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Politics : Idea Of The Day

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To: IQBAL LATIF who wrote (9298)	9/10/1997 9:29:00 AM
From: Logain Ablar	of 50167

Ike: 1) a. No, Dow will not test 7015. IMO inflation fears will creep into market, AG will do a preemptive rate hike as insurance to continue long term growth. The fear of the hike will have market form a tripple botton on Dow of 7620 area from which it will rally into earnings. I buy into your observation that smart money will flow into quality (bonds) keeping long rate down and providing support for next move up. Timing is issue. If I've followed all your posts a scenario that may occur is that inflation fears increase, long rate moves up, money flows from sidelines and out of equitys to bonds, (demand starts to drive long rate down as stock prices decrease), AG raises the discount rate by 1/4 pt. (lets hope its not two hikes but a lot has to become apparent for that to happen) as long rate moves down and we are in 3rd quarter earnings season investors start to look at 97 and 98 earnings and allocate more funds back to equities. The next leg of the bull market is in full force. Again inflation is key. If no inflation on horizon then equities move up sooner without a correction. I think we have some inflation creeping in. Not alot but enough for AG to raise a 1/4 for insurance purposes. Will be good for economy. And you didn't ask for a reason on this one. Its why I'm cautious. Inflation and interest rates vs. a good earnings season. 2. No - Russell 2000 is heading heading higher only because it always lags the big boys and its started to catch up. I think the gain from today is only 5% if the inflation / interest rate scenario develops. If inflation doens't develop then we can see 10% to 15% by December. 3. Bonds will move towards 6.75% (if they break this we'll approach your 7000 dow) but I think they won't break through and head back towards 6.45% So my answer is a yes and no. 4. Single stock pick. Can't do one (this isn't a class so I'm bending the rule). a) IBM - today 100, after January earnings 135. Will meet expectations and with 97 earnings of $6.5 and 98 of $7.5). 35% return in 4 months. As it continues to win respect on street it will command a higher multiple. (risk is it disappoints) Isn't this in the Dow and S&P b) AMTX - today $16+. Speculative but with the technology and market its in in 12 months it will have a 400% apprerciation. Something to think about. Risk of course is that it doesn't sign any deployment contracts (less and less likely with its technology and partnership announcements). c) LGND - today $16. By 2003 (yes 6 years) $200. Yes its technology is that good unfortunately its a biotech and having products go from development to market and revenues takes 10 years. This and AMTX will be great stocks to have in a Roth IRA. To bad that doens't come into play until next year. d) APM - this is now a great short term play. The manulipators have driven it down to $33 and by mid October it will be over $40 on earnings (of course the MM's will play with it again by option expiration). e) MRVC - too late after the last weeks run. Glad its in my Midas account. Have to go. Tim 2)

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