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Strategies & Market Trends : Bill Wexler's Profits of DOOM -- Ignore unavailable to you. Want to Upgrade?

To: Bill Wexler who wrote (3663)	11/6/1998 4:41:00 AM
From: Bill Wexler	Respond to of 4634

A MUST READ article by James Cramer in TSC today... thestreet.com I like Cramer (though I don't always agree with him). This article is an excellent explanation of how the current market was pulled like a rabbit out of the hat from the LTCM mess. It also explains why I have zeroed in on particular retailers. Sometimes I don't bother (or don't want to) go into long-winded explanations of how I come up with some of my picks. In this article, Cramer does all the explaining for me. I agree with his take on the consumer and the institutional credit crunch. I knew that the consumer side of the equation was the low risk end (while everyone was worrying about the world collapsing, I was certain that customers would still be storming Costco, and a new cycle of PC/Sofware purchases would accelerate CPU's sales.) The higher risk side involved determining what COST's and CPU's capital requirements would be over the next 12 to 24 months. CPU was a slam-dunk in this regard. Many of the new superstores had already been built or remodeled, and the Computer City acquisition had mostly been accounted for...so smooth sailing after Christmas, even if credit remained tight. The heavy insider buying sealed the deal. COST was a bit more difficult to figure out. Ironically, I consider it as contrarian a play as CPU because a slight shift in building costs could radically alter the bottom line for this low-margin retailer. The midwest expansion worried me a bit. I was reassured by the good reports from Detroit and the last fed rate cut signaled that Mr. Greenspan is ready to turn on the liquidity spigot if trouble begins to brew. You couldn't ask for a better market climate for stock-shopping, particularly after coming off a massive correction which put tons of great companies on sale.