Welcome to the Moderate Trader. Within these pages a potential investor can easily find information that will be helpful when making the decision to buy or sell a stock. These factors are explored in detail in the section titled “Investing.”


On April 17, 2003, Autodesk, Inc., (NASDAQ symbol: ADSK) closed at $15.90 per share. Read on to see how we rate this stock. We are also featuring the stock of Alcan Aluminum Limited (NYSE symbol: AL) that closed at $30.25 per share on April 17, 2003. Those wondering whether to buy or sell these stocks will want to read the “Buy & Sell” section.


In November 2002, we started a new section titled “The high momentum Dow stocks.” In this section we will feature Dow Jones industrial stocks that either have appreciated at a fast pace, tumbled to a low level, or, depending on the money flow, could ascend or descend at a fast pace during the next five months.


In our Model Portfolio section, investors will find a brief description about each stock in our portfolio, our target level at which to buy these stocks, approximately when to sell them, and at what price level.


Read our Buy Alert section to find out which stocks will be bought when they reach our target level.


For your convenience we have listed the stock split dates and change in value for each one of the stocks held in our Model Portfolio in the section titled Model Portfolio Chart.


In May 2002, we started a section called New investors with a list of five stocks provided in Model Portfolio II that may be bought by investors who are just starting to build their stock portfolio. On July 10, 2002, we added one more stock to the list and now there is a total of six stocks in our Model Portfolio II.


We welcome your questions, or comments. Please E-mail them to: webmaster@moderatetrader.com

JESSICA BEZOLD, Editor

Decisions, decisions. What is an investor to do in the recent economic climate? While some financial advisers are still suggesting that investors should switch a large portion of their portfolio into bonds, others are stating that investors should have a long-term outlook and buy stocks at recent levels. Their reasoning is that during the past fifteen years investors who stayed invested in stocks long-term made money. On the other hand, some of the financial advisers are reminding investors that they can’t time the market.

Some of these financial advisers will be right, but which ones? Surely, not the ones who are suggesting that investors should switch a large portion of their portfolios into bonds because eventually the Fed will start raising rates and as that happens the price of bonds will fall. Although short-term the Fed could still ease by 50 basis points, or half a percent, and the price of the Treasury bonds could edge higher, three or four years from now the yield on the 30-year Treasury bond could rise to 7 percent and the price of these bonds could fall as much as 29 percent. The last thing an investor should do is to try to make up for losses in stocks by switching a large portion of a portfolio into bonds which could once again incur more losses.

What about the financial advisers who are suggesting that investors buy stocks now and hold them long-term, should investors follow their advice? Two or three years from now, if the market were to rise substantially, any one of these advisers may present a list of stocks and specify that investors who bought these stocks have doubled or maybe even quadrupled their money. Of course at that time investors who see these results won’t know that a list of specific stocks was not provided originally.

Although hundreds of stocks are near their low levels, in our opinion many large-cap stocks and technology stocks are still trading at high price to earnings ratios and could still fall as much as 50 percent from their current levels. Furthermore, investors should not get complacent and decide to buy old economy stocks because they have solid earnings.

Royal Ahold (NYSE symbol: AHO), the world’s third largest supermarket operator had solid earnings. Just two years ago this equity closed at a high level of $33.07 per ADR. Then, the equity reversed its upward trend and proceeded to fall. On January 13, 2003, this equity closed at $14.33 per ADR. Many investors who thought that at such a level this equity was a value play bought it. Then, the company issued a statement that it had inflated its operating earnings by at least $500 million in 2001 and 2002. A few weeks later these ADR’s closed at a low level of $3.11 per ADR on February 26, 2003.

The company could survive this turmoil, and if this equity were to reach approximately $29.95 per ADR four years from now, investors who paid $14.33 per ADR and held them long-term will make money. On the other hand, investors who bought this equity at $14.33 in January 2003 and then sold it when it reached its low level of $3.11 per ADR have incurred another loss. We would like to remind investors of one of the main rules: Never buy a stock on its way down.

As for the last group of financial advisers who say: “You can’t time the market” we disagree with them. You can time the market but it’s not easy, especially in this economic environment when geopolitical events have a larger impact on the market than basic economic news such as the latest employment numbers, GDP, capacity utilization rate and the high price of crude oil. Investors can try to time individual stocks by analyzing money flow, fast stochastic and RSI indicators.

Lately some of the financial advisers are stating that investors should buy stocks now, or they will miss the rally. Although investors who have cash on hand may commit 10 to 20 percent of it to selective large-cap stocks that have been beaten down (down 75 percent, or more from their ten year high) the rest of the cash should be kept in the Money Market or short-term Certificates of Deposit.

The Federal Reserve board members met on March 18, 2003, and left interest rates unchanged at 1.25 percent, a 41-year low. Furthermore, the Fed surprised everyone by not issuing their usual outlook for the economy. On that day the Dow Jones industrial average closed at 8194.23, up 52.31 points. The Nasdaq Composite index closed at 1400.55, up 8.28 points.

Although the recent bear market rally could maintain its uptrend until the first week of May 2003, the market may reverse its course when investors realize that it’s the basics such as earnings and P/E ratios of equities that set the direction of each stock. If this were to happen and the mutual fund managers were to start selling large blocks of stocks, the Dow Jones industrial average could drop to 7700 by July 2003.

The market is still in an overall downtrend and has not reached its bottom yet. Speculators who are still on margin should sell some of their blue chip stocks before they generate a loss. Continue to build your cash position. As the remaining large-cap stocks continue to fall, these marginal accounts could generate margin calls during the next four months.

Cash is king! Investors should preserve the cash they have on hand and then start to accumulate equities at a moderate pace when they reach our buy target levels. Initially, do not commit more than 20 percent of your cash to equities because it could take this lengthy bear market several more months to reach its bottom. As of Thursday, April 17, 2003, after the market closed, the asset allocation in our Model Portfolio was 47 percent equities and 53 percent cash.

Applied Materials, Inc. (NASDAQ symbol: AMAT) is a major supplier of wafer processing equipment that is used to produce semiconductors. The company produces systems that use physical vapor deposition technology, chemical vapor deposition, and oxide etching. The demand for the company’s equipment continues to accelerate in line with the growing sales of computers and telecommunication devices.

Although short-term, there may be a temporary decline in demand for the equipment made by Applied Materials, but in our opinion long-term outlook for the company is excellent. As the demand for chips continues to grow worldwide, the sales of Applied Materials could grow approximately 20 percent annually during the next five years.

On July 16, 2001, this stock fell to a low of $41.95 per share and then closed at $45.86 on July 31, 2001. In the September issue, we stated that AMAT could fall to $39 per share in September and at such a level would be a strong buy. Due to the horrific events of September 11, 2001, this stock fell tremendously and closed at $27.87 on September 27, 2001.

The company issued a 2-for-1 stock split on April 17, 2002. Now there are 320 shares in our Model Portfolio. Immediately after the company issued the stock split, this stock reversed its upward trend and proceeded to fall. On May 10, 2002, this stock closed at $23.70 per share. During the next four weeks money flow fell $1.4 billion and the stock closed at $19.83 per share on June 14, 2002.

The chip sector has not rebounded yet and chip manufacturers are still postponing the purchases of additional chip making equipment. As the revenues remain flat, or even fall, this stock may test its support level. In July 2002, we stated, “This stock could test its support level of $13.75 by October 2002.” This equity broke through this support level sooner than we projected and closed at $12.76 per share on August 5, 2002. Afterwards, this stock proceeded to test its resistance level and closed at $14.70 per share on August 16, 2002.

On November 15, 2002, AMAT closed at $15.83 per share. To our surprise money flow rose $701 million during the next twelve days and this stock closed at a high of $17.49 per share on November 27, 2002. Afterwards, money flow proceeded to fall at a fast pace and this equity closed at $13.03 per share on December 31, 2002. On April 17, 2003, this stock closed at $14.80 per share.

If the money flow were to fall $6.5 billion during the next four months, this stock could drop to $6.27 per share by August 2003. At such a level we would rate this stock a long-term buy. Investors who bought this equity at approximately $13.75 per share may want to average down and acquire more shares. Long-term, this stock could reach $48.25 per share. Hold this stock at least four years.



CMGI, Inc. (NASDAQ symbol: CMGI) finds, acquires, develops, and operates Internet companies. It is one of the world’s largest Internet investment companies. CMGI consists of three venture capital funds.

CMGI, Inc., has developed a strategy to acquire start-up Internet companies, and then either sell them outright, or sell a minority interest and reinvest the cash proceeds. The company has a history of acquiring successful Internet companies. To find out more about CMGI, Inc., visit the company’s web site at www.CMGI.com.

Recently, CMGI, Inc., has sold some of its core holdings. Among them were Alta Vista unit and uBid, Inc. Due to these events we have revised our long-term sell target level from $59.75 to $17.50 per share.

We would like to remind investors that the risk of owning this stock is high; therefore it should only be bought by speculators. On December 2, 2002, this stock closed at a high of $1.68 per share and then proceeded to descend. As the money flow fell, this equity closed at $0.85 per share on April 17, 2003, and we maintain our rating of speculative long-term buy.



Cisco Systems, Inc., (NASDAQ symbol: CSCO) makes data networking equipment, data switches, and networking gear. Cisco Systems continues to expand its market share. As John T. Chambers, who is the CEO of Cisco Systems, continues to steer the company on a path to high growth, the long-term outlook for the company is good.

In our opinion, Cisco Systems, Inc., could resume its acquisition spree and the annual revenues may reach $50 billion in six years. Cisco Systems, Inc., is positioned to offer the latest equipment to service providers. IP internetworking technology which allows any company to host Internet applications and expand their service from basic voice traffic to broadband (which can carry data and provide Internet access and video conferencing) is among their innovations.

This stock closed at a low of $11.24 per share on September 27, 2001. It then proceeded to rebound and closed at $21.79 on December 6, 2001. Afterwards, as the money flow fell, this stock reversed its uptrend and proceeded to descend.

On April 17, 2003, this stock closed at $13.95 per share. This equity is in a slow downtrend and may test its $8.60 support level by mid August 2003. If the money flow were to continue falling, in a worst case scenario this stock could drop to $5.75 per share by the end of September 2003, and at such a level we would rate it a long-term buy. Investors who already own this stock could add to their position.

Previously we stated that this stock should be held at least ten years. Although patient investors may want to hold this stock five years, speculators may achieve a better return by trading this equity. On December 16, 2002, one hundred shares of Cisco Systems, Inc., were sold at $13.45 per share. There are still 100 shares of CSCO left in our Model Portfolio.



Compuware Corporation (NASDAQ symbol: CPWR) makes software that manages corporate networks and improves productivity. Its revenues are growing at a fast pace. The stock of Compuware Corporation reached $40 per share in December 1999.

This stock closed at a high of $13.75 per share on January 24, 2002, and then proceeded to fall. Due to the weakness in the sector this stock maintained its downtrend and closed at $12.20 per share on March 15, 2002. In March 2002 we stated, “This stock may test its support level of $9.90 by the end of March or the beginning of April 2002 and investors may want to buy it at such a level.”

On April 4, 2002, this stock broke through its support level of $9.90 and closed at $8.28 per share, down $2.82 for the day. This equity continued its downtrend and closed at a low of $2.56 per share on August 13, 2002.

The money flow rose $154 million during the following three months and this stock closed at a high of $5.78 per share on November 25, 2002, and then proceeded to fall. On April 17, 2003, this equity closed at $4.06 per share. Buy this stock on a pullback, preferably below $2.95 per share.

Due to the negative outlook for this sector, we have revised our long-term target level down to $25.75 per share from $35.00 per share. Once this stock reaches our revised target level it will be sold immediately.



Delia’s Corporation (NASDAQ symbol: DLIA) sells clothing and accessories for girls and women. Over half of the sales are generated at the company’s Web site.

In April of 1999, this stock closed at a high of $39.00 per share and then proceeded in a downtrend. As the money flow fell $266 million during the next nineteen months, this equity descended to a low level of $0.57 per share on December 22, 2000. Afterwards, as the money flow rose $229 million during the next seven months, this equity proceeded to ascend and closed at $7.16 per share on June 29, 2001.

Due to the negative outlook for this sector this stock fell and closed at a low level of $0.40 per share on October 8, 2002. On October 9, 2002, one thousand shares of Delia’s Corporation were bought at $0.43 per share. If sales improve and if the money flow were to ascend $210 million during the next six months this equity could rebound to approximately $4.50 per share. At such a level this stock will be sold immediately. On April 17, 2003, DLIA closed at $0.38 per share and we rate it a speculative short-term buy.

This stock was previously held in our Model Portfolio for slightly over two years and then on February 1, 2002, all of the shares of Delia’s, Inc., were sold at a gain of 84 percent.



Elan Corporation, plc (NYSE symbol: ELN) is a pharmaceutical manufacturer that develops and distributes a variety of prescription drugs. During the past seven years the company expanded by making aggressive acquisitions. On April 12, 2002, five hundred warrants of Elan Corporation, plc were bought at $0.50 per warrant.

These warrants trade under the symbol ELANZ and expire on August 31, 2005. As this stock tumbled, the price of warrants fell along with it and on October 22, 2002, ELANZ closed at a low of $0.06 per warrant. As the money flow rose $182,000 these warrants proceeded to ascend and closed at $0.60 on January 13, 2003. These warrants could fall below $0.15 per warrant during the next three months and we would rate them a speculative buy.

On April 17, 2003, these warrants closed at $0.40 per warrant. The risk of owning these warrants is high; therefore only speculators should buy them when they reach our buy target level. These warrants will be sold as soon as they reach approximately $2.00 per warrant.



Ericsson LM Telephone (NASDAQ symbol: ERICY) is a leading supplier of mobile phones and telecommunications equipment. Ericsson’s telecom equipment is among the most advanced in the world.

This equity fell below our buy target level of $5.75 per ADR. On March 10, 2003, five hundred ADR’s of Ericsson LM Telephone were bought at $5.66 per ADR. The total cost to acquire these ADR’s was $2,850.15.

Approximately four months ago 260 ADR’s of Ericsson LM Telephone that were in our Model Portfolio were sold at $8.53 per ADR for a total net of $2,197.65. We have added an additional $652.50 to that amount and we were able to buy approximately twice as many ADR’s of ERICY.

On April 17, 2003, ADR’s of Ericsson LM Telephone closed at $7.29. This equity will be held in our Model Portfolio until it reaches approximately $9.75 per ADR and then it will be sold.



Hewlett-Packard Company (NYSE symbol: HPQ) is the second largest computer manufacturer in the world. The Company designs and makes notebook personal computers, servers, consumer PCs, and networking equipment. Although revenues continue to grow, the earnings are still below the levels reached three years ago.

Hewlett-Packard Company acquired Compaq Computer Corporation on May 3, 2002. There were 100 shares of Compaq Computer Corporation in our Model Portfolio. For each share of Compaq, Hewlett-Packard issued 0.6325 shares of its stock. Now, there are 63 shares of Hewlett-Packard Company in our Model Portfolio. The new stock symbol for the company is HPQ. On May 10, 2002, HPQ closed at $19.26 per share and we rated it a hold.

We were not enthusiastic about this merger. Now that this merger is finalized, the only thing we can do is to hold HPQ shares long-term until they reach approximately $46 per share, perhaps in 2006.

This stock broke through its support level of $14.96 sooner than we projected and closed at $14.62 per share on July 2, 2002. As the money flow continued to fall, this equity closed at $11.52 on July 23, 2002. Then this stock proceeded to rebound and HPQ closed at $15.30 per share on August 22, 2002.

On October 9, 2002, HPQ broke through its support level and closed at a low of $11.16 per share. Then, as money flow rose $402 million, this stock proceeded to ascend and closed at $17.70 per share on November 4, 2002. During the next four weeks the money flow rose $1.7 billion and this equity continued its uptrend. On December 2, 2002, this stock closed at $19.83 per share.

This equity broke through its resistance level and closed at $20.85 per share on January 10, 2003. Afterwards the money flow proceeded to descend and the stock closed at $15.30 per share on April 17, 2003.

Speculators should wait until this equity tests its $11.16 support level and if it were to fall below that level, in a worst case scenario, this stock could reach a low of $5.75 per share during the next six months. At such a level we would rate this stock a long-term buy.

Speculators may buy this stock and trade it, while patient investors may want to hold it until it reaches our target level of approximately $46.50 per share. As soon as this stock reaches our target level, the 63 shares of HPQ that are held in our Model Portfolio will be sold immediately.



Intel Corporation (NASDAQ symbol: INTC) is the leading manufacturer of microprocessors. The company continues to switch production to a 0.18 micron manufacturing process that yields more semiconductors from each wafer.

The stock of Intel Corporation has kept rising ever since 30 shares were bought in March of 1995 at $78.25 per share. The company issued a 2-for-1 stock split on June 22, 1995, another one on July 14, 1997, a 2-for-1 stock split on April 11, 1999, and another 2-for-1 split on July 30, 2000. The original 30 shares bought became 480 after these stock splits.

On October 30, 2000, two hundred shares were sold and now there are 280 shares in our Model Portfolio. This stock continued to fall and closed at $30.06 per share on December 29, 2000. As the institutional investors proceeded to buy this stock, it rebounded and closed at $37 per share on January 31, 2001.

This stock closed at $35.58 per share on January 8, 2002, and we stated, “At this level the stock is fully valued.” This stock was in a slow downtrend and on May 10, 2002, closed at $27.01 per share. On June 6, 2002, Intel lowered its revenue projection. The stock fell $5.00 on June 7, 2002, and closed at $22.00 per share. This equity continued to fall and closed at a low of $13.22 per share on October 8, 2002.

As the money flow rose $14 billion during the following eight weeks, this stock proceeded in a strong uptrend. On December 2, 2002, this stock closed at $21.05 per share and was fully valued at that level. As the money flow fell, this equity closed at $17.17 per share on March 14, 2003.

On April 17, 2003, this equity closed at $18.66 per share. If the money flow continues to fall, in the worst-case scenario, this stock could reach a low level of $7.85 per share by the end of September 2003. At such a level we would rate this stock a strong long-term buy.



Internet Capital Group (NASDAQ symbol: ICGE) is a venture capital group that owns a stake in over 52 Internet companies. This venture capital group owns a stake in Vertical Net Inc.

In July 2000, this stock traded at $45.18 per share and then proceeded to fall. Due to the carnage in the Internet sector this stock closed at a low of $3.28 per share on December 29, 2000, down from its high of $143.55 reached in March 2000.

Afterwards, this stock proceeded to build a slow upward momentum and closed at $6.44 per share on January 31, 2001. It is highly unlikely that this stock will ever revisit its previous high of $143.55 per share.

On April 12, 2002, five hundred shares of Internet Capital Group were bought at $0.57 per share. These 500 shares will be held in our Model Portfolio long-term until this equity reaches our revised target level of $22.75 per share; perhaps by 2008. At such a level all of the shares will be sold immediately. On April 17, 2003, this stock closed at $0.34 per share, and we maintain our rating of a speculative long-term buy.



JDS Uniphase (NASDAQ symbol: JDSU) makes components used in fiber-optic networks and is a leader in the sector.

Although our original objective was to buy 100 shares, due to the substantial amount of cash in our Model Portfolio, a decision was made to buy more shares. On February 6, 2002, two hundred shares of JDSU were bought at $6.33 per share.

Due to the negative outlook for this sector this stock continued to descend and closed at a low level of $1.62 per share on October 7, 2002. As the money flow rose $1.225 billion during the next two months, this stock proceeded to ascend and closed at $3.41 per share on November 29, 2002.

On January 15, 2003, this stock closed at $3.10 per share and was fully valued. This equity is in a downtrend. As the money flow fell this stock closed at $3.17 per share on April 17, 2003. This stock could test its support level of $1.62 per share by the end of September 2003 and speculators may want to buy it.

Due to the unfavorable short-term outlook for this sector it may take this stock longer to reach our sell target level. These 200 shares will be sold as soon as this stock reaches approximately $12.26 per share, perhaps in the second half of 2005.



LSI Logic Corporation (NYSE symbol: LSI) makes chips for cellular phones, satellite set-top boxes, DVD products, and personal computers. LSI Logic has manufacturing facilities in the United States, Europe, and Japan.

The company may continue to invest 15 to 17 percent of its revenues in R & D. As the demand for cellular phones and set-top boxes continues to grow, the revenues and earnings of LSI Logic could outperform the rest of the companies in the chip sector. This stock closed at $32.63 per share on October 31, 2000 and then proceeded to descend. Due to the bear market, this stock broke below $20.00 per share and closed at a low level of $16.43 per share on December 21, 2000, way down from its high of $71.32.

On January 8, 2002, this stock closed at $16.21 per share and at that level was fully valued. After testing its support level of $13.95 on January 22, 2002, this stock proceeded to rebound and closed at $15.60 on February 7, 2002.

Due to the negative short-term outlook for this sector, this stock continued to fall and closed at $8.26 per share on August 16, 2002. This equity proceeded to test its support level and closed at $6.65 per share on September 20, 2002.

In September 2002 we stated, “If the money flow continues to fall, this stock could test its support level of $4.65 per share by mid November 2002. At such a level we would rate this stock a strong buy.” This stock fell sooner than we projected and closed at $4.15 on October 10, 2002.

On October 18, 2002, LSI closed at $4.49 per share and we stated “… investors may want to accumulate it at a moderate pace.” This equity closed at $8.54 per share on November 29, 2002, and then proceeded to descend. On April 17, 2003, this stock closed at $4.92 per share.

If the money flow were to fall $785 million during the next six months there is a very slight probability that this stock could fall to a low of $1.25 per share by mid September 2003. At such a level we would rate this stock a long-term buy.

We projected that LSI may appreciate substantially by the end of 2002, but it may take this stock a while longer. As the earnings improve it could reach our sell target level of approximately $15.45 per share in the second half of 2005. At such a level, speculators should sell it immediately to lock in their gain.

On the other hand, patient investors may want to hold this stock at least five years and if it were to reach $58.75 per share sell it immediately.

This stock will be held in our Model Portfolio and will be sold as soon as it reaches approximately $41.75 per share, perhaps at the end of 2007.



Microsoft Corporation (NASDAQ symbol: MSFT) is the largest maker of software. The operating system made by Microsoft is used in the majority of computers. The company has no debt and has approximately $42 billion in cash and short-term investments.

Although this timely stock may not appreciate at its previous fast pace, it could generate a gain of 700 percent in six years. This stock will be held long-term, at least five years. On December 29, 2000, this stock closed at $43.38 per share and we rated it a screaming buy.

On January 8, 2002, we stated, “…this stock closed at $69.38 per share and at this level is fully valued.” A month later, on February 7, 2002, this stock closed at $59.80 per share. Then, this stock proceeded to test its resistance level and closed at $64.34 per share on March 11, 2002.

In July we stated, “If money flow were to fall, this stock could test its support level of $43.38 in August or September 2002.” This equity reached such a low level sooner than we projected. On July 23, 2002, MSFT closed at $43.01 per share, down $4.50 for the day, and then proceeded to rebound.

As the money flow rose sharply this stock tested its resistance level and closed at $53.23 per share on August 22, 2002. Afterwards, this equity proceeded to descend and closed at $43.74 per share on September 30, 2002.

On September 20, 2002, we stated “If the money flow were to fall in October, this equity could test its support level of $42.83 and if it were to break below this level it may fall to a low level of $32.45 per share by December 2002. In a worst case scenario, if this stock were to break below that support level it could fall to a low of $14.67 per share in the first quarter of 2003. At such a level we would rate this stock a strong long-term buy.”

This equity closed at $43.77 per share on October 4, 2002, and then as the money flow rose $32.9 billion, the stock closed at $58.23 per share on November 25, 2002.

In January 2003, we stated “On January 15, 2003, this stock closed at $56.27 and at that level was fully valued. If the money flow were to fall $67 billion, then this stock could fall to a low level of $32.45 by March 2003. At such a level we would rate this stock accumulate.”

That was before the company issued a stock split. On February 18, 2003, Microsoft Corporation issued a 2-for-1 stock split and now there are 160 shares in our Model Portfolio.

On April 17, 2003, this stock closed at $25.50 per share. Perhaps we were overly pessimistic about this stock falling to a pre-split level of $14.67 per share but if the money flow were to fall $94 billion during the following six months then MSFT could fall to a low after split level of $11.40 per share by October 2003.



Rite Aid Corporation (NYSE symbol: RAD) is the largest drug store chain in the United States. The company operates approximately 3,600 drug stores in 29 states. In the past, Rite Aid Corporation expanded rapidly through acquisitions. This stock approached a high level of $50.00 per share in December 1998.

After several missteps and a very heavy debt load, the company was almost driven into bankruptcy. New management sold assets and pared down debt.

After reaching a low level of $2.13 per share in December 2000, this stock proceeded to rebound and closed at $9.74 per share on June 15, 2001. Then the stock reversed its trend and proceeded to fall. On January 8, 2002, RAD closed at $4.38 per share.

In January 2002, we featured the stock of Rite Aid Corporation (NYSE symbol: RAD) in the “Buy & Sell” section. We stated “If this stock were to maintain its downtrend and fall to approximately $2.80 per share in February 2002, speculators may start to accumulate this equity for a short-term trade.” This stock broke through our target level much sooner and closed at a low level of $2.06 per share on January 22, 2002.

In order to slightly diversify our Model Portfolio, 400 shares of Rite Aid Corporation (NYSE symbol: RAD) were bought at $2.57 per share on February 25, 2002. These 400 shares will be held until this equity reaches our revised target level of approximately $7.71 per share and then all of these shares will be sold to lock in our gain.

For several months during the year 2002, this equity was in a slow uptrend therefore this stock will be held long-term until it reaches our sell target level, perhaps in 2004. On April 17, 2003, this stock closed at $3.03 per share and we maintain our rating of speculative buy.



Sun Microsystems, Inc.(NASDAQ symbol: SUNW) is among the major suppliers of hardware to the Internet. The company continues to introduce competitively priced new servers in order to expand its market share.

As additional hundreds of millions of users access the Internet, the demand for servers could grow during the next five years. On March 20, 2001, one hundred shares were bought at $18.82 per share. These one hundred shares will be held in our Model Portfolio approximately five years, and as soon as they generate a gain of 200 percent, all of the shares will be sold.

On January 8, 2002, this stock closed at $13.93 per share and then proceeded to fall. This stock tested its support level of $8.07 on February 22, 2002, a month sooner than we estimated.

As the money flow continued to fall, this equity proceeded to break through its support levels. On August 5, 2002, this stock closed at a low level of $3.53 per share and we stated, “If the money flow were to fall during the next two months, SUNW could break through its support level of $3.53 and may reach a low level of $2.95 per share.” As the money flow fell, this stock closed at $2.70 per share on September 19, 2002. This equity continued its downtrend and closed at a low level of $2.42 per share on October 4, 2002.

This equity closed at $4.29 per share on November 29, 2002, and then proceeded to descend. On January 15, 2003, this stock closed at $3.87 per share. After 600 shares of SUNW were sold on January 15, 2003, there are still 100 shares that were bought on March 20, 2001, left in our Model Portfolio and these will be held long-term.

On April 17, 2003, this stock closed at $3.24 per share. If this stock were to break below its support level of $2.42 it could fall to a low level of $1.15 per share by October 2003. At such a level we would rate this stock a long-term buy. Investors may want to average down and buy more shares at this low level. Patient investors may hold this stock until it reaches approximately $41.25 per share, perhaps in the second half of 2007. Investors should sell this stock immediately at such a high level to lock in a long-term gain.



Vertical Net, Inc., (NASDAQ symbol: VERT) owned and operated over 50 websites designed as online business-to-business communities. Recently the company sold its websites and plans to generate its revenues from the sales of software.

This stock was featured in our “Buy & Sell” section in August 2000. At that time, we stated that this stock could fall to approximately $35.00 per share. Furthermore, we stated that the risk of owning this B2B startup is high; therefore this stock should only be bought by speculators.

At that time who would have thought that this stock would break through a $35.00 level and continue to fall? When this stock fell below $5.00 per share it looked as if it may have reached its bottom. In February 2001, two hundred shares were bought at $3.72 per share and added to our Model Portfolio.

During this bear market, VERT continued to fall and when this stock tested its support level again in April 2002, an additional 500 shares were bought at $0.58 per share. On July 15, 2002, the company issued a 1-for-10 reverse stock split and now there are only 70 shares of VERT in our Model Portfolio.

On April 17, 2003, this stock closed at $0.73 per share and we maintain a hold rating on this equity. Due to the reverse stock split we have revised our sell target level from $10.00 to $22.50 per share. As soon as this stock reaches such a level all of the shares held in the Model Portfolio will be sold.



WorldCom Group (NASDAQ symbol: WCOEQ) has grown from a small telecommunications provider to a behemoth through mergers and acquisitions. On September 14, 1998, WorldCom merged with MCI Communications Corporation. Once this merger was finalized, WorldCom was in possession of one of the world’s largest and most advanced digital networks that connects local markets in the United States to more than 280 countries and locations worldwide.

Due to the accounting debacle that pushed WorldCom to its bankruptcy, this stock became almost worthless. This equity will be held in our Model Portfolio as a reminder of what could happen to the stock of any company.

Advanced Micro Devices, Inc., (NYSE symbol: AMD) manufactures microprocessors, flash memory devices, data communications products, and network products. While the demand for microprocessors continued to grow worldwide in the year 2000, Intel Corporation was not able to produce enough chips due to insufficient manufacturing capacity. During that time AMD was able to increase its market share. AMD and Intel continue their fierce competition.

AMD could continue to spend a large percentage of its gross revenues on research and development and try to keep pace with Intel by introducing faster processors to the market. As AMD sells a larger quantity of higher priced processors, the average selling price will continue to rise, thus improving profit margins. On April 17, 2003, this stock closed at $8.03 per share. This equity is in a very slow downtrend. There is a probability that this stock could finally reach our target level of $2.50 per share by October 2003. If this equity were to reach such a low level then, 1,000 shares will be bought immediately and added to our Model Portfolio.



On April 17, 2003, we added the warrants of Elan Corporation, plc, to our buy list. These warrants trade on NASDAQ under the symbol ELANZ and expire on August 31, 2005. As the stock tumbled, the price of warrants fell along with it and on October 22, 2002, ELANZ closed at a low of $0.06 per warrant. As the money flow rose $182,000 these warrants proceeded to ascend and closed at $0.60 on January 13, 2003. On April 17, 2003, these warrants closed at $0.40 per warrant.

If these warrants were to fall to $0.15 per warrant, 2,000 warrants will be bought and added to the 500 warrants that are already held in our Model Portfolio. The risk of owning these warrants is high; therefore only speculators should buy them.



Cisco Systems, Inc., (NASDAQ symbol: CSCO) makes data networking equipment, data switches, and networking gear. Cisco Systems continues to expand its market share. This stock is in a downtrend. On April 17, 2003, this stock closed at $13.95 per share. If the money flow were to continue falling, in a worst case scenario this stock could test its support level of $5.75 and at such a level we would buy 200 shares and add these to our Model Portfolio.



Oracle Corporation (NASDAQ symbol: ORCL) is the world’s third largest software company. The company makes database management system software. Approximately 90 percent of corporate websites are using Oracle’s database software. On April 17, 2003, this stock closed at $12.00 per share. If the money flow were to fall $22 billion during the next four months this stock could descend to a low level of $4.97 per share. At such a level 800 shares of Oracle Corporation would be bought and added to our Model Portfolio.



RF Micro-Devices, Inc., (NASDAQ symbol: RFMD) designs, develops, manufactures, and markets semiconductors and components for the wireless handset market, wireless Local Area Networks (LAN), pagers, the broadband cable communications sector, and wireless security. The company offers a wide selection of products such as amplifiers, mixers, single chip transmitters, receivers and transceivers.

Among the microprocessors made by the company are gallium arsenide-based chips that are the most expensive and generate the highest profit margin. The company’s largest customer is the Nokia Corporation.

This equity is in a very slow downtrend. On April 17, 2003, this stock closed at $5.24 per share. If the money flow were to fall $1.2 billion during the next four months then this stock could descend to $1.65 per share. At such a price level we would buy 800 shares of RF Micro-Devices, Inc., and add these to our Model Portfolio.



Yahoo, Inc., (NASDAQ symbol: YHOO) is a global Internet media company that provides comprehensive information and shopping services to over 200 million users worldwide. The company’s website, www.yahoo.com, is the most visited site and has the highest name recognition. The company provides web content around the world in 12 languages.

Advertising revenues on the web in the United States alone are projected to reach an average of over $8 billion annually within a year. Yahoo, Inc., could receive 20 percent of these revenues; thus we estimate that the company’s annual revenue could grow to approximately $1.6 billion in the year 2003. On April 17, 2003, this stock closed at $25.09 per share and is trading at a very high P/E ratio. This stock could reach our revised buy target level of approximately $4.77 per share, perhaps by October 2003. At such a level 400 shares would be bought and added to our Model Portfolio.



The stock of Motorola, Inc., (NYSE symbol: MOT) is in a slow downtrend. We will continue to monitor this equity. In September 2002, we stated “If money flow continues to fall, this stock could descend below $8.55 per share, perhaps in October 2002. At such a level 200 shares will be bought and added to our Model Portfolio.”

On October 18, 2002, this stock closed at $7.77 per share. Although this equity fell below our buy target level, it was not bought. On April 17, 2003, this stock closed at $7.90 per share. This stock could maintain its slow downtrend and reach a low level of $4.95 by October 2003. At such a level 300 shares would be bought and once again added to our Model Portfolio.



We will continue to monitor Dell Computer Corporation (NASDAQ symbol: DELL). This stock closed at $29.82 per share on November 15, 2002, and was trading at approximately 49 times earnings. On April 17, 2003, this stock closed at $29.50 per share. Depending on the money flow, volume, and other key indicators, this stock could break through its support level of $16.65. There is a slight probability that this stock could fall to approximately $10.15 per share by October 2003. If this stock were to reach such a low level, 200 shares will be bought and added to our Model Portfolio. If this stock doesn’t reach our buy target level then the cash will be used to buy more shares of Advanced Micro Devices, Inc., and another stock.



Nokia Corporation (NYSE symbol: NOK) is the world’s largest manufacturer of mobile phones. The company is located in Finland, with subsidiaries in the United Kingdom and China. On April 17, 2003, this equity closed at $16.18 per ADR. This equity is still in an overall downtrend. If the money flow were to fall $27 billion during the next six months, in a worst case scenario this equity could descend to a low level of $2.95 per ADR. If this equity were to reach such a low level then 800 ADR’s of Nokia Corporation will be bought and once again added to our Model Portfolio.



On October 18, 2002, we added the stock of Juniper Networks, Inc., (NASDAQ symbol: JNPR) to our buy list. The company makes Internet Protocol routers. On April 17, 2003, this stock closed at $10.05 per share. If this stock were to reach a low of approximately $2.15 per share, three hundred shares will be bought and added to our Model Portfolio. We will wait patiently until November 2003 for this stock to reach our buy target level.



We also added the stock of EMC Corporation (NYSE symbol: EMC) on October 18, 2002. If this stock were to reach a low of $2.55 per share, five hundred shares will be bought and added to our Model Portfolio. EMC Corporation is the major supplier of enterprise storage devices, software, and services. The company’s top of the line Symmetrix® system can hold 19 terabytes of data on 384 individual drives.

EMC Corporation acquired Data General in October 1999, and that added a selection of mid-priced storage devices. Although EMC Corporation’s hardware and software is the most expensive, 98 percent of customers are willing to recommend it to their colleagues and business associates.

As the Internet continues to grow and hundreds of millions of people go online during the next decade, we project that the need for storage devices could continue to grow in double-digits. In our opinion, EMC Corporation’s annual revenues could grow ten-fold, and reach $60 billion in nine years. During the past decade, this was the top performing stock on the NYSE. The company consistently split its stock, and the most recent stock split was on June 5, 2000. After the split, the stock continued to ascend and closed at $103.18 per share on September 20, 2000.

During the carnage in the technology sector this stock plummeted to a low level. On Friday, October 4, 2002, the company announced that it will cut 1,350 jobs and furthermore added that it did not expect to return to profitability in the second half of the year 2002. The stock fell $1.18 on that day and closed at $3.83 per share. Although this equity ascended to a higher level and closed at $8.50 per share on April 17, 2003, it is still in an overall long-term downtrend.

We have lowered our buy target level for this stock to $2.55 per share. If this stock were to reach such a level speculators may want to buy it and hold it at least two years. Do not commit more than five percent of your cash to this stock.

EMC has the largest market share for storage equipment. As the sales rebound and earnings improve, this stock may test its resistance level, although it may take a while longer to reach it. This stock may reach our sell target level of $22.12 in 2005, and speculators should then sell it immediately to lock in their gain.



Corning Incorporated (NYSE symbol: GLW) is a major supplier of fiber-optic cable. Its inventory has been depleted to a low level and as the demand improves the company could sell more products. Afterwards this stock may establish a strong upward trend.

On March 11, 2002, this stock reached a high of $8.90 per share. Then, as money flow fell $631 million during the next four weeks, this equity proceeded to fall and closed at $6.38 per share on May 10, 2002. This stock continued its overall downtrend and closed at a low of $1.10 per share on October 8, 2002.

In February 2003 we stated “This equity closed at $5.18 per share on February 14, 2003 and was fully valued at that level. If the money flow were to fall $1.4 billion during the next three months, this equity could descend to $1.71 per share. At such a level 400 shares of Corning Incorporated will be bought and added to our Model Portfolio.”

To our surprise, money flow rose $161 million during the next four weeks and this stock closed at $5.89 per share on March 14, 2003. On April 17, 2003, this equity closed at $6.00 per share. We are maintaining our buy target level of $1.71 per share and this equity could reach it by mid October 2003.



Vitesse Semiconductor Corporation (NASDAQ symbol: VTSS) makes gallium arsenide semiconductors that are used by manufacturers of networking equipment. On August 20, 2002, this equity was removed from the S&P 500 Index and 31.6 million shares were traded on that day.

At its height, this stock closed at $103.83 per share in February 2000 and then proceeded in a downtrend. Among the company’s major customers are Cisco Systems and Lucent Technologies. When that sector rebounds, the stock of Vitesse Semiconductor Corporation could ascend to a higher level but at this time this equity is in an overall downtrend. On April 17, 2003, this stock closed at $2.40 per share. This stock could test its support level of $1.55 per share by mid April 2003. At such a level 800 shares will be bought and added to our Model Portfolio.



Sun Microsystems, Inc., (NASDAQ symbol: SUNW) is among the major suppliers of hardware to the Internet. The company continues to introduce competitively priced new servers in order to expand its market share. On January 15, 2003, six hundred shares of SUNW that were in our Model Portfolio were sold at $3.81 per share.

On April 17, 2003, this stock closed at $3.24 per share. This equity is in a very slow downtrend. If it were to break below its support level of $2.42 it could fall to a low level of $1.15 per share by mid September 2003. At such a level an additional 1,000 shares will be bought and added to our Model Portfolio.



Lucent Technologies, Inc., (NYSE symbol: LU) is the largest manufacturer of telecommunications equipment. Lucent Technologies makes fiber-optic equipment and optical network equipment that allows phone companies to increase capacity and to provide high speed Internet access.

This high flying stock closed at a high of $81.75 per share in December 1999 and has been in a downtrend ever since. At that time no one would have thought that this equity could fall below $10.00 per share. As the money flow fell, this stock continued to plunge and closed at $0.58 per share on October 11, 2002.

On October 18, 2002, Lucent Technologies announced that it will seek shareholder approval to do a reverse stock split to bring its stock price between $15.00 and $25.00 per share. If shareholders were to approve this reverse stock split it could be as bad as 1-for-36 shares. In such a horrendous scenario an investor who owns 100 shares would receive less than three shares.

We will monitor this equity and if the company were to issue a reverse stock split, the stock could pull back to a lower lever after two or three months. When this stock reaches its low level we may buy it again and add it to our Model Portfolio.



Nortel Networks Corp. (NYSE symbol: NT) is the leading provider of networking solutions, including optical networking solutions and wireless networking systems.

In September 2002, the company announced that it plans to do a reverse stock split of 1-for-20, or higher, in the beginning of 2003.

We will monitor this equity and if the company were to issue a reverse stock split, the stock could pull back to a lower lever after two or three months. When this stock reaches its low level we may buy it again and add it to our Model Portfolio.



Our Model Portfolio is already extremely overweighed in the technology stocks. We advise investors against acquiring so many technology stocks in their portfolios. Investors may want to buy some of these stocks and add them to their portfolios. Speculators who are below thirty years of age may allocate up to 50 percent of their portfolios to technology stocks.

Investors who are just starting out should establish a Roth Individual Retirement Account (commonly called a Roth IRA) and may buy equities listed below in our Model Portfolio II when they reach their lowest level. In the year 2002, the annual contribution limit for Roth IRA for these taxpayers who were under age 50, was $3,000.

The Roth IRA has many advantages. One of the biggest advantages is that no taxes are due on qualified withdrawals, while withdrawals from the traditional IRA are taxable.

By not having to pay taxes to the government, a retiree may be able to save over $200,000 throughout his or her retirement years. Surely, you could think of many ways to spend $200,000 on yourself and your family. Furthermore, an investor could trade stocks, knowing that any capital gains, short-term and long-term, achieved in the Roth IRA are not taxable. This allows each investor to reinvest these gains and to generate a much higher annual return on their portfolio.

Investors should be aware that Model Portfolio II is heavily weighed in the technology stocks. The risk of such asset allocation is much greater than owning a portfolio of stocks in several sectors.

Ericsson LM Telephone (NASDAQ symbol: ERICY) is a leading supplier of mobile phones and telecommunications equipment. On May 10, 2002, two hundred American Depository Receipts were bought at $2.29.

On October 23, 2002, the company issued a 1-for-10 reverse stock split and afterwards instead of 200 ADR’s there were only 20 ADR’s in our Model Portfolio II. On December 16, 2002, twenty ADR’s of ERICY were sold at $8.53 per ADR. The cash proceeds from this trade will be held in the Model Portfolio II. When the stock of Advanced Micro Devices, Inc., (NYSE symbol: AMD) reaches our buy target level of approximately $2.50 per share, additional cash will be added and one hundred shares of AMD will be bought and added to Model Portfolio II.



Lucent Technologies, Inc. (NYSE symbol: LU) is the largest manufacturer of telecommunications equipment. Lucent Technologies makes fiber-optic equipment and optical network equipment that allows the phone companies to increase capacity and to provide high speed Internet access. On May 10, 2002, one hundred shares were bought at $4.46 per share.

On October 18, 2002, Lucent Technologies announced that it will seek shareholder approval to do a reverse stock split to bring its stock price between $15.00 and $25.00 per share. If shareholders were to approve this reverse stock split at the company’s next annual meeting, the reverse split could be as bad as 1-for-36 shares. In such a horrendous scenario an investor who owns 100 shares would receive less than three shares. On January 15, 2003, one hundred shares of LU were sold at $1.77 per share. The cash received from this trade will be held in Model Portfolio II.



Nortel Networks Corp. (NYSE symbol: NT) is the leading provider of networking solutions, including optical networking solutions and wireless networking systems. On May 10, 2002, one hundred shares were bought at $2.84 per share.

In September 2002, Nortel Networks announced that it plans to do a reverse stock split of 1-for-20, or higher, in the beginning of 2003. Due to this horrendous plan a decision was made to sell this stock. On January 15, 2003, one hundred shares of NT were sold at $2.43 per share. The cash received from this trade was added to the existing cash in Model Portfolio II.



Oracle Corporation (NASDAQ symbol: ORCL) is the world’s third largest software company. The company makes database management system software. Approximately 90 percent of corporate Web sites are using Oracle’s database software. On May 10, 2002, one hundred shares of Oracle Corporation were bought at $8.37 per share. This stock will be held long-term.



Rite Aid Corporation (NYSE symbol: RAD) is the largest drug store chain in the United States. The company operates approximately 3,600 drug stores in 29 states. In the past, Rite Aid Corporation expanded rapidly through acquisitions. This stock approached a high level of $50 per share in December 1998.

After several missteps and a very heavy debt load, the company was almost driven into bankruptcy. New management sold assets and pared down debt. After reaching a low level of $2.13 per share in December 2000, this stock proceeded to rebound and closed at $9.74 per share on June 15, 2001. Then, the stock reversed its trend and proceeded to fall. On May 10, 2002, one hundred shares were bought at $3.07 per share. These 100 shares of RAD will be held until this equity reaches our revised target level of approximately $7.71 per share and then all of these shares will be sold.



Sun Microsystems, Inc.(NASDAQ symbol: SUNW) is among the major suppliers of hardware to the Internet. The company continues to introduce new servers, competitively priced, in order to expand its market share. On July 10, 2002, one hundred shares of Sun Microsystems were bought at $5.12 per share and added to the Model Portfolio II.

As additional hundreds of millions of users access the Internet, the demand for servers could grow during the next five years. Patient investors may hold this stock until it reaches approximately $41.25 per share. At such a level this stock should be sold immediately to lock in a long-term gain.



After the recent trades there was $529.34 of cash in Model Portfolio II.