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Strategies & Market Trends : The Rational Analyst -- Ignore unavailable to you. Want to Upgrade?

To: TonyAylward who wrote (1567)	4/21/1999 5:52:00 PM
From: HeyRainier	Respond to of 1720

Hi Tony, A cyclical company is typically a company whose fortunes are expected to rise and fall with the economy's business cycle. Given these companies' link to the business cycle, their stocks came to be called "cyclicals." These stocks will react to a number of variables, and market players out there seem to play the stock in anticipation of the next upturn or downturn in whatever economy these stocks may participate in. You'll find that due to this anticipation mechanism, a stock may fall just at the peak of a company's fortunes. Eventually, people catch on to this behavior to try to arbitrage it, but I believe that once too many players play the same game, everyone will pretty much cancel each other out, and you will likely get a choppy stock with less direction. As for the market buying cyclicals, I hear it's because of the foreign markets recovering, Asia in particular. The industrial names that got nailed in last year's economic downturn due to overseas problems are back and have become this week's darlings, but I have never found myself to look too favorably upon capital-intensive companies. There are better companies out there in my opinion that can create a profit with fewer dollars invested. Regards, Rainier