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To: Jim Willie CB who wrote (48716)3/16/2002 9:57:48 AM
From: stockman_scott  Respond to of 65232
 
Barron's: A Sampling of Advisory Opinion

The Harley Market Letter
1605 Ridgewood Dr., Camarillo, Calif. 93012
E-mail: sharley1@gte.net

MARCH 5 ~ Renewed signs of an improving economy have sent investors on a buying spree in the stock market. The strength and character of this rally has confirmed my view that the February 22 price lows established the important 19.625-week (99 trading-day) intermediate cycle bottom. Stocks are poised to push higher in the coming weeks to challenge -- and most likely exceed -- their January 7 highs. I look for an across-the-board advance in equities to power the major stock indexes higher throughout March and into early April. Sectors expected to do well include industrial, transportation, retail and Internet/technology.

-- Stan Harley

Stockscom Report
812 Proctor Ave., Ogdensburg, N.Y. 13668
www.stockscom.com

MARCH 10 ~ While equities should continue to exhibit strength in the short term, the reality remains that this recovery is not expected to be as strong as previous ones. In the past, recovery from recessionary conditions meant that at least one facet of the economy has extraordinary growth. But looking at this one, we have no pent-up consumer demand waiting to explode -- consumer spending has been one reason that this economic downturn has been short and relatively mild. There isn't a real-estate boom beginning -- houses have sold extremely well during the past months as interest rates fell to their lowest levels in decades. Business spending is still practically non-existent and shows no sign of surging in 2002. Corporations attempting to conserve cash resources have postponed decisions on capital expenditures, and, as is often the case, a major portion of the planned spending comes from Information Technology budgets. Therefore, if we accept this premise, it follows that the sharp increase this past week is fraught with danger only serving to push valuations to unjustified levels.

-- Ken Wilson

Hendershot Investments
11321 Trenton Court, Bristow, Va. 20136

MARCH ~ Nearly 90 years ago, Arthur Andersen founded his accounting firm with the motto "Think straight and talk straight." Poor Arthur is probably rolling over in his grave as his firm is now embroiled in the Enron scandal precisely because folks there were neither thinking straight nor talking straight. The spectacular collapse of Enron had led to "Enronitis," a rampant virus that knocks down any company's stock price if even a whiff of accounting shenanigans is perceived.

During the roaring bull market of the 1990s, many companies chose to describe their performance in a very favorable light using pro-forma earnings. Investors have unfortunately learned that pro-forma EPS often turns out to be EBS -- Earnings before the Bad Stuff.

What should an investor do if earnings are suspect? Focus on a company's cash-flow statement instead. Look for growth in its cash flow from operations over the years. Also pay special attention to the free cash flow a firm generates, which is the cash available after funding capital expenditures. Beware of cash flow generated from stock-option benefits. Stock options have been handed out like jelly beans without any regard to the underlying cost. This occurs because most companies don't report the stock-option cost on the income statement, where it should be reflected. Instead, investors are forced to use a microscope to find the cost buried in the footnotes to the financial statements.

-- Ingrid R. Hendershot

The Aden Forecast
P.O. Box 790260, St. Louis, Mo. 63179
www.adenforecast.com

MARCH ~ Crosscurrents and mixed signals are currently the order of the day [in the stock market]. The month ahead should provide plenty of insight, one way or the other, and the numbers to watch will be important in determining the final outcome. Meanwhile, we don't think it's worth taking risks at this time. Let's see how things play out first.

If the stronger markets are indeed leading the way and pulling up both the weaker markets and the leading indicators, then we can go into the market with the odds in our favor and more confidence. On the other hand, if the weaker markets again drag the stronger markets down as the leading indicators are suggesting, we'll be glad we played it safe.

-- Mary Anne Aden and Pamela Aden

Stellar Stock Report
7100 Peachtree-Dunwoody, Atlanta, Ga. 31146

MARCH ~ We're in the best part of a transitional market that's going up.…As we move toward the end of this month, we'll see some significant portfolio window dressing. Mutual-fund managers report to their shareholders the holdings in the fund at the end of each quarter; they want the shareholders to see some of the stocks that had good growth over the last quarter. This window dressing will be additional buying pressure during March, moving prices up.

Another area of strength will likely be high tech. There's been a two-year bloodbath in tech, so most of the sellers have sold. Technology definitely is a productivity tool that will come into play more and more in the growing side of an economic cycle, and retracements do happen. Whether it's bargain hunters, insiders or companies buying back their own shares that begins this, it will likely be followed by professionals and individuals. And with the money supply up billions of dollars in just the last month alone, there's cash out there to fund these buys.

-- Richard Schmidt

The Stock Market Monitor
655 S. Fairoaks Ave., Sunnyvale, Calif. 94086
www.thestockmarketmonitor.com

MARCH 9 ~ Based on the past four quarters' earnings, the S&P 500 is now trading at a P/E ratio of 41 -- its highest ever; higher than prior to the start of the bear market. In fact, the S&P's 25-year average P/E is 17.05, and the 50-year average is 16.17. At such a high valuation by historical standards, it's hard to believe we're witnessing the birth of a new bull market. Bear market rallies, on the other hand, can occur at any valuation.

With regard to stock performance expectations, the gap between Wall Street professionals and corporate insiders is widening. Prominent money managers are -- once again -- becoming increasingly "exuberant." So convinced that robust economic times lie ahead, they're recommending that investors increase their equity exposure to as much as 70%. Incidentally, the Wall Street professional is not alone. The latest individual sentiment poll indicates that 53% of investors are bullish on the market. But, what about corporate insiders? The Vickers/Argus Research Eight-Week Corporate Insider Buy/Sell Ratio has increased from 2.39 to 2.72.

We surmise that one of two scenarios is about to unfold. Either the lagging Nasdaq and S&P power ahead, or the DJIA retreats, dragging the others down with it. Given current high valuations, the consensus view that the recession is behind us, and increasing investor optimism, we believe that a continuation of the market decline will be the eventual outcome.

-- Michael Shotter



To: Jim Willie CB who wrote (48716)3/16/2002 10:02:45 AM
From: stockman_scott  Respond to of 65232
 
Land ho! Real estate is still hot...

NEW YORK (CNN/Money) - The real estate sector has been on fire. And it's not over yet.

Fund managers insist these stocks have life left in them

money.cnn.com



To: Jim Willie CB who wrote (48716)3/16/2002 12:16:03 PM
From: stockman_scott  Respond to of 65232
 
SEC's Pitt Deflected by Enron

By Kevin Drawbaugh
Saturday March 16, 9:36 am Eastern Time

WASHINGTON (Reuters) - Somewhere on his road to rolling back big, bullying government, Securities and Exchange Commission Chairman Harvey Pitt wiped out at Enron Curve.

Both the collapse of Enron Corp. (Other OTC:ENRNQ.PK - news) and the Sept. 11 attacks are confronting America's top markets regulator with urgent demands for more government power and spending.

Presiding over an expansion of the SEC may have been the last thing on Pitt's mind when he was appointed last summer by President Bush, but events have a way of changing reformers' plans, said academic experts and officials.

``That's generally the problem with a lot of these people when they come in, they have already staked out some philosophical territory,'' said Bala Dharan, accounting professor at Rice University's Jones School of Management.

``What he's now finding is (that) even if he doesn't get a single new regulation on the books, just enforcing existing ones will need more resources and more people.''

But new regulations are here, and more are on the way.

Since Pitt took over last August, Congress has enlisted the SEC in the war on terrorism by extending federal anti-money-laundering laws to SEC-regulated financial firms.

Momentum is building behind proposals for forming an SEC-supervised overseer for accountants to help avert future financial disasters like Enron, the former Houston energy trader that filed the largest ever U.S. bankruptcy on Dec. 2.

Bush last week called on the SEC to crack down on auditors, impose new penalties on corporate wrong-doers and require faster, more complete disclosures by companies and managers.

Coupled with chronic pay and staffing problems at the SEC, all these new demands have prompted lawmakers in the House of Representatives to propose doubling the SEC budget -- puny by federal agency standards at $438 million -- to $876 million.

The White House is resisting budget hikes for the commission, even as it asks it to take on new jobs. But backing for a bigger, better-funded SEC is virtually unquestioned in both parties on Capitol Hill to help restore public trust in markets shaken by the Enron train-wreck.

CARTE BLANCHE SEEN FOR SEC

The General Accounting Office, the investigative arm of Congress, concluded this month that the SEC was ``increasingly strained'' in fulfilling its duty to protect investors. The commission in 2001 reviewed only about 16 percent of annual corporate filings it received, about half its annual goal of 30 to 35 percent, the GAO said.

Amid such alarming findings, Duke University investment banking and law professor Michael Bradley said, ``People are just willing to write a blank check to the SEC.''

The push for a bigger, costlier commission challenges Pitt's early approach to leading the SEC, which regulates 8,000 brokerage firms, 7,500 financial advisers, 34,000 investment company portfolios and 17,000 publicly traded corporations.

Formerly a private lawyer, Pitt once was big business' 'go-to guy' on securities law. Clients ranged from Enron's former auditor Andersen and accounting industry trade group the American Institute of Certified Public Accountants to major corporations such as Dell Computer Corp. (NasdaqNM:DELL - news), Morgan Stanley (NYSE:MWD - news) and Bear Stearns Cos. Inc. (NYSE:BSC - news).

He was fighting the SEC just over two years ago on behalf of accountants over his predecessor Arthur Levitt's push for stricter auditor independence laws. When Bush appointed him, Pitt promised a top-to-bottom review of SEC rules and a more cooperative relationship with business.

In an early speech to accountants, he said the days when accountants had to fear the SEC were over, prompting a testy letter of inquiry in early December from Rep. John Dingell, a Michigan Democrat, on the SEC's attitude toward enforcement.

Ever since, Pitt has made a point to talk tough about the commission's zero-tolerance for law-breakers.

Still, officials observed, the burly Brooklyn native has not seized the Enron Moment to grab more power for the SEC, as his predecessors might have done. Rather, his proposed policy responses to Enron have been circumspect, -- critics would say tepid -- reflecting his personal beliefs.

PITT'S STYLE

``Harvey has healthy respect for the legislative branch. He's handled it quite well. I think there's a difference in style here with previous SEC chairmen. But that represents a change in personal style, as well as philosophy,'' Rep. Michael Oxley, chairman of the House Financial Services Committee and a proponent of a much larger SEC budget, said in an interview.

Even today, Pitt seldom misses a chance to flourish his political convictions. ``I do not believe that the solution to every problem starts and ends with larger and more expensive government,'' he told the Senate Banking Committee last week.

But in the same hearing, he asked Congress for $15 million more for his budget to hire 100 new employees and $76 million for raises for existing staff, who are chronically underpaid.

His top-to-bottom review will occur soon, he said, but it is likely to have a predictable result. ``In light of the events of the past six months, I think it is foreseeable that the SEC will require additional funding.'' Pitt told Congress.



To: Jim Willie CB who wrote (48716)3/16/2002 11:32:57 PM
From: stockman_scott  Respond to of 65232
 
"Questions" by Hanson...

nationalreview.com

Questions
Making sense of the world.

By Victor Davis Hanson, author most recently of Carnage and Culture: Landmark Battles in the Rise of Western Power.
March 15, 2002

One of the advantages of living in relative isolation on a farm is the opportunity to ponder idle questions when there are few experts around to give the proper answers. I list in no particular order a sampling of them that arose last night while I was walking alone through the orchard — on the chance that a few other puzzled Americans have also at times been just as exasperated and confused.

Why does Mr. Mubarak lecture us to become intimately engaged in the Middle East Peace process, when Mr. Clinton, who was very recently intimately engaged, got the intifada for his efforts?

And why does Mr. Mubarak seek to advise us about our proper diplomatic role, rather than explain to us why an Egyptian masterminded the deaths of 3,000 of our citizens and others of his countrymen are top lieutenants of Mr. Bin Laden and are now killing Americans in Afghanistan?

And why, instead of warning about rising anti-Americanism in his country — itself the dividend of the virulent propaganda of his own state-run presses — does he not ponder another recent poll, one showing that 76 percent of Americans themselves have an unfavorable view of the Arab world?

Because, unlike Egypt, we are a democracy, at some point will some brave American congressman ask the dreaded question, "Why continue to give billions to Egypt where three quarters of the people do not like us — and when three quarters of the American people would prefer not to?"

Why do Middle Easterners become excited and haughty as they gloat to you that Americans are unpopular in their countries, but suddenly grow shocked, silent, and hurt when you politely and calmly explain why the feeling is becoming — and perhaps should be — mutual?

Why do so many from the Middle East come here to find freedom, security, and safety — and then criticize the country that they would never leave as they praise the country that they would never return to?

Is there a word for profiling or irrationally hating Americans? Americanophobia? Misamericany?

Why did we incur only anger from Eastern Europeans and Orthodox Christians for saving the Muslims of the former Yugoslavia from Milosevic, but no praise at all from the Islamic world itself?

If the West Bank is the linchpin of the current Middle East crisis, what were wars #1, #2, and #3 there about, when it was entirely in Arab hands?

Is there a difference between Palestinians preferring to kill Israeli civilians rather than soldiers, and Israelis preferring to kill Palestinian fighters rather than civilians?

Why are the EU and international agencies vocal about well-fed and humanely treated prisoners in Cuba, and yet said nothing when depraved comrades of these detainees recently executed an American soldier upon capture in Afghanistan, and murdered Danny Pearl?

Would the world be angry if a Jewish terrorist forced a captured Muslim to admit to his race and faith as he executed and beheaded him on film?

Is it really true, as we were warned for most of January, that prayer-mats, lamb stew, Korans, and humane treatment in Cuba ensured that al Qaeda in turn would not execute captured Americans?

Why do not Iran, Lebanon, Syria, and Iraq, who overtly and stealthily war along side the Palestinians, simply all join with the former to gang up and declare war openly on Israel and then settle the issue on the battlefield?

If we remove the fascist regime in Iraq and help institute consensual government there, why would we need troops any longer next door in Saudi Arabia? What and from whom would we then be there to protect?

If we could not have normal relations with the Soviet Union and Eastern Europe, who both allowed neither freedom nor democracy, why and how can we maintain normal relations with the Islamic world?

If America forced Israel to give back every inch of the West Bank, if America withdrew all its troops from all Arab countries, if America increased its aid to Egypt, Palestine, and Jordan, if America sought to placate Saddam Hussein, remove all U.N. sanctions, and normalize relations with the Iraqi dictatorship, and if America sought to restore full relations with Iran without conditions, would the Muslim world really like the United States?

Has any American in any live broadcast on television ever asked a Saudi prince, the king of Jordan, the President of Egypt, or the royalty of Kuwait, whether they plan on allowing a free press or democratic government? If not, why not?

If 19 Americans incinerated 3,000 Muslims in Mecca or Medina, and blew up 20 acres in either of those cities with a two-kiloton explosion, would the Saudis or the Egyptians a few weeks later politely listen to admonitions from the American government about their incorrect Islamic policies in the Middle East?

If the Eiffel Tower had been wrecked by an al Qaeda hijacked airliner, would the French have gone into Afghanistan after the terrorists? And if so, how and why? And would they have asked our help? And would we have given it?

Why in the last decade have we seen a succession of Israeli prime ministers and opposition figures but only Mr. Arafat alone?

What would the world think if Mr. Sharon displayed a revolver and then attempted to strike one of his ministers at a Cabinet meeting?

Why do Palestinians shoot machine-guns up into the air at funerals and Israelis do not?

Why do supporters of Israel in America rarely castigate their country for giving money to Egypt, Jordan, and Mr. Arafat, while supporters of the Palestinian authority here always damn the United States for giving commensurate aid to Israel?

Why do Middle Easterners become far more enraged at Israelis for shooting hundreds of Muslims than at Iranians, Iraqis, Jordanians, Syrians, Indians, Algerians, Russians, Somalis, and Serbians for liquidating tens of thousands?

If nearly two-thirds of the Arabic world believe that Arabs were not involved in September 11, why should any American believe anything that two out of three people from that region say?

Will Palestinians cheer when Saddam Hussein launches chemical-laden missiles against Israel when we invade his country?

Why after half a century has the Saudi government suddenly now decided to enter the negotiations about Palestine?

If Iran launched missiles of mass destruction against Israel, would the EU do anything?

If North Korea attacked South Korea, would the EU do anything?

If someone blew up another 3,000 Americans, would the EU do anything?

Has anyone made an inventory of the all the goods, services, and equipment that France has sold to Iraq since 1991?

If Johnny Walker Lindh is not charged with betraying his country, what precisely does an American have to do to commit treason?

Has anyone heard a Muslim in the United States condemn September 11 without employing the word "but?"

Why do spokesmen for groups that have the words "ethical", "humane", "amnesty", "fair" and other such words of kindness appear so unkind in public interviews?

Why are most of the talking heads on television who are ex-military men direct, honest, polite, and rarely self-absorbed, while the academic pundits usually stutter, lose their cool, and say inane things "one could imagine…" and "as it were"?

How can training someone for four years to lead men into battle make one a more effective speaker and thinker than someone prepped for five years in graduate school to teach in the university and write?

Why do six billion people in the world conclude that the US military is the most deadly and effective armed force in the history of civilization when the American media who covers it does not?

How much annual income and time off does one have to garner to oppose automatically almost everything the United States has done since September 11?

I know that there are properly nuanced answers to these questions that touch on issues of pragmatism, national security, statecraft, requisite education, and other such abstract considerations. But millions of us Americans, I think, wonder about them nevertheless — and just maybe we are not so crazy after all.