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Money makers last year? Telephones, banks, biotechs and emerging market funds. Repeat this year? Hang on for further
news. Jan 4. Riding the rocket with Nortel (NT), Lucent (LU), and Silicon Graphics (SGI).The first two are plays on the
recovering telephone sector. The last is a long-shot bet on the financial recovery of a poorly-managed computer company--they
do a lot of work for the military, NASA, and animation for movies.These stocks are called bottom-feeders stocks by Jim
Cramer.Are we headed into the year 1998 or 2000? Can make money in a bubble, but unfortunately, nobody blows the whistle when
it's time to get out. Favorite long-haul stocks? Morgan-Stanley Asia-Pacific Fund, APF (half of its funds in Japan); Lloyds
Bank, LYG, a British bank play on a high dividend and the falling dollar; an Australian income fund, FAX, a play on the falling
dollar and a high dividend. Jan 21. Jumped out of NT and SGI at a profit of about 20 %. It's confession time and the market
tends to move down if there are any negative comments by management. Worked well with SGI, which dropped about 10 % after
a disappointing quarter (Whew, that was close). The next day they moved up again. NT, however, moved up after announcing
that they would sell most of their manufacturing plants throughout the world. This is good news? (Later,NT moved down nearly
8 %, as 'investors' changed their minds).Feb 3. In and out of NT, lucky to participate in the 19 % jump last week, but
presently out of NT, LU, and
SGI. Expect that the month of February will be choppy. Avoid getting extended. Take profits quickly. Don't wait around for
the millenium (Meaning a week or so).Feb 10. Back into Nortel once again. It has turned around and is heading north.
| NORTEL 2/27/04 |
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| Turnaround candidate |
| Nortel 3/15/04 |
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| Crash! Where's the bottom? |
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Mar 11. Heart-arresting slump in the price of NT. It seemed to be an ideal turnaround candidate, with a return to profitable
operation and glowing predictions from management. But, management has announced another change in the accounting (they did
the same in October). Very difficult to deal with this company. Their accounting is either incompetant or fraudulent. Bailed
out, taking a 20 % haircut. So ends a series of positive speculations in the last year Mar 15. After the heart-thumping
rise and fall of NT, let's think more conservatively. How about Utilities, some of which yield about 5 %. Steward Chausee
in RealMoney (3/15/04) suggests the following:
- Duquesne Light, DQE, 5.1% div, Financial rating A++
- Teco, TE, 5.1 %, B
- Duke Power, DUK, 5.0 %, B+
- American Elec Pwr, AEP, 4.1 %, B+
- All of the above are turnaround candidates, with potential cap gains.
- He also mentions the following utility stocks:
- Con Ed, 5.1 %, A++
- Nicor, GAS, 5.0 %, A
- Southern Co, SO, 4.6 %, B+
- No big cap gains anticipated, but the yields beat the hell out of money market funds, don't
they?
Mar 28. MBT--a rapidly-growing Russian mobile phone system. Up about 200 % in the last year. Vast areas of Russia
have no telephone wires, so wireless is the only way to call your pals. Only 30 % of the population have cell phones. A great
speculation.Mar 28. WIRE--a soaring small Texas company that makes residential communications connections, both copper
and cable. Growthrate well in excess of 50% a year.Nov 18. I believe that the market will rally into January, and so we
should take advantage of this. Two tech stocks recommended by DW's adviser: MOT and AMD. Both have risen. I picked up some
MOT, but was too slow to nab AMD, which went hyperbolic. Perhaps a good speculation after it corrects 20% or so. The argument
for the latter company is that they have let Intel in chip development in the past year. Hope springs eternal that AMD can
best INTC!
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