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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club
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To: marc ultra who wrote (1783)10/24/1998 6:52:00 AM
From: Justa Werkenstiff  Read Replies (1) of 15132
 
Marc: Your analysis of small caps is right on the money. What I saw at he beginning of the week was a compelling situation. Anytime a two bit player like myself can move the price of a stock up with buy orders those higher prices would stick because they were not met with sell orders, you have to stand up and take notice. And if you snooze, you lose. Let's watch how these puppies perform if we have some down days.
I would focus on purchasing institutionally owned small caps now. The tax loss selling for them in this nasty correction should be over at the end of the month. But I personally would not wait for fund flow confirmation to purchase these small caps or the funds. If one waits too long, what is the point? You may have already missed a good part of the period of outperformance and the corresponding gains. Like I said, get there before the herd. And like you said, performance attracts money flow and it will come. And the talking heads have been humping small caps and their short term outperformance all week long. I smell money flow. Your biggest risk IMO is to market perform in this sector.

Semi-equips are overextended in the large cap area. Small caps have some more reasonable valuations. I would be very cautious here in going long. While things are looking up, the prices have run past the fundamentals IMO especially in the large caps. I expect some weakness now in the sector but I feel the lows have been seen. The run in TER on strength in the backend is compelling as most of TER is intstitutionally owned and so they were pumping money into this stock. The strength in the sector on Thursday was also compelling with all players, small and large, showing huge gains on Thursday. The Billat sector upgrade on Friday morning which pushed these stocks again was too much, too soon IMO. I was shorting on that run for a trade. I expect weakness and choppiness in this sector with some strength in the middle of November as the AMAT cc approaches.
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