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An SI Board Since September 1998
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Emcee:  Mark Johnson Type:  Unmoderated
The Internet Financial Connection September 10, 1998

Presented by Mark Johnson, Editor of the IFC

It appears exclusively on Silicon Investor


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This newsletter can be viewed at

In This Issue:

1. Technology Stocks Remain Undecided in Their Direction
2. Louis Navellier on the Market & Stocks
3. Universal Electronics Inc. & Colorado MEDtech Inc.
4. Forest Laboratories & Kansas City Southern
5. Interesting Articles On The Internet by Joe Dancy
6. Highlights on SI: by Tom Taulli
7. Need help choosing an online broker?
Trading Center by David Z
8. Disclaimer


Last Friday evening, Federal Reserve chairman
Alan Greenspan signaled that the central bank
may cut interest rates to offset the drag from
economic turmoil in Asia and Russia. The market
followed through with their own "exuberance"
with the DJIA rising 380 points, the NASDAQ
Composite gained more than 90 points and the
Morgan Stanley HI Tech Index (An index of 35
High Tech Stocks) was up about 40 points, or
an increase of 8%. The very next day after
the rally, the DJIA dropped 155 points, the
NASDAQ Composite fell 36 points and the Morgan
Stanley high tech Index went 15 points, all on
worries about President Clinton being impeached
because his affair with ex mistress Monica Lewinsky.

Since the recent correction in the overall market,
nothing has really changed. The stock market
corrected during one of the slowest trading times
through the year and when orders came in to sell,
there were very little buyers to hold the market
up. In this weeks newsletter, Louis Navellier notes,
when there is a large volume reversal in the stock
market, lows are retested rarely. If that is true,
investors may take a sigh of relief because the
market was over done on the sell side. Investors
need to measure their investments with a
speedometer that measures in miles and not in feet.
For example, the distance you may drive back and
forth to work, would you measure that distance
with a ruler or by your speedometer? Hopefully you
answered "with my speedometer." The same principal
must be done with investments. Measuring day to day
fluctuations against performance will produce
much strain.

Last Friday, the USA Today noted that August was
the worst month for stock mutual funds since the
stock market crash in 1987. According to that data,
the average stock mutual fund lost a whopping 16.5%
in August. In October 1987, the average fund fell
22% during that fateful month. From July 16, (the
day before most stock indexes peaked) through August
31, the average mutual fund was down a staggering
22% from their highs according to the article.

The talk among many technology analysts and experts
in the technology field is that PC sales have and
will continue to be strong, despite fears of slowing
PC growth. Circuit City recently announced that total
sales for the month of August rose 21% when compared
to total sales in August of 1997. There was strong
demand across a broad range of categories which
included PC's.

The volatility in the technology area will continue
as the technology indexes begin to rebound from their
lows. If investors wish to sell some of their
technology holdings, it may be best to do so when
there is strength in that sector. If you wish to
buy, do so on market weakness because there will
be plenty of ups and downs in the current market
environment. Keeping a cool head is your best
investment. It may be a smart idea to keep away
from the frenzy because you might be selling when
in fact you should be buying. Sometimes it is
difficult to do but, the smartest investors invest
for longer term profits and do not worry about
short-term market corrections. The stock market
will continue with its volatility.

Mark Johnson Editor IFC



Louis Navellier, manager of Large Cap Growth Fund, provides the following
stocks. Below is the write up.

Longtime stock expert and market pro Louis Navellier
notes that the last 3 trading days in August were
very devastating but were more mechanically related
than anything else. Other factors such as the Russian
Crisis "is no where near as serious as the Asian
Crisis was."

Louis believes that the stock market (as a whole)
hit bottom last week. "There was a record volume
reversal we had on Tuesday (September 2nd), which
was very encouraging," says Louis,"Over 1 billion
shares traded on the NASDAQ and on the NYSE... When
there is a large volume reversal, rarely do we retest
the lows." He thinks the rally could persist for a
few weeks but feels it could slow down as investors
focus on the upcoming earnings season.

One of Louis's stellar performing funds year to date
is his Large Cap Growth Fund, which survived the recent
market turmoil and is up 20%+ this year. Click here for
more information on his mutual funds. One key element
in the stocks that he has been selecting is that they
are experiencing profit margin expansions. He points
out that the strength of the U.S. economy is in
consumer spending "and you have to look where consumers
are spending their money. A good example of this is
Best Buy (BBY 49)." They are a retail seller of
computers, TV's, VCR's, software, and appliances.
The majority of what they sell comes from Southeast
Asia, Japan and Korea. The cost of their goods has
plummeted during the last year because of the Asian
Crisis and a strong U.S. Dollar. "Sales are going up
and operating margins are expanding... It is a
tremendous stock," says Louis. Another stock he likes
and that is profiting from the Asian crisis is Wal-Mart
Stores (WMT 61). "They sell a lot of goods from Asia
that have plummeted in price."

Other areas in the economy where consumers are spending
money is in the refinancing of homes because of record
low interest rates. Mortgage lenders require their
borrowers to obtain a title insurance policy at the
time a mortgage loan is made or to allow the sale of
loans in the secondary market. Two companies that Louis
likes and that are also benefiting from this are
Fidelity National Financial (FNF 31 1/2) and Stewart
Information (STC 52 7/8). A few other companies that
he likes and has been buying are; Arterial Vascular
(AVEI 42 1/2) and Dendrite International (DRTE 21 7/8).

There are threads that discuss BBY and WMT on SI.
Subject 8412
Subject 14954


Byam Stevens of HG Wellington & Co provides the
following stock ideas on Universal Electronics Inc.
(UEIC 10 1/8) and Colorado MEDtech Inc. (CMED 6 3/4).
Below is the write up.

On August 12th of this year, Universal Electronics
Inc., announced that it has signed an agreement to
become General Instrument's exclusive supplier for
all universal peripherals, including remote controls.
Universal Electronics develops, manufactures and markets
preprogrammed, easy-to-use universal remote controls
primarily for home video and audio entertainment

"The agreement Universal Electronics received may
guarantee a 50% growth rate for them over the next
three years," says Byam Stevens of HG Wellington & Co..
Next April, General Instruments will begin to ship new
digital cable boxes and Universal Electronics will be
a significant supplier of the mini-keyboards used to
control the new cable boxes. Byam notes that there are
about 50 million cable boxes in the U.S. waiting to be
upgraded from analog to digital. General Instruments
will supply 15 million new cable boxes to
Tele- Communications Inc. over the next few years and
Universal will supply many of the remote controls for
those boxes.

Byam figures Universal will earn $0.93 this year,
$1.30 in 1999 and possibly $2 in 2000. He thinks their
stock will hit $30 once their earnings are realized
by Wall Street.

Another stock Byam favors is Colorado MEDtech Inc.
They perform outsourcing services for the medical
device market, from initial market research to
production. One of their current products will test
for food contamination using DNA technology, which
will give an instantaneous result. Using a similar
method, blood can also be tested using the same DNA
method for blood banks. Blood can be tested for
various diseases such as AIDS or TB.

Byam believes that they can grow at a 50% rate over
the next few years and estimates they will earn $0.50
this year and $0.75 to $0.80 next year. When that
happens, he thinks their stock can hit $15 per share
within the next 18 months.

There is a thread that discusses CMED on SI.
Subject 13811



Christy Wood of the Westcore Small Cap
Opportunity Fund 800-392-2673, provides the
following stock idea on Forest Laboratories
(FRX 39 3/8) and Kansas City Southern (KSU 32 7/8).
Below is the write up.

Forest Laboratories develops, manufactures and sells
prescription and non-prescription drugs. On July
20th, Forest received FDA approval for one of drugs
which is called Celexa. It is used in the treatment
of depression. That drug will compete with other
antidepressant drugs such as Prozac, Paxol, and Zolof.

Christy Wood of the Westcore Small Cap Opportunity
Fund, estimates that Celexa will have a 10% market
share over the next couple of years. She notes that
the market in which Celexa will compete in is about
a $4 billion market. "That will have a huge impact
on Forest," says Christy, "This will be the main
driver for the company over the next couple of years."

Another plus for Celexa is that it has less side
effects than it's rival drug Prozac. Another kicker
for Forest is that Warner-Lambert will promote Celexa.
"This increases our confidence that Celexa will go
well," says Christy. She estimates Forest will earn
$1.70 for calendar year 1999 with their stock hitting
$50 within that same period of time.

Another stock idea Christy finds favorable is Kansas
City Southern. They primarily operate a railroad and
a money asset management division which includes the
Janus & Berger mutual funds. Total assets under
management are close to $100 billion.

Like most financial stocks, Kansas's stock has been
retreating from a high of $57 in mid July to $33
currently. Christy points out that both Janus and
Berger funds have been increasing their market share,
when at the same time, the majority of their funds are
beating peer funds, when comparing relative performance.

Kansas plans to spin off the Janus and Berger funds to
shareholders. Christy thinks that their stock will come
back strongly and figures that the sum of all of the
businesses put together are worth around $55 to $60
per share. Kansas was recently upgraded by Merrill Lynch.



Joe Dancy of The Lone Star Growth Investor
provides the following links to Interesting
Articles On The Internet. These articles were
from a daily worldwide search of over 150
newspapers and magazines. Subscriptions to his
newsletter are FREE.


Independent firms' global fiber optic networks
could cut prices

The hot, new buzzword amongst the Internet stock
trading crowd is the "portal." What exactly is a
portal and what are the potential rewards from
this cyber experiment?

The market potential of Internet companies has yet
to be quantified, so investors continue to believe
the upside story of incredible potential

Investors still playing net roulette with fragile
online stocks


Global deflationary pressures adding to stock
market turmoil

Why the fed can't just go out and cut rates

Some worry about recession as the global crises
dredge up fears, but fundamentals are in better shape
than previous downturns

What brought the bears back?

The Federal Reserve is under new pressure to lower
U.S. interest rates now that foreign financial troubles
are starting to spook Wall Street.

Asia is losing confidence in the free-market medicine
the IMF and the United States have advised for the
ailing global economy.


James Grinney, Senior Vice President and Chief
Investment Officer of Northern Trust of Florida
discusses their outlook for the market and the economy.

But it is almost always a mistake to sell in a panic.
In fact, it is almost always a mistake to sell

There is hope for those in the stock market. The
worst might already have occurred.


Confusion may actually be good now for small
investors as they avoid making rash decisions

It wasn't quite Black Monday, but the last day of
August 1998 may go down in stock trading annals as
the day the Internet bubble burst.


The semiconductor industry has weathered the
current industry down cycle far better than many
in the past, says Wilf Corrigan, founder and chief
executive of LSI Logic Corp. and former CEO of
Fairchild Semiconductor Corp. And he expects the
industry to rebound explosively next year


The financial contagion that has spread from Asia
to Russia is threatening Latin America, the United
States' fourth-largest trading partner.

In a jolting sign of how quickly Japan's economy is
deteriorating, Toa Steel Co. said today that it will
liquidate, creating the largest failure of a Japanese
manufacturer since World War II

Analysts see economic trouble spots in Asia and Latin
America that are more worrisome than a destabilized
Russia, which helped trigger the Dow's dizzying drop
over the last week.


The federal government said Friday it will cost at
least $5.4 billion to fix its most important computers
to overcome the Year 2000 problem, about $400 million
more than previously estimated.



The Taulli Report, Voices of SI: by Tom Taulli

Will Santa be good to The Learning Company?

Investors mostly upbeat about Lucent

Investors look for silver lining in market cloud


7. Need help choosing an online broker?
Trading Center by David Z


DISCLAIMER: All information contained on this page are from the
authors cited. The information is believed to be reliable but
there is no guarantee to its accuracy. Stock ideas presented by
mutual fund managers, money managers, newsletter writers and SI
participants may be bought or sold by them anytime before or
after being presented in this newsletter. Anyone purchasing the
stock ideas above should consult a financial advisor before doing
so. The stock ideas mentioned above are not solicitations to buy
or sell but to provide people with information from many sources.
I (Mark Johnson editor of the IFC) am not paid any fees by the
above writers nor by the companies represented. The stock ideas
may represent a starting point for investors. People are
encouraged to do their own homework before buying any stock.
Neither Silicon Investor or the Internet Financial Connection
will be responsible for any loss occurring from
the purchase or sale of the above securities or any securities.

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