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Strategies & Market Trends : Roger's 1998 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: Roger A. Babb who wrote (4272)	3/6/1998 1:47:00 PM
From: Oeconomicus	Respond to of 18691

Roger, it's that PEG ratio thing again. I keep having the same argument over and over with diehard bulls on no-earnings internet stocks. One guy tried to use current year estimated growth, say 50%, over last year's actual earnings to justify a 50 FORWARD PE. By this logic, any company expected to reach breakeven in the coming year should have an infinite value. Where does this twisted logic come from? The whole idea that a stock's PEG ratio, even using a long-term sustainable growth rate, should be 1:1 is ridiculous. OTOH, by this twisted logic, since First Call now says earnings on the S&P 500 are expected to grow by only 3.7% this year, we can justify a decline in that index of about 85% to 155. But remember, while this decline is going on, internet stocks will still be approaching infinity. Bob

To: Roger A. Babb who wrote (4272)	3/6/1998 2:42:00 PM
From: McNabb Brothers	Read Replies (1) \| Respond to of 18691

Roger and all, As of now we have sold covered calls on 100% of our longs that trade options, which is about 75% of our total core holdings! The other 25% includes some preferred stocks and fixed income securities and a few companies like FSTW! If we get our stocks called from us we will be happy with the cash, for we do not have to be invested in the stock market as most people feel as they need to be! There are many other places to put ones money besides the stock market! Right now we are more concerned with the return "OF" our capital than the return "ON" our capital! As of now %4 1/2 to %5 in money market is very nice as far as we are concerned! I my be a fool to get out now, but I do not want to be the greatest fool, as the greater fool theory goes! We are also holding on to most all of our shorts as of now also, but it sure hurts! Hank P.S.-Roger it is really funny that the stock that you have been blasted the most by shorting it is doing the best! (CTXS)!