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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Joan Osland Graffius who wrote (68167)	1/31/2001 7:00:38 PM
From: sea_biscuit	Read Replies (1) \| Respond to of 99985

So are you implying that food stocks like ADM and energy stocks (like XOM or SLB) will be good investments going forward? Are there any other sectors that can withstand the ravages of inflation? Pharmaceuticals? Beverages? Small-cap value stocks? I would think that most tech stocks will be very poor investments going forward. Do you agree?

To: Joan Osland Graffius who wrote (68167)	2/1/2001 12:45:00 PM
From: HairBall	Read Replies (1) \| Respond to of 99985

Joan Graffius: Congrats...your post made the SI Home Page "Cool Posts" list. Regards, LG

To: Joan Osland Graffius who wrote (68167)	2/1/2001 6:17:31 PM
From: sea_biscuit	Read Replies (1) \| Respond to of 99985

Over the past few days, the New Highs have exceeded New Lows on both the big board and the Naz, sometimes by a few hundreds. (e.g. Feb 1, NYSE 238 New Highs vs. 6 New Lows; Naz 106 NHs vs. 17 NLs). So then, why all the jitters among investors? I think it is primarily because of the following reasons : 1. Many investors that invest in individual stocks are heavily into large-cap tech stocks. 2. Many of the 401(K) plans have a "wide selection" of mutual funds that are essentially clones of the large-cap S&P 500 which in turn is dominated by large-cap tech stocks. Case in point -- Fidelity Magellan, Blue Chip Growth, Growth Company, Contrafund are all essentially the same as the S&P 500 with a little tweak here and there. 3. Even when the investors do go for non-S&P 500 stocks, they end up chasing overvalued small-cap tech stocks (the "next" Microsofts, Ciscos and Intels of the world). Most of those invariably crash and burn. The small-cap growth index fund (VISGX) which typically houses such companies, has managed a measly gain of about 3% over the last 1 year. 4. Investors have completely overlooked small-cap value stocks, sometimes by choice and sometimes because their 401(K)s offer no funds in that category. In stark contrast to VISGX, the small-cap value index fund (VISVX) has gained about 39% over the last 1 year. I think the small-cap value sector is the place to be over the next 5 years which are likely to be highly inflationary, and that over the 2001-05 time frame, I think VISVX will handily beat not only INTC, CSCO and MSFT but also funds like VISGX and the S&P 500 index and even the total-stock market index fund VTSMX.