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Technology Stocks : Small Cap Stocks -- a huge future ahead? -- Ignore unavailable to you. Want to Upgrade?

To: Brad Rogers who wrote (15)	4/11/1999 1:50:00 PM
From: Brad Rogers	Read Replies (1) \| Respond to of 18

Diamonds in the rough Westphalia's Cardillo believes in small caps By Stacey Tisdale, CBS MarketWatch Last Update: 11:55 AM ET Apr 11, 1999 NewsWatch Thom Calandra's StockWatch NEW YORK (CBS.MW) -- Talk about not living up to the hype, small-cap stocks have been expected to come on strong for the past three years. Still waiting! Though the sector hasn't participated in the recent record run on Wall Street, it has its proponents. Peter Cardillo, chief investment strategist at Westfalia Investments, spoke with CBS MarketWatch.com about how small caps could make an impression this spring as the bull rally in the big names like IBM and Merck hits a ceiling. What do you think of the overall market? Cardillo: I think the market is probably going to trend higher here, I'm looking for the market to reach probably about 10,300, 10,500 on the Dow ($dj: news, msgs) before we see a pullback, then head to 11,000 by the end of the year. I believe the market will pull back in the latter part of April, beginning of May, I think we could be headed for a substantial correction of about 10 to 15 percent, and I think that will occur in the large-cap stocks, particularly in the market leaders like IBM (ibm: news, msgs) and Merck (mrk: news, msgs). I do believe there's a lot of play in the small-cap stocks, a forgotten group. I think these troops will catch up with the generals somewhere down the line here. I think when the large-cap stocks correct, we'll see investors turn to some of the little companies. Small-cap stocks have consistently not lived up to their expectations, why do you think that will change? Cardillo: I don't think that they have not lived up to their expectations, they're a lot of small cap stocks that are reporting good earnings, but they're just not in play. This market that we've had for the past several years has been very narrow as you know, and has basically been in the large cap stocks, and as a result of that, investors are just ignoring these small companies, and I think one of the reasons for that is because the mutual funds and the index funds have continuously concentrated on the big names, and forgotten some of the little ones. But someday that's going to change, and I think that's going to change very soon. Why? Cardillo: I think the large cap stocks are over-valued, and the valuation problem is going to get even greater for them. As the market corrects, people are not going to pull their money out of the stock market. I believe the long-term bull market will continue over the next two to three years. We're not going to see a derailment of this bull market. As the larger-cap stocks correct, I think investors will turn to the smaller-cap stocks. See MicroCap Moment. What are some of your favorite smaller cap stocks? Cardillo: In the Internet play I like Alpha Microsystems (almi: news, msgs), I like National Technical Corp, I like Matthews Studios (matt: news, msgs), another Internet play, I also like Palatin Technologies (pltn: news, msgs), a biotech company over the counter. I'm long quite heavily in most of these stocks.

To: Brad Rogers who wrote (15)	5/17/1999 4:36:00 PM
From: Brad Rogers	Respond to of 18

Making the case for small-cap and mid-cap Plus: Two favorites when you're ready to make the shift By Roy M. Blumberg <mailto:royblumberg@email.msn.com>, CBS MarketWatch Last Update: 3:43 PM ET May 17, 1999 NEW YORK (CBS.MW) -- The last two years have been a great time to be an investor in large capitalization stocks, especially large technology stocks. Each year, the Standard & Poor's 500 Index {s: $spx] advanced more than 20 percent. Compare this performance with the action in smaller capitalization stocks. The Russell 2000 was down 3 percent in 1998. I consider the Russell 2000 the best measure of performance of smaller stocks. Additionally, the Russell 2000 is still below its all-time high, made in April of 1998. Mid-cap stocks have not fared better. The Nasdaq advance-decline line shows an even bleaker picture; it has been in a downtrend for the last two years. This has created one of the largest spreads in historical price performance between large and small companies. Larger stocks are at their highest price to earning ratios in history while smaller stocks are at their lowest valuation levels in relation to larger stocks in many years. Smaller and mid-size stocks (under $2 billion of market capitalization) have been undervalued for more than a year. Except for a short period last fall, they have shown little relative or absolute performance until the past few weeks. There are a number of reasons for the poor performance in the last two years. The first one has nothing to due with fundamentals. The National Association of Security Dealers, which operates the Nasdaq Stock Market, make changes in the way brokerage firms create spreads between the “bid” and “ask” prices of a stock. This makes it less profitable to “make markets” in Nasdaq stocks and caused a number of brokerage houses to cut back or stop “market making” activities. Liquidity disappeared in many small and mid-sized stocks, almost overnight. This forced many institutional investors to buy larger, more easily traded securities, even if their claimed objective was small cap. A transformation has taken place. The lifeblood of the market for the last two years, Internet, technology and large-cap growth stocks, has shown some vulnerability for the first time since the entire market dropped more than 20 percent last autumn. Some company share prices have corrected 20 percent or 30 percent; others have become extremely volatile, moving as much as 10 percent in a day. For the past few weeks, the Russell 2000 has outperformed the S&P 500. This improvement in performance, combined with the rise in the yield of the 30-year government bond toward 6 percent, appears to be the catalyst that could revive small stocks. I do not expect the S&P 500 to go down while the Russell 2000 moves higher. Instead, look for a steady improvement in the performance of small cap vs. big cap. It is time to sell some of the those high-flying names of last year and reallocate the money to some companies that may not be household favorites, but are still good companies.