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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Thai Chung who wrote (10109)	10/31/1997 9:30:00 AM
From: Martin A. Haas, Jr.	Respond to of 70976

Thai, nice post from the WSJ. Here's another from the front page of the WSJ about Kent Simon, portfolio manager of Neuberger and Berman, regarding what he's buying: Pros Conquered the Chaos In the Market's Wild Week Oct. 19, 1987: The stock market plummets. Trading simply stops in many stocks. Brokerage firms refuse to fill orders. The system comes close to collapse. Panicky investors, large and small, rush to sell at any price. This article was prepared by reporters Robert McGough, Greg Ip, Vanessa O'Connell, Raju Narisetti, Michael Siconolfi, Patrick McGeehan, Gregory Zuckerman and Suzanne McGee of The Wall Street Journal. Oct. 27, 1997: The stock market plummets. This time, brokerage firms handle the cascade of orders with few breakdowns. Small investors stand their ground and help stem the selling tide. ............ "National Semiconductor, buy 50,000," money manager Kent Simons barked to a trader at his firm, Neuberger & Berman Management, on Monday. The trader's reply stunned him: "We can't. The stock exchange has halted trading." Mr. Simons, 62 years old, had spent most of the day putting more than $100 million to work, buying stocks at what he hoped were fire-sale prices. He was calling companies to ask if their business, as Wall Street analysts were proclaiming, was dependent on sales to Asian countries. And the answer kept coming back no, it isn't. But he hadn't paid attention to the action on the floor of the New York Stock Exchange. So he didn't realize when he put in the bid for National Semiconductor that the circuit breakers had kicked in. All told, in the four trading days from last Friday until Wednesday, Mr. Simons spent $540 million of his two mutual funds' $1 billion cash hoard on stocks. At the bigger fund, the $8.7 billion Neuberger & Berman Guardian, he cut the cash portion of the portfolio from 11% of assets to 5%. On Monday morning at 6:15 EST, Mr. Simons turned on cable-TV channel CNBC, saw that the Hong Kong market had plunged, and got ready to do some serious buying. After a breakfast of cold cereal, he took his 15-minute walk to Neuberger's midtown Manhattan offices, thinking, "It's gonna be down a lot. We're gonna spend a lot of money." In the office at 7:10, he warned his 36-year-old co-manager, Kevin Risen, about the frustrations of buying a "cheap" stock that keeps getting cheaper: "You have to ask yourself, 'If I buy this company at this price, will I be happy six months from now?' " Mr. Risen, he says, bought heavily in stocks such as Chrysler and US Airways. "He was like an old veteran," Mr. Simons says with pride. Mr. Simons and Mr. Risen seemed to be buying all the stocks the market hated most: Merrill Lynch, Travelers and Morgan Stanley Dean Witter all would be roadkill in a bear market; Mr. Simons bought millions of dollars worth. Citicorp's earnings growth would grind down because of disaster in its Asian business; Mr. Simons poured money into the stock, knowing that several months ago, top Citicorp officials said they were cutting back on Asian lending. Demand for personal computers would be cut; Mr. Simons bought Compaq, plus Teradyne and Applied Materials. "You have to filter out all the noise and hysteria," he says. "You wait and wait and wait. Then, every once in a while, they have a sale on the companies you think are really well-managed." Regards, Marty