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Strategies & Market Trends : The Art of Investing

PICK 47.40

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Nov 28 4:00 PM EST

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To: Sun Tzu who wrote (739)	7/3/1999 10:09:00 AM
From: jttmab	Read Replies (2) of 10654

All, I think that this three days of mourning (or jealousy) while Sun is in Australia is enough.... Since I had made a previous suggestion of dealing with the application of the Art of Investing with respect to overvalued stocks, I guess it's incumbent on me to put up some effort in that regard. I don't usually take short positions [though I have taken a few for post earnings sell-offs], here's an attempt in identifying some potential plays with the logic behind it. At least I hope it's logic. :0) Step 1: I used a stock screening tool, i.e., xls.com as the means of identifying overvalued stocks with a potential of Chapter 11 :0) Criteria used: Nasdaq stocks All sectors Debt to Equity >1 (They have more debt than equity) Assets to Liabilities < 0.7 (They can't pay the operating expenses; potential for increasing debt) Price to Sales > 5 (I took a handful of large cap tech sectors on looked at their valuations in Price to sales and successful companies seemed to hang around a valuation of 5) Five companies popped out: Aerial Communications (AERL) www2.hoovers.com clearstation.com 1999 EPS (4.23) 2000 EPS (3.70) 5 Year Growth Rate: 15% vs. sector: 25% Daily Volume: 150,000 Electric Lightwave (ELIX) www2.hoovers.com clearstation.com 1999 EPS (2.83) 2000 EPS (2.98) 5 Year Growth Rate: 40% vs. sector: 21% Daily Volume: 150,000 Excelsior-Henderson (Motorcycles) (BIGX) www2.hoovers.com clearstation.com 1999 EPS (1.32) 2000 EPS 0.33 5 Year Growth Rate: N/A vs. sector: 7.6% Daily Volume: 50,000 Level 8 Systems (LVEL) www2.hoovers.com clearstation.com 1999 EPS N/A 2000 EPS N/A 5 Year Growth Rate: N/A Daily Volume: 50,000 TCA Cable TV (TCAT) www2.hoovers.com clearstation.com 1999 EPS 0.98 2000 EPS 1.14 5 Year Growth Rate: 24% vs. sector: 20% Daily Volume: 140,000 This is as far as I've gone; the volume is relatively low on each of the issue and I'm not recommending any of these as shorts. Though I have created a shared portfolio to track the progress. So, I therefore expose myself to potential public humiliation for stupid short picks. techstocks.com Further discussion is welcomed and encouraged. Best Regards, Jim Note: I've found some discrepencies between Hoover's and other net sources and haven't reconciled or found which is in error.

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