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Strategies & Market Trends : The Contrarian's Corner

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To: HeyRainier who wrote (93)	9/25/1998 10:12:00 AM
From: Mark Marcellus	of 113

Rainier, I agree with you about BOST but perhaps John has a point. Mr. Dremen in one of his earlier books tells a possibly apocryphal story about an index fund. To improve performance, the fund managers decided to weed out all of the companies that were in such horrible financial condition that no prudent manager would invest in them. As would be expected, the fund went on to produce returns slightly lower than the market and much better than most mutual funds. However, some wise guy went back and calculated the performance of the stocks left out of the fund. He found that as a group they were up over 1000%. I don't know how BOST will pan out, but it's certainly a classic contrarian situation. There's definitely value in the brand and concept, the big question is whether there will be any equity left for the current stockholders when and if Boston Market turns it around. FWIW, Mark

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