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Technology Stocks : Safeguard Scientifics SFE -- Ignore unavailable to you. Want to Upgrade?

To: michael r potter who wrote (2977)	5/27/1999 5:01:00 PM
From: Teflon	Respond to of 4467

michael, no problem giving you a response to your questions. Before I do, however, I must clarify some points. 1) I am not a trader, I buy stocks for the long term and most of my original positions in my holdings I have had for over two years. 2) I do trade options occasionally on certain stocks that I know intimately -- MSFT especially -- to supplement cash flow and income (hopefully!). 3) I adhere to a fundamental belief that the tech sector of the Market does nothing without the confirmation of MSFT and its trading pattern. (I know, sounds strange - but it works!) Regarding SFE: I have been buying it since last December (original purchase price of ~ $35) and have continued to add to my position up through the $90 price range. Do the fluctuations bother me? Sure. But I tend to value SFE and CMGI on a price-to-book ratio basis which are 8 and 16, respectively. This analysis tells me that as SFE's story gets out and positive institutional coverage starts to gather momentum (which it will -- the wheels are already in motion), SFE has a lot of room to run to the upside. I firmly believe in SFE's management and the story that their portfolio of investments and their shareholder investment strategy (both the rights offerings and direct share purchases) bring to the street. I will even go so far to suggest that CMGI and other similar type VC funds will be forced to emulate this strategy as SFE's story becomes more familiar on Main Street. But enough about that, that stuff is old news. I have accumulated SFE with the intention of holding it for at least 5 years. I know individuals that have sold businesses to this group and the businesses have flourished. My approach to lower my basis in SFE's stock will be by participating in SFE portfolio IPOs. Plain and simple. I have accumulated a large enough position that the potential returns (especially with IPOs like ICG which I have been told will be extremely oversubscribed) on rolling out of these positions at the offerings more than offset any pain I may endure while the Market currently corrects. You choose to lower your basis in SFE by playing the option market in the stock, and that route is workable as well, yet too dangerous for my tastes when I have such a low overall basis in the stock. Not to say I haven't been playing the option game elsewhere, however!!! Regarding the overall market: MSFT began selling off soon after its 2 for 1 split in mid April and similar to the same time frame last year, began to sell off as its stock started its consolidation. MSFT for the past six weeks has continued to consolidate/sell off and is down 25% from its all time high. It will not go any lower. History has taught me this much over the past seven years - and there is no potential bad news on the horizon for the market to digest that will change my mind (a rate hike is irrelevant in the big scheme of things). Regardless, I base my conviction that the tech sector is completing its consolidation at these levels in part due to MSFT's trading pattern (and the fact that it is now starting to show signs of accumulation) and also the fact that the majority of the internet stocks are 35-45% off their highs - another historical benchmark for consolidation in the internet sector as the last three sell offs in this sector have demonstrated. Combine these two patterns with the continued worries (unjustified IMHO) over inflation while commodities continue to drop in price and the cyclicals start to show signs of weakness, and I start getting confident that the tech sector is about to regain its leadership position in the Market. Just my opinions, obviously. Please remember that though you asked for FACTS as to *what am I basing my opinions on,* all there really is are observations and opinions as to what really drives the Market. No one can accurately state the exact reason for anything in the world of Wall Street. Thanks for your patience. Teflon