Bulls And Bears Weekly Wrap Up
By Tobin Smith
Now you can add the Nobel Peace Prize to former Vice President Al Gore's list of awards. Gee, do you think the Nobel Prize and an Academy Award are enough for one year?
Amidst all of Al Gore's prizes, there's a small and even vocal contingent out there who'd like to see the former vice president go for the biggest prize of all -- the presidency. So, would a President Al Gore be good or bad for stocks? That was the first question up for debate on this week's "Bulls & Bears."
Gary B. Smith of Exemplar Capital says that if there were a President Gore, it would be "absolutely terrible" for the markets. Gary doubts that Gore would ever run for president. As he put it, "he couldn't take the pay cut."
Marc Lamont Hill, Professor of American Studies at Temple University, has quite the opposite view. Marc says that Gore represents a level of "hope, and possibility and experience that Hillary and Obama don't." Marc says he would much rather see Al Gore in the White House than any of the other Democratic front-runners.
Pat Dorsey of Morningstar says that the question of whether a President Gore would be good or bad for stocks would depend largely upon what kind of policies he proposed. If he brought people into his cabinet like former Treasury Secretary Robert Rubin, then Wall Street would like a President Gore. If, however, he took a more protectionist route, the Street might not feel so good about Mr. Gore.
Cheryl Casone, host of the new Fox Business Network, thinks that all the big oil and energy stocks would take a hit because of Mr. Gore's environmental positions. But, Cheryl says that if you own alternative energy stocks, well, then you might really like the prospect of a President Gore.
Scott Bleier of Hybrid Investors doesn't think it's all that far-fetched an idea that Al Gore could be president. In fact, Scott thinks it may actually be good for stocks. He added that if it was down to a choice between Hillary Clinton and Al Gore, he would much rather have Gore, as he would do more to move our economy toward alternative fuel sources.
My fear is that a President Gore would feel like he actually had a mandate to enact the business-restricting rules of the Kyoto treaty. The parameters of this treaty would virtually disembowel the American economy and take us down from a competitive standpoint around the globe. I would be deathly afraid of a President Gore, and I hope such a thing never comes to pass.
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Five Stocks for the Next Five Years
It's the five-year anniversary of the current bull market, and the "Bulls & Bears" decided to celebrate with our picks of the five best stocks for the next five years. Hey, what better way to celebrate the present than to look toward the future?
Bob Froehlich of DWS Scudder joined us for this segment, and he says the answer to this question is simple, it's all about China. Bob says China is where the growth is going to be in the next five years, and that means you'll want to own a bellwether Chinese stock like China Mobile Limited (CHL).
Gary B. thinks tech will lead the economy during the next few years, and he says the best way to take advantage of tech is via the Nasdaq 100 (QQQQ) exchange-traded fund. Gary says this index, unlike the Dow or S&P 500 (SPX), still has room to double in the next half-decade.
Pat Dorsey's pick is insurance company Progressive (PGR). He says this company is the lowest cost producer of insurance, and they have the best service. And at 10-times earnings, Pat argues that now is the time to buy PGR.
Scott's pick for the next five years is power optimization firm EnerNOC (ENOC). His theory is that our existing power grid is running down, and that means companies like EnerNOC will be key to making sure we get the most out of our power infrastructure.
My favorite pick for the next five years is virtualization software firm VMware (VMW). Five years is a long time, and you want to own a company that is going to grow big in those years. I think that this company will be 10-times larger during the next five years. Bank on it!
A New Bull Market in Housing?
Home foreclosures nearly doubled in September compared to last year, but what you aren't hearing is that number actually decreased since August. So, is this the beginning of a new bull market in housing?
Gary B. says there is a historical connection between housing stocks and median home prices. When the price of housing stocks are on the way, as they have been recently, median home prices generally tend to go up as well.
Scott doesn't think we'll see a new bull market in housing unless interest rates fall down to 1%. In order for rates to fall that low, there will have to be a recession, which Scott says isn't going to happen.
Cheryl says now is the time to buy a home, especially if you are planning on holding it for the long term. Bob agrees, and says you should buy a home to live in, but not for an investment. Stocks, says Bob, are much better investments over time.
I think we should all keep in mind the really unusual circumstance we just had in the housing market. We had huge price appreciation during the past few years, and that kind of growth isn't going to happen again anytime soon. I'd say it's going to be at least six-to-10 years before we see another housing bull.
And … Predictions
Time once again for the furious final free for all, the lightening round of punditry we call, Predictions.
Scott kicked things off, and he reminded us that this week is the 20th anniversary of the October '87 crash. Although he isn't predicting we'll see another 1987-style debacle, he is predicting the Dow will be down 10% by the end of the year -- and maybe a little more.
Gary B. says that starlet Lindsey Lohan may be done partying, but that doesn't mean you shouldn't buy adult beverage company Anheuser-Busch (BUD). He especially likes BUD in light of the Molson Coors/Miller merger, and predicts the shares are in store for a spirited run higher.
Pat disagrees, saying the real spirits companies to buy in the wake of the merger are companies that are actually merging. He predicts Molson Coors (TAP) shares will be 40% higher in the next year.
Bob says now is the time to play offense with the defense industry. He predicts defense giant Raytheon (RTN) shares will battle 30% higher by the time we vote in a new president.
My prediction is that LDK Solar (LDK), which was hammered by overblown allegations of fraud and failure to disclose information to shareholders, is going to come out shining when the clouds clear. I think sales are going to continue to grow, and that means the LDK shares will be up 50% in six months.
Here's to more sunshine.
Toby
Tobin Smith is the founder of ChangeWave Research, the editor of ChangeWave Investing and a regular panelist on Fox News Channel's investment roundtable, "Bulls & Bears," which airs Saturdays at 10 a.m. Eastern/7 a.m. Pacific. His market commentary can be found in the ChangeWave WaveWire and he provides more specific recommendations and advice through his ChangeWave Investing service. Click here to sign up for RISK-FREE trial subscription.
