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Strategies & Market Trends : P&F Research -- Ignore unavailable to you. Want to Upgrade?

To: Mr. BSL who wrote (171)	8/1/1998 7:58:00 PM
From: Mr. BSL	Respond to of 389

SMALL CAP MUTUAL FUNDS. (long post) Yea, I know. The wheels may be falling off the market and the small caps are not the place to be when that happens. The Chartcraft Value Line - S&P500 Difference indicator has fallen to the lowest level ever. This means that the small caps are lagging the large caps by the widest margin since whenever they invented this indicator. They have run out of room on the chart and are putting O's in the bottom margin. All we need now is the cover of TIME to read "Are SmallCaps Dead?". With large cap stocks, Point & Figure types have it made. If it is a large cap stock, Value Line & Zachs will follow it closely so our FA consists of checking Value Line or Zachs or both weekly to see if the fundamentals of our stocks have changed. One we have bought a stock correctly, it generally stays in a nice uptrend above the BSL. When a stock starts to get in trouble (except for CA!), we start to get a few sell signals above the BSL to let us know that the smart money is starting to peel off. Not much to it. Small caps, when their time comes, will be tougher to invest in. To keep the price reasonable, the FA that Value Line put into it's small cap (Expanded) edition is pretty light weight. This means more hours spend looking up projected earnings, which are not found in the Expanded edition but are readily available in the Standard edition. The smart money in a given small cap stock might be one or two institutions. The first P&F sell signal may start above the Bullish support line and end up well below it! The spreads on small caps aren't cheap either. I'll be buying mutual funds instead of stocks when the bell rings for small caps. Listed below are mutual funds that Morning Star classifies as Small Growth, Small Value or Small Blend. I included the funds that are considered No load/ No transaction fee by many internet brokers. No load / No transaction usually means that the only time you ever pay a commission or any other type of direct cost is if you sell the fund within 30 days of buying it. I looked at two very recent up periods (Apr 97 to Oct 97 and Jan 98 to Apr 98) and down periods (Oct 97 to Jan 98 and April 98 until now). NAESX is the Russell 2000 index, which is included for reference. No specific dates were used. Instead I set up P&F charts for each fund, using 1% per box divisions for the scale and counted the vertical runs between the tops and the bottoms. 04/97 10/97 1/98 4/98 10/97 01/98 4/98 8/98 UP DOWN UP DOWN Vangrd NAESX 35 % (16)% 17 % (16)% (Russell 2K index) Small Cap Growth Funds Barron BARAX 25 % (7)% 17 % (11)% Barron BGINX 34 % (16)% 15 % (15)% Berger BENGX 56 % (21)% 25 % (10)% Berger BESCX 42 % (31)% 28 % (15)% Dryfus DGVAX 30 % (36)% 12 % (40)% Freemnt FUSMX 34 % (17)% 17 % (16)% Kaufman KAUFX 29 % (16)% 16 % (11)% Managrs MGSEX 34 % (14)% 19 % (12)% Monetta MONTX 39 % (29)% 18 % (21)% RobStep RSEGX 44 % (43)% 30 % (10)% RobStep RSMGX 52 % (18)% 25 % (21)% Scudder SCDVX 36 % (26)% 21 % (11)% Strong SCAPX 38 % (22)% 27 % (20)% Warburn CUEGX 36 % (20)% 22 % (11)% Small cap Value Funds Heartld HRSMX 28 % (31)% 7 % (21)% Heartld HRTVX 30 % (36)% 15 % (15)% RobStep RSPFX 25 % (19)% 17 % (26)% Royce RYOTX 29 % (15)% 15 % (12)% Royce RYPRX 20 % (17)% 15 % (7)% Royce RYTRX 20 % (6)% 9 % (5)% Small Cap Blend Funds Crabben CHSCX 31 % (30)% 19 % (29)% Dryfus DNLDX 31 % (19)% 19 % (12)% Gabelli GABSX 32 % (23)% 15 % (8)% SSgA SVSCX 37 % (15)% 19 % (16)% Looks like there are a lot of growth funds that beat the Russell 2000 index during a rising market. Plenty to choose from. Thanks again to Ben Antanaitis for coming up with the EZ-PnF software that makes counting the percentage rise and fall between peaks a snap. Anyone who hasn't test driven this $20 P&F software ought to try the shareware version at pipeline.com duke60