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Technology Stocks : Apple Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Marc Newman who wrote (17398)	8/28/1998 11:13:00 PM
From: soup	Read Replies (1) \| Respond to of 213173

1990. View from the Desk: Marty Whitman's Buying ... By TSC Funds Staff Always a Buyer >Call value manager Marty Whitman when the market's down a few hundred points, and you'll hear a consistent story. He's buying. On Thursday, Whitman was in the market adding to the semiconductor equipment stocks in his Third Avenue Value (Nasdaq:TAVFX - news) fund. "I'm not going to worry if they will be cheaper tomorrow," he says. "Screw that." "I'd like to worry about it, but I'm just not that good." Whitman ticks off the chip equipment stocks he's buying: ADE (Nasdaq:ADEX - news) FSI International (Nasdaq:FSII - news) Electroglas (Nasdaq:EGLS - news) Electromagnetic Sciences (Nasdaq:ELMG - news) Silicon Valley Group (Nasdaq:SVGI - news) Speedfam International (Nasdaq:SFAM - news) AVX (NYSE:AVX - news) C.P. Clare (Nasdaq:CPCL - news) . "Cash alone is in excess of book liabilities," Whitman says. "I think the prices are a helluva lot better than what a first stage venture capitalist would pay." Prices are running at five to seven times peak earnings, and Whitman is convinced that the next peak will be better than the last. Whitman admits that he doesn't know when the depression in these stocks will end. But does he know that it will end? You can count on it, he says. With the spending he's done this year, Whitman has been able to reduce the fund's cash position to 15% from 40% at the beginning of the year. (He also closed the fund to new investors in July.) Oil services stocks, which went from beloved to betrayed in a matter of months, have also caught his interest. Whitman says he started buying land-driller Nabors Industries (AMEX:NBR - news) about three to six months ago. He's still adding to his Japanese blue-chips, which he has owned since January 1997, and he's thinking hard about moving into aluminum, particular Alcoa (NYSE:AA - news) . Third Avenue is down 5.8% this year and has a five-year average annual return of 13.8%, according to Lipper Analytical Services. Meanwhile, the Vanguard Index 500 (Nasdaq:VFINX - news) portfolio is up 12.8% this year and has a five-year record of 21.2%.< fnews.yahoo.com ---------------------------------------- I've been a fan of small-cap value manager Marty Whitman since he was voted Morningstar's 1990 Manager of the Year by returning 28% when the Russell 2000 was down over 10%. He did it by putting over 50% of his fund Equity Strategies into the same Nabors Industries he's buying now. In doing so, he ran afoul of SEC holding limits and forfeited the fund's tax status. Still, as a shareholder, you have to love a guy like that. At times like these you have to stay with what you believe in. Through most of the year, I've been torn over by bullishness over AAPL and my bearishness over the market. Up till the past few days, AAPL has been the clear winner. Am I worried about Russia taking other emerging markets down with them? Yeah, there's some chance the panic will spread. But there's also a good probability, based on iMac reports (and first hand experience) that AAPL will post outsized revenue and earnings gains over the next two quarters -- which represents my short-term time frame. Do I wish I has sold a block of AAPL at 43 and could buy them back at today's close? Sure! But to quote Marty: "I'd like to worry about it, but I'm just not that good." PS> On the other hand, I've been out of short-term options for some months. The market would've wiped out anything I might've attempted.

To: Marc Newman who wrote (17398)	8/29/1998 4:39:00 PM
From: Richard Habib	Read Replies (1) \| Respond to of 213173

Marc, I did catch Jerry Favors but I got a different vibe off that last remark. I think he wanted to explain that that was not the most likely scenario but he was pressed and out of time. I got the impression he was not comfortable with that kind of prediction, without a chance to explain in this volatile environment. Doesn't he have an oscillator based on astrology also??? Sure your right that we get the benefit of cheaper components and materials. The other side of the coin is our exports become too expensive to sell overseas because they have much less buying power and their exports to us displace some of our goods. We're seeing that now. Of course a wild card is the pain that those cheap commodities prices cause overseas and how the people react. I think there are some macro questions here. Some are overarching questions of capitalism, haves and have nots, Americas role in a world where we garner most of the benefit of the world economy, etc. But right now the central question for us is - is this a correction which would mean Apple is now undervalued or is this a loss in positive sentiment for the market as a whole which would drive PEs down to more reasonable levels which means Apple as well as all the other stocks driven down are fully valued at the price they end up at. That means Dell and the other high flyers have to come way down. I don't have the answer obviously. For me it was obvious the market was on the verge of a serious decline and I've been mostly cash since Jan and since the last couple of weeks I've been buying protective puts. Unfortunately, I also bought Apple calls at 39 because while I was sure of a market decline - who knew the timing. I sold my puts on Thursday at the close so I felt some pain on Friday. Also my neighbor is a Mac consultant and he asked me to invest money for him which I did on Thursday PM - oops. I feel worse about that. The market is driven by demand for stocks so the question is what would cause the baby boomers and my generation to decide stocks were no longer safe. Previously, people invested in savings bonds and the like not stocks. Is it possible we could go back there? That would be the worst scenario. Retail investors discovered stocks really just a little while ago in the scheme of things. What if retail investors now discover the bond market. There are some indications that that is happening. That would create much less demand for stocks hence low PEs. Second scenario is people just become afraid and keep their money out for a year or two and we get a much weaker market trading sideways for a while. Third is just the typical correction we have had and this sharp downturn is followed by a sharp rally that takes us to new highs. The sentiment among a lot of tech investors seems to be the latter and that of course worries a contrarian like me. The market tends to fool you and it's lulled us into thinking we have a buy opportunity once again - maybe not this time. Rich