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

To: larry who wrote (11577)	7/16/1998 1:40:00 AM
From: joe	Respond to of 18691

Larry, >>I still don't think that DELL is in the same league as MSFT. The latter is a monoplay and the former will never achieve the status.<< Long term of course. But short term DELL is growing faster. I'm not sure how long short term is...maybe 6 months for DELL and then total reevaluation, but I'll bet you they have something up their sleeve. No reason you can't put that JIT, BTO way of doing business with the higher margin hi-tech hardware. >>Anyway, do you have any good ideas about defensive plays in the time of a market correction that's coming?<< Well, first of all, it depends on what causes the correction. If it's world turmoil, I'd go more into Banks and Pharmaceuticals. I'm presently in Pfizer, and BMY, and they're both doing well. I was in Chase Manhattan which is doing well, but had to get out because there were 2-3 downgrades...didn't really affect the price that much, but I sensed danger. They are multinationals, but low interest rates are always good for banks. And everybody always needs drugs all over the world. If we correct because earnings are pitiful this quarter, well, I'm not sure...that's my biggest worry, that earnings are so bad that we start into recession. I only give this scenario about 10% chance though. So far it seems like earnings are better than expected. There won't be a correction because of overvaluation,...just rotational, sideways trading, etc. MSFT, DELL won't blow up earnings wise, INTC came out smelling clean, so in a way, hi-techs are already 3/4 way through the hard part. CSCO still has to report...I think they'll do OK. So what major company will blow up? Another reason for correction would be rates going up. Then, better to just sell all if you can and wait for a while. Nothing will be left untouched. But, this most probably won't happen because economy looks like it's slowing...we have to help Asia by lowering rates, which looks likely due to economic slowdown. To tell you the truth, I think as long as earnings are decent - S&P 500 has at least 5% year-over-year earnings profit - we are in stock-heaven<gg>. Interest rates will probably go down, and stock prices will go up. More $$ flowing entering the Mutual Fund pipeline will have to keep the stock machine fed. This inflow may ebb and flow, causing short term correction. Of course there has to be some slowdown. And I think the reason will be manufactured by Wall Street. That's the sign I'm looking for. What is Wall Street going to make us scared of next? Probably earnings slowdown in 2nd 1/2 of '98. When the stock machine gets run up too much, the hype about earnings slowdown will intensify. That's my que. You're idea about CPQ turnaround is also pretty good. I think turnaround stories are a good tactic against corrections and economic slumps. My turnaround stock is COMS. That's were I spend most my time. If it has a good quarter this August, it will be two in a row, and WS will bless it for further upward movement. Right now it's beaten to a pulp. I guess the problem with turnarounds is that a) you have to be pretty confident they will turnaround, b) you have to predict when it will turnaround - this part I guess you can tell by outward signs (like COMS getting through last earnings report). So much for theorizing...hope I didn't make you fall asleep<g> Don't know anything about CD or MO. BTW, the last hour and a half, I've been seriously contemplating piling on more $$ onto DELL. After writing my last post to you, and looking at more DELL numbers, I think you're right...DELL will hit 130 without much problem, and a good chance there will be an extra 20-40 pts extra.... as long as the market doesn't have a seizure over Japan or similar related event. WHAT DO YOU THINK? good luck, joe

To: larry who wrote (11577)	7/16/1998 1:49:00 AM
From: mchip	Read Replies (2) \| Respond to of 18691

Regarding Dell... If one had bought Dell just before last earnings in May they would have been in a loss until recently. This pattern holds in declining degrees for the 2 years back I have looked by charts(Oct 97 threw a kink.. but still present). Looks like run-up to the report then drops then recovery. Yes a constant up... predictible?, but getting longer. Last qtr Dell beat numbers, if I remember, and still pulled back. So.. Intc missed/beat numbers depending on if you discount the charge. Beat last Qtr numbers and tanked, now it surges(well till Friday when the options expire at least). There is something here... what do you think?