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

To: Lars who wrote (1703)	10/19/1998 4:29:00 PM
From: Justa Werkenstiff	Read Replies (6) \| Respond to of 15132

Small Cap Thoughts I have decided to place more of my equity allocation to small caps which are artificially priced IMO. I have had the experience over the past few days of being able to move the price of some small cap individual issues up with my orders which are far from huge trades even for these small issues. Thus, IMO, selling presure has passed in quality small caps. I have then decided not to wait for the money flows into the sector so as to get the best prices. The small caps over the past few months have been priced for a recession due to either economic fears or liquidity concerns or a combination of both. The first stocks out of a recession are the small caps and if a recession does not materialize then so much the better. These stocks are going to grow their earnings more than the S & P 500. But they are priced at historical lows on a valuation basis when compared to the S & P 500. The Fed. is fostering liquidity now. The Russell has outperformed the averages big time over the past two trading days. CNBC is humping small caps. Small caps with institutuional sponsorship are most attractive.They will be less prone to individual tax loss selling at the end of the year. Mutual fund tax loss selling will be done by the end of the month as most fiscal years end at the end of October for this group. Also, small stocks that have announced buybacks during the last quarter and have the cash to follow through are also good candidates. Companies cannot normally buyback shares until after they have reported earnings because of a blackout period. I am extremely BULLISH on the small caps. Mutual funds which specialize in these issues should be purchased now IMO before the herd.