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Non-Tech : Philip Morris - A Stock For Wealth Or Poverty (MO) -- Ignore unavailable to you. Want to Upgrade?

To: Stoctrash who wrote (1698)	5/30/1998 1:59:00 AM
From: Rarebird	Read Replies (3) \| Respond to of 6439

Market Outlook: Fred, I respectfully disagree with your statement, " If this market takes a powder, good ole MO will be 30ish or worse ". As you know, some stocks have already begun to take a "powder" here, semiconductors, box makers, capitol goods, disk drive makers, metals, papers, oil service, most high techs, etc. There is a good reason why they are getting creamed here. Need I say again. Deflation, reduced profit margins, and decelerating earnings growth. Asia has always been a great engine of growth for high tech. No more, at least for the time being. I'd look at the Market carefully here. The defensive issues, like the utilities, certain beverage and food companies, and value plays, have been holding up very well here and some of them have been rallying strongly. I think we are at an inflection point and sea change in regard to the U.S. Stock Market. The rise over the last couple of years has been very narrowly based. The decline will be no different. MO has always moved to the beat of its own drum. The beat since the early part of January has been a vicious bear market: A decline from $47.875 to 34.75 intraday. That's 27.5% on the downside. MO is presently trading on the worst fears imaginable: Government extortion and rip off. I expect the result to be far better for the share price than what is feared and priced in today. MO has a noose around its neck at the moment. June should tell all. As a value player, I love to invest in the storm and turbulence of the night. Just you wait when that noose gets loosened. It's already on pretty tight right now, tight enough where it has choked many players from initiating a position. MO has something that most high techs would die for now: steady earnings growth. The Market is just ready to reward it and give it its due, as soon as the UNCERTAINTY is removed. There will be stocks that will rise in this Bear Market. MO has an excellent chance to be one of them, pending on the nature of the settlement, IF there is a settlement! Dividends are real important in Bear Markets, especially ones that yield well over 4%. The yield provides a nice cushion and safe haven from the Bear. A Technical Dow SELL Signal gets initiated if we close below 8888. We are not far away. How low do we go? At first 8500, ultimately 7700-8000. A retracement would be good and healthy here. So the Dow and S@P close flat for the year. The brunt of the decline will be borne by technology and the over valued large caps. I'm still short Cube and I initiated a short position on Intel a few weeks ago at $85. Intel reminds me here of Micron technology a few years ago. Remember the fall in those DRAM prices. The same thing is happening to Intel's chips. Intel is in real trouble here. Without Grove, I see a free fall developing. Cube has held up well due to their design wins. But their margins will ultimately get squeezed too. And China? Devaluation? It's becoming more probable as each day passes. I don't see a massive decline here in the U.S. Just a typical garden like 15%-20% slow bear market correction over the next 6 to 9 months. Notice that contraction of Volume lately? Our domestic economy is still strong, although growth will slow. If growth gets below 2%, you can count on Greenspan to lower rates aggressively. Certain sectors will get decimated, but not tobacco. You see MO has already been clawed by the Bear for 5.5 months. I'll take my chances at 11 times 99 earnings, with their dividend. MO is a survivor!