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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (75773)	2/12/2000 3:51:00 PM
From: double-plus-good	Read Replies (3) \| Respond to of 132070

Michael, I follow a very value oriented approach and agree with your assessment of when to sell. <You buy a stock that is cheap and sell it when it is fully or slightly overpriced. You also sell when the fundamentals turn out not to be what you...> I loaded the boat on energy issues at the beginning of last year and did fabulously until late summer. I bought back into producers that had rewarded me well and that rerpresented to me compelling valuations. Metrics I used were cash flow and reserve value and the continuing bull case for the commodities. Flushed some of the losers out for tax loss but continued to build positions in a couple i especially liked. One problem may be that they are small/mid-caps, but that is obviously not the only problem as in some instances they are near or below prices last seen at 1.65 Nat. gas and 12 oil. Is the market discounting some aspect of these shares that I am not aware of? For example, is the attitude toward these issues reflect a market expectation for recession which would kill energy demand and pricing? Already trading at around 2x cash flow in some instances and below asset value, why are they continuing to get trashed? Have the fundamentals changed IYO? Ranger Oil, Comstock Resources and Ocean are a few of the specific companies. I remember your recent discussion of selling Aug 35's on BR. Is the nature of a "synthetic long" to recycle some of the sale proceeds into buying calls as well? I thougt a bit about that trade but am fairly heavy already in the sector and am wondering about the very grim treatment being handed out to these issues. ++good

To: Knighty Tin who wrote (75773)	2/12/2000 4:37:00 PM
From: Skeeter Bug	Read Replies (1) \| Respond to of 132070

mike, what kind of analysis is..." it is down 50% from its high and will grow 15% going forward..." therefore, buy the stock. that isn't analysis. the stock may be a buy, but not due to this dreman "logic." very poor...

To: Knighty Tin who wrote (75773)	2/12/2000 7:04:00 PM
From: Greg Jung	Read Replies (1) \| Respond to of 132070

I can't say either Cramer or Dremen should carry much weight. Cramer I reject from first principles, Dremen I am forced to reject because he would have made me poor(er). From Nov 1998: f you own any of the handful of large-cap growth stocks that have been the sole props for the market to date, sell them now. Disappointments in these issues could result in catastrophic drops in their prices. What happened to the Nifty Fifty in 1974 will happen to them. Dell Computer, for example, currently has a market value more than twice that of General Motors and is trading at a P/E of 75. Can Dell continue to grow sales and earnings at a near 60% clip, with major foreign markets beginning to dry up and heavy competition at home, which will only get worse if the economy slows? It is a great company with a great business model, but it can't walk on water. Ditto for Pfizer, America Online, Yahoo! and the rest of the new "Nifty Twenty-five." These are not the stocks you will want to own when earnings disappointments arrive en masse. Stick with value stocks, many of which are already down sharply. Keep some reserves and be slow to jump back in. If the market moves lower, here are some value stocks worth considering: Citigroup (44, CCI), P/E 15, yield 1.6%; Fannie Mae (67, FRE), P/E 21, yield 1.5%; Key Corp. (27, KEY), P/E 13, yield 3.2%; and RJR Nabisco (24, RN), P/E 11, yield 8.3%. David Dreman is chariman of Dreman Value Management of Jersey City, N. J. His latest book is Contrarian Investment Strategies: The Next Generation.

To: Knighty Tin who wrote (75773)	2/13/2000 12:05:00 PM
From: Freedom Fighter	Read Replies (1) \| Respond to of 132070

Les, I agree with Mike. The money center banks are not undervalued. If you take their current earnings streams and returns on capital at face value you can make the case that the prices make sense. But to do that you would also have to believe that the enormous credit expansion that has been going on won't end like all the others. (With a lot of stupid excesses and losses) You also have to believe that we live in a world of continued 20% capital gains, zillions of mergers, and other fee based activities that are 100% tied to the greatest stock boom ever. To me, when this period ends, there's going to be a lot of banks and brokers forced into each others arms and the rest will be lined up for taxpayer bailouts. I think investors are paying top multiples for top returns. In my book that's about the dumbest thing you can do. Only the lucky ones will escape. Wayne