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Strategies & Market Trends : Electronic Contract Manufacture (ECM) Sector -- Ignore unavailable to you. Want to Upgrade?

To: patroller who wrote (1763)	9/19/1998 11:49:00 PM
From: jeffbas	Read Replies (2) \| Respond to of 2542

I hope you are right. But while you think they are highly undervalued, I think that the risk premium in stocks generally is highly underdone. For example, a growth stock with a current growth rate of 30%, could reasonably sell at a P/E well under the growth rate if worldwide economic conditions and problems make that growth rate highly speculative. That comment may or may not apply to a great extent to this group (but even the big ones have had warnings). It surely does apply to the S&P 500; and major weakness in that group of stocks will affect any stock with significant institutional holdings (because of redemptions). Therefore, I will not consider buying any such institutionally owned stocks at this time. The only category I would consider is the $15-->$1 bunch, some of which will go up 5 or 10 times and some will go broke. If you have special info on some of these, they can be bought now, in my opinion. They have already been wiped out, are priced as private companies in some cases, and have zilch institutional ownership. But there is no rush on these either. In sum, I am extremely wary of the market, the ECM stocks have had a a string of feel good conferences and a very strong rally, and I would be cautious on them as well. Remember, A BEAR MARKET DOES NOT CARE ABOUT FUNDAMENTALS AND TAKES NO PRISONERS. I still remember 1973-4 where Xerox, Polaroid, Avon and many other big name stocks were over $100 and ended up near $10.