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Non-Tech : Derivatives: Darth Vader's Revenge -- Ignore unavailable to you. Want to Upgrade?

To: Stitch who wrote (646)	11/14/1998 10:07:00 AM
From: Worswick	Respond to of 2794

"Mitch" is out there headed for land. From Charles Allmon.... (C) Business Week For Private Use Only Q: What do you think about the problems at Long-Term Capital Management and other hedge funds? A: In my opinion, derivatives are the most colossal gambling scheme ever conceived of by man. There is nothing like it in history. I don't think we know half the story [about Long-Term Capital]. If the market had kept going down we might have seen 50 to 100 of those things. That was just the tip of the iceberg. To me they are a colossal accident just waiting to happen. Q: But there are some stocks you like? A: My buying list is as long as your arm. There are 75 to 80 stocks that I want to own at the right price. But the price needs to decline 40% to 80% to get me interested. I'll buy anything at the right price. Coke (now at 72 1/8) is a good $17 stock. Q: How do you evaluate stocks? A: I look first at sales. Sales are still the lifeblood of any company. If you haven't got sales, you haven't got anything. Then I look at the balance sheet, and earnings come third. Ninety-nine percent of investors, if they are not looking at a chart, only look at earnings. Corporations are fudging all these earnings. Today the most popular thing is to look at operating earnings only. This is where you pull in suckers now. Q: Is there any closing thought you'd like to leave us with? A: I just want to make certain everyone understands that I am not a perma-bear. I'm a value player. We are in a bubble market, there is no question about that. This has been a great bull market. But we are either going to get a humdinger of bear market or go sideways for 10 to 15 years. The risk out there is almost off the chart. Best to you, Clark But anytime the average dividend yield on the Dow and the S&P is 6% (the historical average is about 4%), get out your checkbook and bet the farm. Go in full margin. Get all the money you can get and put it in the stock market.