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To: Berney who wrote (3073)	6/20/1998 4:02:00 PM
From: MonsieurGonzo	Read Replies (1) \| Respond to of 11051

Berney; RE:" Value " As I buy stocks rather than companies, Berney, my approach is probably simplistic. I start with the S&P-500 and look at that chart relative to the charts of sector indices. At present I am working with three sectors: *XBD.X Broker-Dealers, DRG.X Drug Companies, and XTC.X / PNX.X* (and my own index which includes these US and all the ADR's like BCE, BTY, CWZ, DT, FTE, ALA, TEF, TI, ERICY, NOK.A, TBR, TMX, HKT, NTT, ROS etc.) *Telephone Companies. They all move "with" the S&P-500, in a sense - but these three sectors have exhibited the potential to grow at a faster rate than the S&P, which is why I chose to study them. Then I chart the (component) securities against each other and their (sector) index benchmark, picking out the ones that (1) tend to outperform their sector index; and (2) tend to grow in a stable fashion. For example, in the DRG.X* sector, BMY and SGP are more "linear" on their weekly charts, though they are not the fastest growing in that sector. I don't usually do YTD or some other arbitrary, calendar measure; Rather I measure performance from the start of some TrendLine on the sector index charts. My current thinking is to allocate a dollar amount to a particular sector, allocate that 80 : 20 = stocks : index options, and divide the stocks 2 : 1 = fast growth : stable growth, buying odd lots. The hope is that the stocks will grow faster / be more stable than the sector index itself, and that the options will leverage that growth. I'm back-testing this scheme now. So, to me - "value" is the ability to generate capital gains, rather than income. BTW, I've got DRG.X going down next, target = 630 ? I think the Tech (PC) sector (is different) has undergone a fundamental change. The commodities that represent "supply" are clock speed, storage capacity and bandwidth. "Demand" is a function of software and services. For the near term, I only see demand for bandwidth commodities, and sustained growth on the software/services side (MSFT, SAP/PSFT, PMTC/CDN + UIS, CSC, etc). Voice and Video apps will eventually cause us to demand more clock speed / storage capacity but, bandwidth supplies are growing more diverse (telephone, cable, and wireless) faster than more throughput. -Steve