Bulls And Bears Weekly Wrap Up
By Tobin Smith
A Government Boost to the Economy: Good or Bad for the Market?
President Bush and Congressional leaders agreed in principle to a $145 billion stimulus package aimed at pushing the sputtering economy forward. But that plan isn't enough for the Democrats running for president. Both Sen. Clinton and Sen. Obama want to see even greater infusions of money into the economy, and the question for the "Bulls & Bears" this week was: Would a bigger government boost be good or bad for the market?
Gary B. Smith of Exemplar Capital kicked off the segment with the libertarian view that a bigger stimulus plan would be "not just bad, but horrible." He says that this is an insane idea that won't do anything to either stimulate the economy or solve any of the long-term economic problems we face. "This is political pandering at its worst," says Gary B.
Marc Lamont Hill of Temple University disagrees with Gary B., saying the Dems have it right on this issue. The bottom line is that people who are poor need more tax cuts and more government stimulus to help pay the bills they're struggling with.
Matt McCall of the Penn Financial Group says it is ludicrous to add more money to the already hefty $145 billion stimulus. The push by Hillary Clinton and other Democrats for more government givebacks is just going to push us further into debt and hurt our economy in the long run, says Matt.
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.
Scott Bleier of Hybrid Investors makes the shrewd point that buying votes never hurt a politician, and with the talk of more government giveaways, buying votes is what the Dems are, in effect, doing. The fact is, Scott argues, government spending is indeed stimulative to the economy. He doesn't think, however, that we need any stimulus right now. "It's the stupidest idea in the world, but we'll take it," says Scott.
I say that all this talk of stimulus and how much is necessary is setting us up for what amounts to a virtual stimulus addiction. Hey, if $145 billion is good, how about $200 billion, or even $250 billion? Isn't it "the more the merrier" here? Of course, the answer is no, but there's no telling the big-government crowd that. This is just a bad idea made even worse the larger the dollar amount gets.
President Bush and Congressional leaders agreed in principle to a $145 billion stimulus package aimed at pushing the sputtering economy forward. But that plan isn't enough for the Democrats running for president. Both Sen. Clinton and Sen. Obama want to see even greater infusions of money into the economy, and the question for the "Bulls & Bears" this week was: Would a bigger government boost be good or bad for the market?
Gary B. Smith of Exemplar Capital kicked off the segment with the libertarian view that a bigger stimulus plan would be "not just bad, but horrible." He says that this is an insane idea that won't do anything to either stimulate the economy or solve any of the long-term economic problems we face. "This is political pandering at its worst," says Gary B.
Marc Lamont Hill of Temple University disagrees with Gary B., saying the Dems have it right on this issue. The bottom line is that people who are poor need more tax cuts and more government stimulus to help pay the bills they're struggling with.
Matt McCall of the Penn Financial Group says it is ludicrous to add more money to the already hefty $145 billion stimulus. The push by Hillary Clinton and other Democrats for more government givebacks is just going to push us further into debt and hurt our economy in the long run, says Matt.
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.
Scott Bleier of Hybrid Investors makes the shrewd point that buying votes never hurt a politician, and with the talk of more government giveaways, buying votes is what the Dems are, in effect, doing. The fact is, Scott argues, government spending is indeed stimulative to the economy. He doesn't think, however, that we need any stimulus right now. "It's the stupidest idea in the world, but we'll take it," says Scott.
I say that all this talk of stimulus and how much is necessary is setting us up for what amounts to a virtual stimulus addiction. Hey, if $145 billion is good, how about $200 billion, or even $250 billion? Isn't it "the more the merrier" here? Of course, the answer is no, but there's no telling the big-government crowd that. This is just a bad idea made even worse the larger the dollar amount gets.
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Stocks on Sale -- Get Yours Now!
So, can't resist a sale? Well, don't worry; the latest round of market action has trimmed the price of many big names. But which sale stocks should you put in your shopping cart? The gang's got the answers.
Gary B.'s stock sale selection is brokerage firm TD Ameritrade (AMTD). Gary says that despite its recent pullback, the stock is still trading within its long-term trading range. That means it should continue moving higher once this market settles down.
Pat likes medical equipment and instrument maker Waters (WAT). He notes the company's "lock" on its core market, as well as the growth of generic drug makers who buy from Waters, as big reasons why this stock is a great bargain right now.
Scott wants you to listen to stereo maker Harman International Industries (HAR). He says this stock was valued at about $120 by investment banks just a short time ago, but now you can get it dirt cheap at under $40 a share.
Matt's discount diva is mining firm BHP Billiton (BHP). He says the demand for iron ore from China and other emerging markets will continue, and that makes the recently beaten-down shares of BHP a great buy right now.
My stock sale is a little fruity -- fruity as in Apple (AAPL). The company got unfairly slammed after its recent earnings outlook, but all the metrics remain positive for this stalwart innovator. I say that any time you can pick up shares of Apple under $130, you are looking at a potential $50 per share profit in the next year.
Obama's Plan to Tax Profits: Good or Bad for Stocks?
Barack Obama walked away with a decisive victory in the South Carolina primary on Saturday, and one of his big messages dealt with how to fix the economy. Specifically, Obama talked about a plan to raise taxes on profits attained through stock investments. So, is this kind of profit-tax proposal good or bad for stocks? Not surprisingly, Gary B. says the Obama proposal would be a disaster for stocks and the economy. He also claims that the problem with Obama is that he went to Harvard Law School. What he should have done, says Gary B., is gone to Harvard Business School. Maybe then Obama would have learned that raising taxes on capital gains harms the economy, says Gary.
Marc came back with a proposal that Gary B. should go to Harvard Divinity School so that he could learn that it is, "immoral and unethical not to impose what Obama is offering." Marc claims that money garnered via a capital gains tax could and should be used to help provide money for education, housing and healthcare.
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Matt says that what Obama is trying to do is redistribute wealth down to the middle class, which sounds good on the campaign trail. But the reality is that this is just a vicious circle, because when people go from middle class to upper-middle class, they get banged with more taxes which, in essence, keep their economic status at a standstill. Matt added that this plan just won't work in reality, but that it may indeed be good campaign rhetoric.
And … Predictions
We've once again reached the point of the show where we are forced to come forth with our forecasts for the future. It's the prognostication portion of the program we call, Predictions.
Scott was in the hot seat this week, and he predicts we will NOT get another 50-basis-point interest rate cut from the Fed on Wednesday. He thinks the market will pull back on that failure to cut, and when it does, Scott thinks you should start picking up shares of beaten-up financial stocks such as New York Community Bank (NYB).
Matt says the bottom of the housing crisis will be put in sometime this year, and that means you should buy Bank of America (BAC). Matt argues that the company's purchase of Countrywide Financial (CFC) will be a big boost to the bottom line when people rush to refinance their homes.
Gary B. predicts the demise of Sen. John Edwards' candidacy sometime in the very-near future. That, says Gary, will please the market, as there will be one less populist Democrat for Wall Street to worry about.
Pat argues that pharmaceutical giant Pfizer (PFE) is looking very attractive right now. He cites the company's solid yield and their improving drug pipeline as reasons why the shares could be up 50% during the next two years.
I say that this has been the Maalox week of all weeks, and judging by the enormous quantities of the product I -- and I suspect many on Wall Street -- have been consuming as of late, Maalox maker Novartis AG (NVS) stands to do quite well. These guys have a great generic drug business, and I predict that NVS shares will be up 20% when this bear market indigestion subsides.
Here's to a strong stomach!
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.
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