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Technology Stocks : SDLI - JDSU transition -- Ignore unavailable to you. Want to Upgrade?

To: puborectalis who wrote (453)	2/28/2001 6:34:07 AM
From: DBrian	Read Replies (1) \| Respond to of 3294

Words of wisdom from Karen McGrath, portfolio manager at Strong. Not sure why I got the email since I don't own any of her funds but here it is: Inside the Trading Room with Karen McGrath February 23, 2001 Market conditions like this can be difficult. It's tough for investors,and it's tough for me. But I've been a portfolio manager for more than 25 years, and there are some lessons I've learned that are applicable today. There have been a number of periods when we've seen a rash of really discouraging, negative economic news, such as we're having now,and an accommodative Fed cutting interest rates, as we have now. As we look back, the people who bought or held common stocks during those periods were generally rewarded over the following 12 months. Binoculars and mirrors You can't do anything about the past. Now is the time to anticipate the improving times ahead. They will be there. That said, I don't know exactly when the economy gets better. I don't know when the stock market gets better. But I do think that sometime in the next 12 months we'll see favorable returns in common stocks. The time to be cautious and raise cash reserves was a year ago, when the economy was growing at eight percent, corporate profits were growing at almost 20 percent, and the Fed was raising interest rates.That was the top. Now, we have almost the reverse situation. We're a lot closer to the bottom than the top. This is a time to be looking forward to the economy improving. It's a time to be patient and optimistic about the potential for capital gains going forward. Think long-term We have had approximately eight corrections like this over the last 20 years, and yet it's been one of the best 20-year periods in history for common stock returns. The most recent behavior and concern among investors is similar to what I saw in those past corrections, and it's what one would expect. Yet, history suggests that it's the long-term investor who gave it time who has profited. It does take time. What an investor needs more than anything right now is a diversified portfolio and lots of patience. Help from Washington We've had a big adjustment in valuations, and we've corrected the excess enthusiasm of a year ago. I think we can now return to reasonable, rational investing. In addition, because of the big budget surplus, we can get a little help from tax reform. The worse the economy looks, the more likely that significant tax relief will be passed. President Bush is on a big campaign, and I wouldn't be surprised to see something legislated by June. The pressure will be on to get some help for the economy, and even Alan Greenspan supports a tax cut. We should have stimulus both from monetary policy and fiscal policy, and I think we'll avoid a full-fledged recession. These are difficult times for investors, but remember: At the bottom,the news is always grim.