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Strategies & Market Trends : Buffettology -- Ignore unavailable to you. Want to Upgrade?

To: Shane M who wrote (698)	12/19/1998 12:30:00 AM
From: James Clarke	Read Replies (1) \| Respond to of 4690

CAT at 42 - yeah, I follow that professionally - I know CAT very well. Absolutely outstanding company - one of the best I have encountered. But very very cyclical. And almost unquestionably just coming off a peak. I have been bearish on CAT for a while now, just waiting for the stock to break down. But because it is "large cap" it can miss the June quarter, the September quarter and still hold up. The other day they preannounced the fourth quarter and finally the stock started to break down. My advice would be to give it time. If you look at other stocks in the machinery sector, CAT looks like Deere did at 50 on the way down. Deere is at 31 now. The fundamentals are just starting to decline. Let the fundamentals do their thing. Be patient. I would be looking for $35 if you really want to own it long term. If you're looking for a freebee, maybe it gets to $30 if we go into a recession. Then buy the hell out of it. CAT is one of the best managed companies I know of. Whatever they choose to do they do to perfection. Their people are smart and work their tails off to beat their competitors. They have large competitive advantages, but the business is still cyclical. I put CAT in the category of Boeing, Deere and Intel - a "Buffett cyclical". But you're still probably 6-12 months early in my view. Jim