio manager at Capitalist Pig Asset Management: Wayne, do you feel comfortable with President Bush here? Do you feel he's protecting you?
Wayne Rogers: I don't know whether it's President Bush that's protecting me or whether I'm protecting myself but I think we're all out there looking out for ourselves and I think if you live in a major city like you do, Jonathan, the risk is much greater than if you live out in the country somewhere.
Terry Keenan: Do you feel comfortable Jonathan?
Jonathan Hoenig: I do. This guy, when asked, will say his real job is protecting American citizens and I vote with my feet. Where else would I be? I want to be in Chicago. I want to be in America. People still feel comfortable here. Land prices are still going up here. We have bigger problems than a couple guys sitting in a cave passing notes like sixth graders.
Terry Keenan: Stocks are moving to four-year highs on most major indexes. Wall Street doesn't really seem worried about anything right now.
Herb Greenberg, senior strategist at Marketwatch.com: That is often the case until something happens. If you start thinking about what will happen if a terrorism thing were to occur, we already know because we saw one of the worst things that could ever occur. The only thing I would be concerned about, if something were to occur, would be how it could tip an industry like the airline industry. But even then you have to wait until it happens. You can't, you know until it affects the earnings of a company.
Dagen McDowell, FOX Business News: You can factor in at least some risk and that is not what the market is doing. They have pushed any worries about terrorists so far into the backs of their minds that you could see the market really disrupted if there's any strike made.
Charles Payne: One of the biggest things about terrorists and terrorism is not the actual physical event but the psychological impact. If we let them hold our stock values and land values back simply because we're at risk then we are letting them win.
Wayne Rogers: I think that's absolutely true. But you also have to think of what the nature is of the terrorist attack. If they were to explode a dirty bomb, for example, in a major city, that would have an enormous effect. If some guy walks into a restaurant somewhere in east Podunk with a dynamite stick and blows up five people it won't have a big effect. It will make us aware of it, but it won't have the same effect.
Jonas Max Ferris: I think if we stop traveling and going places because of the threat of terror then yeah, they're winning. But I think to say stocks maybe shouldn't have full valuations because if there was an attack it would really hurt the market and the economy, that's rational and not letting them win necessarily. To Jonathan's point, everyone is kind of behind Bush because he has done a good job so far but if we were attacked wouldn't you start to question how much money was spent, that it wasn't working and maybe this wasn't the greatest way to go after Usama bin Laden?
Jonathan Hoenig: People want to kill us. I think that is a point you have to get in your head these days. People are out there who want to bomb our train stations and stock exchanges and what not, but, you know, I feel safe and I feel like there's always been a terrorist threat. If you feel like you're too much in the market, put some money in cash. You can't invest based on the threat of a terrorist attack. It just doesn't make sense.
Herb Greenberg: Yeah. I think based on everything you still come back to the bottom line of being the economy and what you think about the earnings of individual companies. Whatever is going to happen is going to happen. It's going to be like a hurricane, a tornado or an earthquake. Boom. It's going to hit you and have a psychological impact and life will go on.
Dagen McDowell: But the economy might not recover as quickly as it did after 9/11, Herb. Americans went out and started spending. We came out of a recession a couple months later.
Jonathan Hoenig: Dagen, look at Boeing (BA) for example.
Dagen McDowell: The issue is that American consumers have spent money since then, haven't stopped, so there is no pent-up demand so our economy might not hold up as well.
Herb Greenberg: Can't disagree with you, Dagen. As a matter of fact, interest rates are not going down, but going higher. There are a bunch of other issues you have to start thinking about.
Terry Keenan: Herb, why is the market shrugging off that, shrugging off $55 oil?
Herb Greenberg: You know, because everyone wants to think everything is fine. And I'm looking here in California at housing prices wondering what happens when they start falling. We still have issues here.
Charles Payne: I will tell you why they're shrugging it off. It is because there is an underlying economy that supports it. The economy is going at a point where we need oil; it’s the whole ‘supply and demand’ thing. I could see if the economy was weak and we had $55 oil, but look at the jobs numbers and all the other economic data. We're heading in the right direction and they can support all of the different prices that are out there. It's a fair market.
Terry Keenan: There were some good economic numbers as we closed out the week. Are you any more bullish than you’ve been in the last couple months?
Wayne Rogers: Yes and no. Here's what I'm saying. I think Charles is right. I think Herb is right. I think we shrug that off. But oil prices, if they're sustained at $55, eventually that is going to hurt you. Interest rates eventually are going to hurt you so it's a question of timing and that's what we have to worry about, because that will hurt the real estate market, the interest rates, the oil will hurt everybody because their costs will go up and if those costs are not passed on they'll hurt those industries. If they are passed on that's inflationary and we've got to face up to it.
Jonas Max Ferris: But are the terrorists eventually going to hurt us? You just said the market is a discounting mechanism for everything, oil, recession, all these things that could happen, a disaster even but Usama bin Laden is the guy who plotted on September 11 and is still around. It has to have some risk premium there going on.
Terry Keenan: Perhaps, Jonathan, on the other side of this equation we have peace breaking out all over the Middle East. And what happened this week in Lebanon was nothing short of incredible.
Jonathan Hoenig: Yeah, Terry, listen. I may want to buy a condo in Beirut right now if I could. It’s probably a good buy. Stocks have a bid and you have to be a little leery of fighting that bid right now.
Terry Keenan: Are you a little bit more bullish here?
Jonathan Hoenig: Absolutely. I mean, utilities, some of my favorite stocks right now, they're leading the charge. So I'm at a pretty good place.
Terry Keenan: Herb, are you more bullish here?
Herb Greenberg: No. I'm always a little more cautious, if anything, just because of the direction of rates.
Best Bets: Charles in Charge
One man, three stocks he says are poised to break out. Charles Payne was in charge of the picks today, with three stocks he thinks are ready to make some big gains.
• Maxim Integrated (MXIM)
Friday’s close: $43.01
Charles Payne: This one is going to be driven in part because everyone hates this industry (semiconductors) and yet you look at the margins and they're expanding, the top line is expanding. A lot of people confuse semiconductors with DRAM chips, which do have a problem, but everybody today is going to go out and use something that uses a lot of chips and that's going to drive this business.
Jonathan Hoenig: I think I'll pass on the stock. I don't know, Charles. It just seems when the market rallies these days tech, including semis, is always bringing up the rear. It's the least favorite of my picks.
Charles Payne: They have been bringing up the rear because a lot of the rally has been based on safety. Once there's greater confidence in overall market, you know, we're talking about a breakout. When this stock gets through a couple more dollars it's off.
Jonas Max Ferris: Has it been bringing up the rear? I agree with Charles on this pick. I've liked semiconductors since late last summer. Stocks like Texas Instruments (TXN) are up. I'm with you.
Wayne Rogers: I like the company and I think the earnings are up and I don't know how much it has left in it. That's the only thing. I think I like Tessera Technology (TSRA), in this field, a little better.
Terry Keenan: Do you own that one, Wayne?
Wayne Rogers: I do.
• FedEx (FDX)
Friday’s close: $99.60
Charles Payne: Now this is a play on the global economy and the US presence in the global economy. The breakout here is through a double top. It is one of the toughest breakouts technically ever, but once you break out through the double top you're off to the races. That’s breaking out up through a hundred dollars.
Wayne Rogers: Well, you know, with a hundred dollars it's trading at 22 times earnings. How much more is there left in this? I don't really know. FedEx is a terrific company. Earnings are up. But I don't know how much more they can expand and how much that will be reflected in the stock price.
• Old Dominion Freight Line (ODFL)
Friday’s close: $37.00
Charles Payne: Ladies and gentlemen, another type of breakout. That's when a stock has really tried but hasn't and is sort of creeping above. Old Dominion, this is a play on the U.S. Economy, there is a lot of consolidation in the area. This stock is undervalued. I think it will be taken over, but I tell people to buy it simply because of the fundamentals.
Jonas Max Ferris: I like your first two stocks. This is not the kind of shipping I like. It's an overpriced small cap stock. I prefer FedEx (FDX).
Terry Keenan: Jonathan this is trading about the same price as FedEx 23 times earnings or so. Do you like it?
Jonathan Hoenig: The group is strong. Stocks like TPG (TP) or Swift Transportation (SWFT), this whole logistics area is strong. I get leery about a stock that goes from five bucks to $37 in three years but the trend is there and I think this is probably Charles' best bet.
Wayne Rogers: I kind of agree with Jonathan. I think Knight Transportation (KNX), Yellow Roadway (YELL), Swift, this company; they're all very strong and once again, they are protected. As my friend tells me about the trucking industry, and this is something that he knows a lot about, they are all protected from these price increases in gasoline by the fact that they get a surcharge. I don't see that they'll get hurt in their margin.
Jonas Max Ferris: They haven't been protected since the mob got out a truck.
Terry Keenan: Wayne, do you own those stocks?
Wayne Rogers: No I do not. I wish I had owned it. I tell you, all four of those stocks I just mentioned are terrific.
Stock of the Week
Last week’s pick from Chris Russo was Glamis Gold (GLG). For the week of February 28 – March 4, GLG went down 1.8 percent.
Dave Nelson says that Lions Gate Entertainment (LGF) is ready to roll on Monday morning. (Dave owns shares of LGF.)
Dave Nelson, president of DC Nelson Asset Management: Lions Gate Entertainment is a small movie production company, really off the radar screen because everybody is focused on the big guys. The big guys have big stars, big budgets, big risk. These guys get it right and you have a catalyst coming next week because last week they launched, "Diary of a Mad Black Woman." It swept the box office, it wasn't in anybody's numbers and this week, as a matter of fact yesterday on Oprah's show she had the entire cast on the show, it's going to drive the momentum this week. This stock is going up. I don't want to hear about it.
Terry Keenan: That's Oprah. Are you against Oprah?
Jonas Max Ferris: I'm not against Oprah. Not on TV I'm not. Let me say one thing. I agreed with the CEO of this company. He thought the stock was cheap at $5, when he was buying the stock. He recently started selling millions of his own shares because this stock is expensive and that's how people lose money investing — by paying too much to get in.
Dave Nelson: If I sold stock every time a CEO sold stock I wouldn't be in the market at all.
Jonathan Hoenig: It’s a terrible indicator.
Jonas Max Ferris: You would have gotten out of Global Crossing and Enron.
Jonathan Hoenig: But come on. You have to give this stock credit here. It's got a bid. DreamWorks (DWA) has a bid. Pixar (PIXR) has a bid. And I don't love the movies. I don't watch the Oscars, but it's OK to respect a stock that you don't maybe even like the business of.
Jonas Max Ferris: I don't think it is respectable to like the stock you don't like the business of.
Dave Nelson: Jonas, you are completely wrong. This company does it right. They do these movies for a song. They did this movie for $25 million. They made that last weekend.
Jonas Max Ferris: Why do they have to borrow money to buy their businesses?
Dave Nelson: That’s part of what the business does.
Jonathan Hoenig: The fundamentals are so good here. We’re just seeing so much private equity and hedge fund deals right now. This could be a takeover target right here.
Dave Nelson: Jonathan hit it right on the head.
Jonathan Hoenig: I wouldn't bet against this.
Cashin’ In Challenge
Check out the $10,000 Cashin’ In Challenge at: www.foxnews.com/challenge
Question: “Now that Martha Stewart is out of jail, will her stock take off?”
Herb Greenberg: They haven't looked at the price. Buy on the rumor sell on the news. That's the old saying on Wall Street. The news is she is out of prison right now and the reality is this company is not making any money yet and with Martha back, you know, we've got the show but still, it's trading at such a big number. So you have to look at it and say, ‘can I accept the risk in the event now that Martha is back and doesn't perform?’
Terry Keenan: Dagen, the company lost $60 million last year. It doesn't pay a dividend. Has no earnings.
Dagen McDowell: It's going to take quarters if not years for this company to get back in the black and frankly you have a better chance of profiting by going to Kmart (KMRT), buying some of her sheets, and then trying to sell them on eBay.
Wayne Rogers: Well I think Herb and Dagen are absolutely right. By the way, this is another showbiz stock. If they want the stock to go up again, put Martha back in jail, maybe it'll go up again. But you're right. The earnings are not there. It's going to be a tough row to hoe.
Jonathan Hoenig: I'm not as negative. The stock has proven itself and, to me, this looks like a better breakout stock than even some of Charles' but it is so heavily shorted and it's just not on my screen right now. Not for me.
Question: “I bought $5,000 worth of XM Satellite Radio (XMSR) at $28. The stock is off its recent highs, but it’s still a winning trade. Thoughts?”
Jonathan Hoenig: As he said, it’s still a winning trade. Hold that winning trade. The more these republican senators talk about regulating cable and the FCC rules it's just helping XM and Sirius Satellite Radio (SIRI). I can't say either one is on my plate but it's a winning trade. Hold onto it.
Herb Greenberg: I think it will be really volatile but when I saw it was trading at a discount to Sirius, I was flabbergasted because XM, of both of them has the better capital structure.
Wayne Rogers: In the long term I think they're both terrific companies. That's where radio is moving and they are both expanding. They're constantly adding more and more subscribers so the future of these companies is great. It's the price that I worry about. I'm not sure that the entry price here is where I would buy it.
Dagen McDowell: XM just raised the monthly subscription fee to match Sirius so that should help profit margins at XM.
Wayne Rogers: I'm not saying it won't help. All of these things are helpful in the long run. They're good but they don't make money yet. They're not really moneymakers and ultimately they have to do that or you won't want to hold that stock.
Question: “I’m a musician, so naturally I’m interested in Guitar Center (GTRC). What does the crew think about this stock?”
Wayne Rogers: Guitar Center has had a terrific run-up, and if this guy is in and he's got profits in it, I'm like Jonathan. I would put in stop losses under this and let the stock run. It's been a terrific company, a terrific ride. I don't know what the future is, but I would stop myself out.
Question: “I’m president of an investment club and am looking for an aggressive fund to rev up our profits. Any ideas?”
Dagen McDowell: Think about the Wasatch Global Science & Technology Fund (WAGTX). It’s run by a great firm out West. They have a lot of experience at small and mid-cap stocks. Take a look. It’s risky, though.