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To: IQBAL LATIF who wrote (29769)	11/19/1999 6:21:00 AM
From: IQBAL LATIF	Respond to of 50167

Keep an eye on the bond yields this 6.25 breach will not be ignored so on one hand we have this possibility of second close above 1428 today and on the other possiblity of rising yields. Keep an eye on htis and remember that Comp rocket like move and DOT move is great to take profits and reduce exposure in deep in them onies as much as possible shifting the stirkes to out of the monies... like taking out AMAT and replacing it with 115 for March or CSCO 100 if you have 70's long or ORCL 90 for 50 Orcl.. these premiums will clean out in case sentiment changes..so for me it is always good that on breakout initiate new posiutions and take out old ones.. purely a traidng strategy that helps if the breakout is false... Market knows it that Fed is concerned about asset inflation and the third increase has been discounted but the bond marekt the smartest of the monies know it fine that something is not fititng in this whole thing they are taking the yields higher that I think is bascially due to asset inflation threat.. it is bond rallies that lead to market rallies here we have a market rally leading to bond weakening that is one point helping me to gradually set new positions with little on stake but still to benefit if this rally continues on the other hand positioning to take advantage of 3000 level base making, we need a base to this comp move and 12th good break on comp in last nearly as many sessions only help me to think that no one ever goes bust with profits.. Narrow stock rally looks even more precarious amid rising bond yields. 11-18-99 \| 05:04 PM \| Harry Milling On its face, today's action makes it look like the good times are rolling on Wall Street. The S&P 500 Index and the Nasdaq Composite Index both closed at fresh record highs, and the Dow Jones Industrial Average rose 150 points to close above 11,000 for the first time since mid-September. The problem is that the rally took place only in a small portion of the overall stock market, and these gains were amplified by the stock averages themselves. For example, more than half of the Dow's rise was due to the massive gains of one stock: Hewlett-Packard HWP. Hewlett surged 17 3/16 to 94 5/8, accounting for 84 points of the Dow's 152.61-point rise to 11,035.70. Meanwhile, decliners outpaced advancers on the New York Stock Exchange by 16 to 15. The Nasdaq Composite Index's 77.72-point, or 2.4%, gain to a record 3,347.11 was confined mostly to gains in the telecom and chip sectors. The Nasdaq Telecommunications Index rose 2.9% to a record 870.18 and the Philadelphia Semiconductor Index, which is dominated by Nasdaq issues, rose 2.9% to 649.59. The S&P 500 Index rose 14.23 points or 1.0% to a record 1,424.94, its second record close this week. But as the averages hit fresh records, the Treasury market is selling off amid fear that the next action by the Federal Reserve, albeit months down the road, will be to hike rates again. Bonds and stocks can only decouple for so long before one of them gives in. Financial stocks are already siding with bonds. While stock rallies typically mean trading gains on the equity side, higher yields curb borrowing business. The S&P Financials Index fell 0.07 point to 144.50. JP Morgan was the Dow's largest point decliner, followed by General Electric GE, which owns GE Capital. The price of the 30-year Treasury fell 15/32 to 99 13/28, boosting its yield four basis points to 6.17%. For the week, the long bond's price is down almost two points so far, and it's on its way to posting its worst weekly point decline since October 1. The pre-emptive and hawkish stance by the Fed on Tuesday has many bond dealers convinced that the Fed may hike the federal funds rate by another 25 basis points to 5.75% in the spring. The long bond's yield rose to a two-year high of 6.40% in October when the bond market began to price in the possibility of a 5.75% fed funds rate, but it slipped back when a 5.50% fed funds rate seemed more likely after the November meeting. The consensus is that a long-bond yield of 6.50% discounts a 5.75% federal funds rate. S&P 500 futures dealers are already saying the stock rally would not be able to survive a yield at 6.25%.

To: IQBAL LATIF who wrote (29769)	11/19/1999 6:27:00 AM
From: IQBAL LATIF	Respond to of 50167

Target 180 and how it is set.. look at the growth rate and the discount rate.. when the rates start moving upward the changes in discount rate can lead to huge changes in vlauation.. An intrinsic value/share is a hypothetical value that is based on the sum of a company's future earnings. This value can be compared to a stock's current price to help determine if a stock is overvalued or undervalued.Target of 180 and how it is achieved.. Calculate Intrinsic Value/Share Initial earnings: $ Earnings growth rate: Company 3 year (101.23)Company 1 year (71.89)Sector 10 year (15.02)Sector 5 year (16.62)Sector 3 year (8.94)Sector 1 year (50.23)S&P 500 10 year (11.71)S&P 500 5 year (11.99)S&P 500 3 year (9.77)S&P 500 1 year (17.38) % % Discount rate: % 1 yr T-Bill (5.00)30 yr Long Bond (6.00)S&P LT Return (11.00) % Intrinsic Value/Shr ($): 180.98 Current Price* ($): 137.00 By this calculation, NOK appears undervalued. *Retrieved Thursday, November 18, 1999 05:47 PM EST Nasdaq quote delayed at least 15 minutes, all others at least 20 minutes. ? Hints: It is difficult to establish a long-term growth rate for a company with less than 5 years of reported earnings. Try different growth rates to gain insight into how the company will have to grow earnings to justify its stock price. Also, try increasing the discount rate to account for the higher risk inherent in younger companies. ? Walk through: If we assume initial earnings of $1,961,400,064 grow at a rate of 30.00%, and we discount those future earnings at a rate of 17.00%, we arrive at a net present value for the company's next 10 years of earnings of $36,638,404,608. To account for potential earnings beyond the 10th year, we estimate a growth rate of 11.00%, a discount rate of 15.00%, and we arrive at a continuing value of $182,820,306,944. To complete the calculation we add these two figures together, subtract the long-term debt for NOK ($0), and divide by the outstanding shares (1,212,621,952) to get a per share intrinsic value of $180.98. ? Considerations: Gauging the future growth and risk outlook of a company such as NOK, however, is more art than science. New products, management, or strategic directions can fuel growth far above historic norms. Likewise, unforeseen setbacks can cut a company's future value in half. Have NOK's earnings slowed or accelerated in the past year from its 5-year average? How fast do analysts expect it to grow in the next year or two? How great are the risks it faces? Be sure to check NOK's financials and recent news stories on the company. Also compare it to other companies in its industry. >> <<http://www.quicken.com/investments/stkeval/?cmetric=intrinsic&histtim=ann&grtim=5yr&symbol=NOK&csym=NOK&initearnec=1%2C961%2C400%2C064&egrdd=2&egrrbtn=ec&egrec=30&dcrrbtn=ec&dcrec=17.00&dcrdd=0 quicken.com