Bulls And Bears Weekly Wrap Up
By Tobin Smith
Even as foreclosures soar and median home prices tumble, there are still those who think that it's happy holidays for the housing market. Our resident housing sector bull, Gary B. Smith of Exemplar Capital, thinks that while the actual housing market may still have some downside left, housing stocks have now actually hit a bottom.
Who wouldn't want to earn a decade's worth of wealth in the next two years? Find out how you can ... click here to learn more.
According to Gary B., homebuilders and other companies in the sector are down 60%-90% from their peak, and this kind of selling in the sector means that investors can pick up some great companies at really great prices.
Gary, my friend, your thesis has made me so queasy I think I am about to barf up my big Thanksgiving meal! The issue in housing is not so much the price of housing stocks, but the massive amount of inventory we have in the United States. I don't think we'll see these inventory numbers shrinking substantially until 2010, and that's based on the hypothesis of a normal recovery. I think housing stocks are in for more pain, and that means you'd be better off shorting the sector right now than going long.
Patricia Powell of the Powell Financial Group says that it's going to take a lot longer to shake off the cobwebs in the housing sector. She thinks the days of "brain dead lending" are over, and that means the housing sector has a lot more healing to do before we can call a bottom.
Cheryl Casone of the new Fox Business Network does think we are hitting a bottom in housing. She says it's all about fear and negativity, and when you see this much out there in the housing market, it might just be telling us all that the worst is indeed over.
Pat Dorsey of Morningstar agrees with me, saying that inventory is the real key issue. He thinks it's going to take a long time to work that inventory off, and it may take another year or so before housing stocks start to come back from their doldrums.
Scott Bleier of Hybrid Investors thinks we may be close to a bottom in housing stocks, and that's because of all of the fear and negativity out there that Cheryl mentioned. Scott says the housing market, rather than housing stocks, is in for more pain. He does, however, agree with Gary and thinks we are at least getting close to the beginning of a bottom in housing stocks.
I think that when it comes to housing, if you are buying a home to live in during the next year or so, you are going to see some good opportunities. If, however, you hoping we have hit a bottom in either home prices or housing stocks, I think you are in for a rude awakening.
The Best Presents You Can Buy Yourself Right Now
The holiday shopping season is officially here, and in keeping with a "Bulls & Bears" tradition, the gang was asked to give out our best stock presents you can buy yourself right now.
Gary B. kicked off the segment with his selection of beaten-down financial giant Wells Fargo & Company (WFC). He says this one has been unfairly caught in the financial sector sell-off, and that means some time soon it will be heading up, up, up.
Pat's pick is medical device maker Medtronic (MDT). He argues that the company's market leadership, competitive advantage and recent share price pullback make it a great holiday present for any investor.
Patricia's favorite gift stock is PC maker Hewlett-Packard (HPQ). She thinks the company's earnings are going to continue being strong, and given the current overall market sell-off you can get HPQ shares now at a substantial discount.
Scott selected ethanol company VeraSun Energy (VSE). He argues that government ethanol mandates and subsidies will help the company come out of its current funk, and that means the stock is going to head higher soon.
My holiday present is Apple (AAPL). I've been a bull on this one for a long time, and according to our latest ChangeWave research, the bull is firmly ensconced in Apple's cart. I say this stock is going to $225.
Cut Off Government Healthcare to the Obese?
In a strange example of how a national healthcare system might operate here in the United States, a man from England who recently moved to New Zealand was told that his wife was too fat to join him. Officials in that country argue that being overweight constitutes too great a burden on New Zealand's government-run healthcare system. So, should America learn from this situation and start cutting off healthcare benefits to the obese?
Meme Roth of National Action Against Obesity says that while we should all be careful not to overreact emotionally to this situation, the fact is that if the government is going to pay for your healthcare then it also has the right to set standards for risky behavior and for the "bad choices" people make.
Gary B. sarcastically argues that while we are at it, we should just cut off other "risky" people from the healthcare system including: people who don't exercise; eat junk food; smoke; drink too much; drive too fast; and people who read the New York Times. And of course, Gary warns us not to forget about left-handed people. His point, of course, is that once you set up a government program, you just can't have some government clerk out there determining who receives benefits and who doesn't.
Patricia agrees with Gary, saying that she doesn't want some "petty bureaucrat" deciding on who gets health insurance and who doesn't. Patricia says the last time she looked, "eating was a legal activity." She also says that if you are going to start excluding people from the healthcare system because they are greater risks, then you have to exclude elderly people from the mix, as they are the biggest consumers by far of healthcare services.
Very good points indeed, Patricia.
And … Predictions
Time again for the final segment -- alas, it comes so fast -- the flurry of forecasts we fondly call, Predictions. In honor of my return from vacation, I was put in the hot seat this week, and as you all know, that's right where I love to be.
My prediction is that the New England Patriots will run the table on the rest of their schedule, and go on to win the Super Bowl. Now, if you want to find a New England stock that is just as strong as the Pats, then look into Charles River Laboratories (CRL). I think this company is great, and I think their stock will be up 25% by the time the Patriots hoist the Lombardi Trophy.
Gary B. predicts that the bull is coming back real soon. He says that the Dow will be up 10% in the next five weeks!
Pat's prediction is a bit more specific. He says Dow component 3M (MMM) will regain its mojo and climb 30% during the next 12 months.
Scott likes teen-retailer Zumiez (ZUMZ), and thinks that the disposable income of the teen set will help fuel this battered stock higher. He predicts the shares will be up 40% by spring.
Patricia says the subprime lending mess is actually "overblown," and that means that financial sector stocks are ready to rebound. She predicts the iShares S&P Global Financials (IXG) will be up 40% in the next year.
Cheryl predicts that contrary to popular belief, we are going to see record holiday consumer spending again this year. I don't think you are right on this one Cheryl. I think spending won't be horrible this year, but it won't be anywhere near as strong as it was last year.
See ya next week,
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 a RISK-FREE trial subscription.
