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Politics : Stockman Scott's Political Debate Porch -- Ignore unavailable to you. Want to Upgrade?

To: Jim Willie CB who wrote (5076)	8/22/2002 7:15:52 PM
From: 4figureau	Read Replies (1) \| Respond to of 89467

You should get a big kick out of the March article below. Do the present math and it is easy to see that he has screwed up "royally!" (GGGGG) I remember Priceline at 165.00 in April 99...it hit 1.70 last month...and was at 5.60 in March when he bought AGAIN! YIKES! He bought all the way down. I believe him when he says he is not selling.. it's only down 63% this year from 52 week highs....he hasn't finished buying yet~ haha: >>LOS ANGELES (CBS.MW) - When it comes to building an investment portfolio, do you have champagne wishes and caviar dreams? Anyone who's not heir to a fortune or head of a billion-dollar enterprise might assume the best way to attain a lavish lifestyle is to follow in the financial footsteps of successful, wealthy investors such Prince Alwaleed bin Talal of Saudi Arabia or Microsoft co-founder Paul Allen. Yet it's a strategy fraught with pitfalls. This week, investors bid up the prices of the shares of Citigroup (C: news, chart, profile), AOL Time Warner (AOL: news, chart, profile) and Priceline.com (PCLN: news, chart, profile) on news that Prince Alwaleed spent $1 billion over the past six months to increase his holdings in those companies. See full story. The prince "is a very famous investor, but that doesn't necessarily mean he's someone people should follow," said Mark Sellers, editor of the Morningstar StockInvestor report. A not-so-perfect record Why not mimic high-profile investors? For one, like the rest of us less-affluent mortals, they're not infallible. "It's hard to have a perfect record," said Michael Sincere, a former trader and author of "101 Investment Lessons from the Wizards of Wall Street." "Anyone's a genius sometimes." Indeed, a great fund manager is someone who gets six out of 10 investment picks right, Sellers said. Consider the prince's record. His reputation as a savvy investor was minted after making a fortune investing in Citicorp, the predecessor of Citigroup, in the early 1990s. He bought the stock at a time when Wall Street largely shunned the company - and made the right call. But since then, his majesty's performance hasn't been stellar - and put to the test in a down market, according to Sellers. For instance, Prince Alwaleed disclosed in May of 2000 that he invested in DoubleClick (DCLK: news, chart, profile), Internet Capital Group (ICGE: news, chart, profile), Amazon.com (AMZN: news, chart, profile), EBay (EBAY: news, chart, profile) and Infospace (INSP: news, chart, profile), pouring $50 million into each stock. Back then, DoubleClick traded at about $60 a share. It now hovers at $13. Among his other picks: Internet Cap was at $36, and now trades at 89 cents; Amazon was flying high at $59, and has since fallen to $16; EBay was at $135 and has plunged to $57. Infospace had been at $60, now it's down to $1.60. By the prince's own admission, he bought more Priceline shares this time around to lower his average purchase price to single digits. In contrast, billionaire investor Warren Buffett stayed away from tech stocks. He even avoided Microsoft (MSFT: news, chart, profile), not only a tech blue chip, but whose co-founder Bill Gates is a buddy. Still, Prince Alwaleed is not alone in making investment follies. Paul Allen also bet on losers through his Vulcan Ventures group. Vulcan invested in Egghead.com, which filed for bankruptcy protection last year and sold its assets to Fry's Electronics and TheStreet.com, whose once highflying shares are now at $2.50. Investors in the dark Another reason why mimicking a market maven can be a bad idea: You don't always know the circumstances surrounding their decision, said Paul Merriman, founder of Merriman Capital Management and a guest contributor to CBS.MarketWatch.com. "We don't know under what conditions he'll sell," he said. "Is the prince going to make a personal call to the people who follow him and say, 'It's time to get out.' I suspect not." By the time the small investor finds out about a stock purchase or sale, it's usually several months after the fact. The stock could have moved up appreciably since then. "The guy could be selling the shares right now just when you found out he bought them," Sellers said. A better game plan Instead of focusing on specific stock picks of a famous investor, examine his or her investment strategy, Sincere said. Choose someone with a good track record. If it's a fund manager, find one with at least five years experience in managing a portfolio and ranks among the top 10 percent of his or her peers, Sellers said. Investing tip: How does one choose among the many investment strategies touted today? Look for a method with a lot of history behind it that is "statistically meaningful," Merriman said. It's preferable if the strategy is backed up by academic research. Also, make sure the author is credible by examining his or her credentials. If you decide on any one method, divide your money among your favorites.<< cbs.marketwatch.com.

To: Jim Willie CB who wrote (5076)	8/23/2002 9:58:20 AM
From: SOROS	Read Replies (2) \| Respond to of 89467

What if the next Kondratieff Winter phase causes the Dow/Gold ratio to correct to a long-term average? What would then happen to the DJIA or the price of gold? Fitting a linear regression line to the data between 1896 and 2001 gives a line with a slope of 0.1511 increase per year in the ratio. This puts the long-term average ratio at about 17 in 2002. The last period for which the ratio was below the regression line was 1973 to 1995, when the average ratio was 5.54 over the period. "Looking at the chart, the long term trend of the ratio is up at a rate of 1.25% per year. This should be expected as the process of mining gold becomes more efficient and cheaper due to advances in machinery, energy, exploration technology, chemicals, etc. In fact, the advances in mining probably match the efficiency gains seen in the economy in general." Long Term Dow/Gold Ratio [Fred's Intelligent Bear Site] We can now predict what the Dow and the price of gold would be, assuming they both change by the same proportion (i.e. Dow falls to a certain fraction of its bubble value, and gold rises by the same proportion). If the ratio falls to the value that it had in the last low period, then the Dow will be 3934 and gold will be $710. Even if we only assume a fall to the trend line, the result is a Dow of 6889 or a gold price of $405. Of course, for the long term trend to hold, the ratio by the law of averages must correct for its time above the trend by a corresponding time below the trend. We can also look at what might happen if either Gold or the Dow stays roughly the same, but either the Dow falls or gold rises to revert to the trend. If we assume that gold stays at about the level of the 2001 close, i.e. $278.7, this predicts a Dow that will fall to 1544. If we assume that the Dow stays at about the level of the 2001 close at 10021.5, this predicts a gold price of $1808. Even if we only assume a fall to the trend line, the result is a Dow of 4734 or a gold price of $590. The bottom channel line of the long-term inflation-adjusted DJIA suggests a potential Dow fall to around 2-3000: Dow Jones Industrial Average Inflation Adjusted [Fred's Intelligent Bear Site] So, whatever happens, when the Dow/Gold ratio crosses over its long term trend, and the Kondratieff cycle gives us a clue as to when that might happen, there must surely be major consequences in the markets.