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Strategies & Market Trends : The New Economy and its Winners -- Ignore unavailable to you. Want to Upgrade?

To: stockman_scott who wrote (15586)	1/5/2003 7:50:12 PM
From: Lizzie Tudor	Read Replies (1) \| Respond to of 57684

So he sees another down year, with the dow hitting 6500 or so mid-year and rising back to 8000 by year end... while at the same time a possible 50% rise in the nasdaq???. That is just too wierd, really. L Conclusion I expect 2003 to be another bear market year. I do not rule out an extension of the rally that began on the first trading day of the year through the end of January. If this rally occurs, it is likely to be a major fake-out that will result in an avalanche of money flowing into equities at just the wrong time. I expect the bulk of the damage to have occurred by mid-year or shortly thereafter, with a potential Dow low in the 5800-6000 area. I look for a rally beginning in the second half of the year that could take the Dow back above 8000, but only if the Dow first takes out the October 2002 lows and trades down to at least 6500. I see Nasdaq and the techs as being the least vulnerable to a first-half slide and the Nasdaq potentially posting a gain of up to 50 percent for 2003. I am most bullish on the small- and mid-cap techs – the "single-digit midgets." I see the biggest cap names in the Dow and the S&P as being most vulnerable to major declines. Many of these stocks have attracted "safe haven" money due to their large capitalizations and liquidity and the illusion of safety. But I see these names as being "first out" of institutional portfolios on the next market leg down. These include Pfizer (PFE), 3M (MMM), Procter & Gamble (PG), Citigroup (C) and General Electric (GE). Overall, 2003 is likely to be a very tough year for heretofore "safe" or "quality" assets – mega-cap stocks, the dollar, and bonds. I suggest "thinking speculatively" – not with all your capital but with a portion of your funds – by investing in low-priced tech stocks and gold stocks (see below). I continue to believe that all investors should have at least 10 percent of their portfolios in precious metals stocks. Gold has broken out to the upside technically and will be the beneficiary of the Fed's "reflation" push and potential dollar weakness. And investor enthusiasm on gold remains muted, with gold funds accounting for a smaller than average percentage of sector fund assets. - Bernie Schaeffer