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To: Dale Baker who wrote (316)	12/6/1997 6:20:00 AM
From: Dale Baker	Respond to of 118717

Time to eat my words from Friday's open. Some very strange patterns showed up across my watch lists. Lots of stocks which had been declining steadily suddenly shot up, most on no news. This leaves me very suspicious. Is it a December rally or just the illusion of one? Many, many buy orders will be stacked up at the open on Monday from those who eagerly chase the big gainers from Friday. I just don't see what will hold these stocks up more than a day or two. The smart money probably bought in early Friday and will exit Monday or Tuesday afternoon. This is especially true for the Individual Investor Magic 25. Very few mere mortals have seen the whole list since II's Web site crashed soon after it was released and I can't find anybody who has posted the full list, or a news story about it. If anyone has the whole list, please post it here. Last time I checked the II Magic 25 for 1997, sixteen were up and nine were down. Overall the portfolio made 44% so it's probably a good buy if you grab them all. On the other hand, be careful cherry-picking. Some of the nine losers were real losers. I heard that PRCM is on the list. Haven't followed this in a long time but at first glance it looks like a good 50% or better candidate.

To: Dale Baker who wrote (316)	12/6/1997 6:30:00 AM
From: Dale Baker	Read Replies (3) \| Respond to of 118717

An important tax consideration for all us small cap investors - "wash sale" rules. Put simply, if you sold a stock at a loss and bought the same stock or something equivalent like warrants either 30 days BEFORE or AFTER your sale at a loss, you CANNOT take that tax loss this year unless you also sold your new shares in 1997. If you did sell your newly purchased shares, the legal solution is to add the amount of the tax loss to the cost basis for your new shares. For example, I shorted ZITL in early June and lost money in a few days. Then I reshorted ZITL within 30 days and made money when I covered in November. So I can't claim a capital loss on the first transaction but I can add the loss to the cost basis for my second transaction. Since I shorted ZITL a third time in less than 30 days, I'm not sure if I can claim that cost basis for the 1997 transaction since I made money (I think I can). In a long position, I hold BNGO and BNGOW. If BNGOW doesn't move back to 2 1/2 by Dec. 22, I will have a loss. But I plan to buy more BNGO with the proceeds from BNGOW and I'd like to do it soon after the warrant expiration Dec. 22 because I think BNGO will move up once the warrant call is over. If BNGOW doesn't make it back to 2 1/2 and I buy BNGO before Jan. 23, I can't take a 1997 tax loss on BNGOW but I can add the loss to the cost basis for my new BNGO shares. I have to crunch some numbers at the time to see if I do better carrying over the loss and buying BNGO quickly or waiting. If BNGO goes up between 12/23 and 1/23 more than the amount of my tax loss, I come out behind. Hope this makes some sense. Go out and do some research yourself to see how the wash sale rule applies to your trading activity. I would welcome any comments or corrections on all of the above.