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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club -- Ignore unavailable to you. Want to Upgrade?

To: Lars who wrote (1331)	10/2/1998 10:33:00 AM
From: DD™	Read Replies (2) \| Respond to of 15132

Is anyones else nervous about the upcoming 4 October Mondays? DD

To: Lars who wrote (1331)	10/2/1998 1:08:00 PM
From: Lars	Read Replies (1) \| Respond to of 15132

* Abbreviated Summary of 9/27/98 Sunday Moneytalk * - We have a classic market drop-off 2 years after election. Mentioned historical results. - February '78 decline of 26.9% followed by a rally of 22%. - August '82 decline of 24% followed by a rally of 65%, in less than one year. - September '86 decline of 8.5% followed by a rally of 50% in 11 months. - Early 90s (I missed exact date) decline of 21.2% followed by a rally of 68% over 39 months. - April '94 decline of 9.7% followed by a rally of 72% in 28 months. - August 31, 1998 decline of 19.3% followed by a rally ??????? - All of the previous corrections were accompanied by bad news (Franklin Bank, Chase, etc.). - Currently our correction was facilitated by Russia, SEA, Latin America (Brazil), LTC bailout. - Bob mentioned that the current position of the Fed is critical. They must be prudent. - Bob said the Fed needs "to involve itself in solution" and be watchful for the future. - Mention of Greenspeak saying we are not "an oasis of prosperity" due to the global economic challenges. - KO weak earnings and still room to decline. P/E = 50 at one point w/growth targeted for 17% range. Moneytalk trekkies will note Bob's review of KO awhile ago. Since then it has retreated 36% from high. 1999 earnings $1.58. Based on '99 earnings the stock is still has a P/E + 30. - Dell leading rally in NASDAQ. P/E = 63 based on '98 earnings, highest in large cap universe. 300% increase in '97. #1 performing stock in S&P 500. $90 B market cap, nearly two times that of Gillette, Boeing, etc. - Microsoft P/E = 58 based on '98 earnings. Watch out if there is an earnings disappointment. - Several areas showing leadership potential, two in particular: drug stocks and tech stocks. Stocks that were mentioned (not as buys), just mentioned. Drug Stocks: PFE, Eli Lilly, WLA, MRK Tech Stocks: CSCO - Caller had inherited stock due and was concerned about taxes. Owned T and had LU due to spin-off. Bob said to keep brokerage statement re: cost basis and that he wouldn't receive anything from Lucent. Adj gross income = $50,000. Some short term gains. Caller worried about being pushed up in tax bracket. $12,000 short term added to ord income will not move bracket. Bob said not to worry. Caller had 6 figure tax burden on older stocks. Subject to LT gains rate. - Commented on the absurdity of LTC. E.G. LTC would buy junk bonds of company and sell stock short (rumored Globalstar Communications position). LTC rumored to have $80 B in positions due to leverage w/only $500 million in actual capital. - Bob followed up with an excellent example of how much leverage LTC had. Picture a $160 portfolio and you only have equity of $1. Obviously, if the position moves against you there are major problems due to your leverage. - UBS rumored to have lost $600 million due to loans to LTC managers. - Bob mentioned how all of this is "not a pleasant thought". An owner in LTC may end up with a net worth of $0 or worse to the point of bankruptcy. Many wealthy individuals appear to be in bad shape with personal finances

To: Lars who wrote (1331)	10/2/1998 1:21:00 PM
From: Lars	Respond to of 15132

* Lars' Clueless Caller of the Week * Caller asked Bob about options. Just starting to learn about puts and calls. Caller said "not a lot of time to devote to this". Asked Bob about selling covered calls for extra profits. Bob responded that these are a "sophisticated process". The average investor should not enter this arena. The caller proceeds to mention Y2K. Asked Bob if one should buy gold, natural resource stocks, etc. because Y2K may cause market and global economic crisis. Bob asked how would gold help. If there is a worldwide recession if Y2K happens then gold will go down. Personal Commentary: If I had the money of people that I know that have lost money in the options market I would have more money than I would know what to do with. Trust me, that's a great deal of cash. I am glad Bob tried to guide the caller down the rational path. I just can't understand why people continue to think they can make quick money in the options market when 9 out of 10 don't understand options. I have an acquaintance that lost hefty five figures in a couple months last year trying to triple money in the options market. This person was very knowledgable too. The long term cost to total portfolio value is so large that I feel as though I had Justa's Swanson TV dinners three times a day for a week. What a horrible blow to achieving critical mass!!!