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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: IQBAL LATIF who wrote (13752)	11/8/1997 2:51:00 PM
From: Cynic 2005	Read Replies (2) \| Respond to of 50167

Ike, I will never ever treat a tech stock the sameway I treat a drug stock. I have had a solid reason to buy WLA, well ahead of the crowd realized it. I expected their two new drugs to be gangbusters, which they are! I estimated WLA 98 earnings to be about 4.50 and 99 earnings to be about 6.00 which were a lot more on the aggressive side. An $85 DRUG stock with forward earnings of $6.00 and growth rate in excess of 50% deserved higher PE. That was my take then. I talked to physicians and pharmacists to see how the drugs are accepted. The news was positive. However, later I found out that my expectations are very aggressive and thought WLA is richly priced at 135 and I bailed out. BMY is still relatively cheaper drug stock. I think it is ridiculous to club BMY/WLAs with SUNW/KLIC or even Intel. Techs have cycles. Parmaceuticals don't. During hard times, people can put-off buying a hard drive but they will buy drugs. Another thing, I am part value, part speculative and part momentum player. When it comes to mature stocks like KO, the only thing I look at is PE. When I see good and sustainable growth I ignore PE's. As with momentum, I know I am critical of the momentum traders but I have also admitted that I am often the culprit myself. Early this year, I did stick my neck out and tell people that Gateway will be dead meat in a couple of years. (So far they are right on target.) However, when they announced 2/1 split, I know what is going to happen. While holding on to my puts, I did buy calls to take advantage of the price momentum. If I saw similar appreciation for Dell and Compaq, I would have done the same thing. In retrospect, I should have. Who wouldn't? -Mohan