To: VLAD who wrote (21884 ) 5/11/1999 9:54:00 PM From: Little Gorilla Read Replies (1) | Respond to of 23519
The Death List (notice ICOS was on the list even before today's run-up) The Death List was inspired by articles listing overpriced stocks occasionally run in Barron's, the Dow Jones weekly financial newspaper. A couple of years ago I noticed a stock I'd purchased a few days earlier near the top of a list of overpriced stocks featured in one of those articles. Of course I ignored Barron's advice because I had just finished analyzing the company and I knew it was a great stock. I decided Barron's might be on to something when I ended up selling the stock for a loss a few months later. I dug out the original story and found the formula Barron's used to create the list. I used the Telescan ProSearch backtesting program to find out what would have happened to stocks selected according to Barron's formula at various times in the past. The results were convincing For instance, the market as measured by the S&P 500 Index soared 31 percent during 1997. The thirty-seven stocks selected according to the overpriced formula on January 1, 1997, on average fell 3 percent during the year. Nineteen stocks dropped in price, and what's worse, ten of those lost more than 50 percent of their value. I found similar results for other time periods. For instance, the eighteen stocks selected this way on January 1, 1998 rose 4 percent on average during 1998. The S&P 500 Index gained almost 27 percent during the same period. You can see why I call it the "Death List." Not every stock on the Death List will drop in price It just means that these stocks as a group are likely to underperform the market over the coming twelve months. Here's the list as of Friday, May 7, 1999. Company Symbol America Online AOL Ameritrade Holding CL A AMTD Andrx ADRX Applied Microcircuits AMCC Arm Holdings PLC ARMHY Ascend Communications ASND Broadcom BRCM Broadvision BVSN Cisco Systems CSCO CMGI CMGI CNet CNET Cree Research CREE Customtracks CUST Data Broadcasting DBCC Electronics For Imaging EFII EMC EMC Emulex EMLX Factsheet Research Sys FDS Gemstar International GMST Geotel Communications GEOC ICOS ICOS Immunex IMNX Laser Center LZRC Laser Vision Centers LVCI Liposome LIPO Macromedia MACR Macrovision MVSN MedImmune MEDI Mindspring Enterprises MSPG Minimed MNMD Netbank NTBK Network Appliance NTAP Network Solutions NSOL Novell NOVL Providian Financial PVN QLogic QLGC RF Micro Devices RFMD Sanchez Computer Assoc. SCAI Schwab, Charles SCH SDL SDLI Seibert Financial SIEB Transwitch TXCC Veritas Software VRTS Verity VRTY VISX VISX Xilinx XLNK Yahoo YHOO The list is updated twice a month