July 2001
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Contents Back Issues March 2001 April 2001 May 2001 June 2001 Investing Buy & Sell Stocks for traders Model Portfolio Model Portfolio Update Model Portfolio Chart |
Last month we stated that after the recent gains, tech stocks were bound to pull back and some of these could even test recent support level. In addition, we stated that the market could continue to consolidate during the first half of June. We also added that this year the summer (continued in: Investing). Parametric Technology Corporation (NASDAQ symbol: PMTC) is the world’s largest software company that develops, markets and supports product development. The company has focused on product development because (continued in: Buy & Sell ). Speculators who like to trade frequently could buy stocks listed in this section. Investors should be aware that short-term trading involves much greater risk, and preferably no more than 10% of the portfolio may be invested in these stocks. Many of the stocks in the technology sector should be bought at recent low levels. Speculators could achieve short-term gains up to 100%, or higher, on some of these stocks. EMC Corporation (NYSE symbol: EMC) 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. (continued in: Stocks for traders). Advanced Micro Devices, Inc. (NYSE symbol: AMD) manufactures microprocessors, flash memory devices, data communications products and network products. AMD and Intel continue their fierce competition. While the demand for microprocessors continued to grow worldwide in the year 2000, Intel Corporation was not able to produce ( continued in Model Portfolio). |
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Investing Last month we stated that after the recent gains, tech stocks were bound to pull back and some of these could even test recent support level. In addition, we stated that the market could continue to consolidate during the first half of June. We also added that this year the summer rally may start at the end of June and could last less than eight weeks. On June 1, 2001, Nasdaq Composite Index closed at 2149.45 points and continued its upward trend, closing at 2264 points on June 7, 2001. Since the index did not break through its recent resistance level of 2313.90 points reached on May 22, 2001, it reversed its course and proceeded in the downward trend. On June 29, 2001. Nasdaq Composite Index closed at 2125.18 points. Last month, we featured Citrix Systems, Inc., (NASDAQ symbol: CTXS) in the Buy & Sell section. We stated that speculators might buy this stock if it were to test its support level of $17.10 per share. This stock fell to $22.41 per share on June 4, 2001, and found strong support at this level. Afterwards, CTXS proceeded to establish an upward trend and closed at $34.46 per share on June 29, 2001. Short-term, CTXS could pull back to $26 per share and once it does speculators should buy it for a short-term trade. This timely stock could retest its recent high of $34.46 by the end of July 2001 and provide speculators with a short-term gain of 30 percent. In April 2001, we have stated that as the Fed continues to cut interest rates, the market will take off like a rocket in July. The month of July is upon us. Investors who have cash on hand should buy tech stocks at their low levels. The stock of LSI Logic Corporation (NYSE symbol: LSI), EMC Corporation (NYSE symbol: EMC), Advanced Micro Devices (NYSE symbol: AMD), Applied Materials, Inc. (NASDAQ symbol: AMAT) have the biggest short-term upside potential. The Fed cut rates once again on June 28, 2001, by 25 basis points, or a quarter of a percent, to 3.75 percent. There may be two more rate cuts in sight and each one could be a 25 basis points cut. In such a positive environment the market could continue its upward trend. The question is: Did the summer rally start already, or is it possible for some of the tech stocks to retest their recent low levels? It appears that this year, the summer rally could start later than usual, perhaps by July 9, 2001. Speculators who have cash on hand have an opportunity to buy tech stocks at their recent low levels. The timely stock of EMC Corporation could reach approximately $50 per share during the next two months, and once the stock reaches such level speculators should sell it immediately to lock in their short-term gain. We also like ADR’s of Nokia Corporation (NYSE symbol: NOK) that could reach approximately $38 level before the end of August 2001. Investors and speculators should remember that it never hurts to take a profit. Once these equities reach their high levels, sell immediately to lock in your short-term gain. Back to Top |
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Buy & Sell
Parametric Technology Corporation (NASDAQ symbol: PMTC) is the world’s largest software company that develops, markets and supports product development. The company has focused on product development because it is one of the most profitable segments, representing the highest revenue growth and profit margin. Parametric Technology Corporation’s software allows companies to design their products through collaboration between their customers, manufacturers, and suppliers. By using this software, these companies can realize significant improvement in time that it takes to develop a new product. Over 30,000 customers worldwide are using PMTC’s software. The company is the largest licensor of mechanical computer-aided design (MCAD) software. Over 400 companies, including EMC Corporation, Lockheed Martin and Siemens are using Windchill® software. This is PMTC’s software solution that allows manufacturers to greatly improve the efficiency of the development cycle by connecting product, engineering and manufacturing information sources through the Internet. The sales of Windchill® software more than doubled last year and ended the year at $174.7 million. Parametric Technology Corporation formed a partnership with Oracle Corporation to distribute its software. For the fiscal 2000, ended September 30, 2000, the revenues edged lower to $928.414 million, from $1,057.601 million for fiscal 1999. The company reported a loss of $3.980 million, or $0.01 a share, versus an income of $119.293 million, or $0.43 a share for fiscal 1999. After closing at a low level of $8.09 per share on April 3, 2001, this stock proceeded to establish a strong upward trend and on June 29, 2001, closed at $13.98 per share. This stock could pull back to approximately $10 per share by the end of July and speculators may start to accumulate it at such level. By the end of August 2001, this timely stock could revisit its 52-week high of $16.63 and at that level should be sold immediately. RF Micro-Devices, Inc., (NASDAQ symbol: RFMD) designs, develops, manufactures and markets semiconductors and components for wireless handset market, wireless Local Area Networks (LAN), pagers, 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 offer better performance, and are the most expensive. The company’s largest customer is Nokia Corporation that accounted for 59% of annual sales for fiscal 2000. During fiscal 2000, sales in United States accounted for 44% of annual revenues, while sales in Asia generated 24% of revenues, and sales in Europe 32%. During fiscal 2000, gross profit rose to 47.1%, from 35% for fiscal 1999. While the average selling prices for the company’s components continued to trend lower, these were offset by lower overhead cost per unit and lower wafer costs due to greater internal manufacturing efficiencies. In fiscal 2000, chips manufactured in company’s wafer fabrication facility generated $180.5 million in sales and accounted for 62.5% of total annual revenues. The company’s wafer fabrication facility had a maximum production capacity of approximately 35,000 four-inch wafers per year. The company planned to increase the annual capacity to 60,000 four-inch wafers by the end of the calendar year 2000. Furthermore, in order to expand manufacturing capacity, the company began construction of a second wafer fabrication facility in 1999, and once the first phase is completed by the end of the calendar year 2000, this facility is projected to start producing approximately 60,000 four-inch wafers annually. RF Micro-Devices, Inc. projects that the second phase of construction will be completed by the end of calendar 2001. The total potential annual output from this facility could reach 210,000 four-inch wafers. The company plans to increase the production capacity gradually, to meet the market demand. RF Micro-Devices, Inc. estimates that the cost to build and equip this facility will be approximately $140 million for the first phase and $180 million for the second phase. The company will fund this project by a synthetic lease arrangement that is an asset-based form of financing. The company continues to spend heavily on research and development, and in fiscal 2000 this expense rose to $33.338 million, an increase of $19.1 million from fiscal 1999. RF Micro-Devices, Inc., had a working capital of approximately $142.3 million as of March 31, 2000. The company announced an agreement with Qualcomm, Inc., on February 28, 2000, to cooperate on the development of the module CDMA power amplifiers to be used in Qualcomm CDMA chipsets. Furthermore, the company is expanding its component line for Motorola’s phone platform and plans to begin volume shipments in the second half of fiscal 2001. Although Nokia Corporation remains the biggest customer and continues to increase orders; the sales to this company have decreased as a percentage of total revenue, because RF Micro-Devices, Inc., continues to expand its customer base. In the fourth-quarter of fiscal 2000, Sagem, a major manufacturer of handsets in France placed a long-term order for components. The company has also received an order from Sony Corporation to provide components for one-year. In our opinion, as the demand for wireless handsets continues to grow worldwide, the long-term outlook for RFMD is excellent. Although this stock may not repeat its previous performance, where it has risen from a low of $2.78 per share in the second fiscal quarter of 1999 to $184.50 in the fourth fiscal quarter of 2000, it could generate a return up to 2,000% during the next five years, and $1,000 invested in this stock now could appreciate to $20,000 by 2005. This sector is very volatile; therefore, investors who buy this stock should prepare themselves for a bumpy ride. Furthermore, once the second phase of wafer fabrication facility is completed near the end of calendar 2001, the company could incur increased costs toward the end of fiscal 2001 due to the initial low capacity utilization. In our opinion, at that time the company could start to write-off the depreciation on the wafer manufacturing equipment. These costs could weigh heavily on the bottom line and bring substantial downward pressure on the price of the stock. The company issued a 2-for-1 stock split on August 28, 2000. After this 2-for-1 stock split the 52-week high was adjusted from $99.92 to $49.96 per share. This stock fell to a low level of $9.06 per share on April 4, 2001, and then proceeded to build a very strong upward trend. On May 21, 2001, this timely stock closed at $36.60 per share. By June 18, 2001, this stock pulled back to $20.06 per share and then proceeded to rebound. On June 29, 2001, this stock closed at $26.80 per share. If this stock were to break through its recent support level of $20.06 during the next two weeks, it could fall to approximately $15 per share. At such level, speculators should buy it and then sell this stock as soon as it reaches approximately $36 per share. On the other hand, patient investors could hold this stock long-term, at least five years. Back to Top |
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Stocks for traders Speculators who like to trade frequently could buy stocks listed in this section. Investors should be aware that short-term trading involves much greater risk, and preferably no more than 10% of the portfolio may be invested in these stocks. Many of the stocks in the technology sector should be bought at recent low levels. Speculators could achieve short-term gains up to 100%, or higher, on some of these stocks. EMC Corporation (NYSE symbol: EMC) 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 has over 17,000 employees worldwide. EMC Corporation acquired Data General in October 1999, and that added a selection of mid-priced storage devices. During 1999, EMC Corporation shipped over 10,000 software licenses that generated $822 million in revenue. EMC Corporation plans to spend $1.7 billion on R&D through 2000 and 2001. Approximately 75% of this expense will be applied toward development of software. Although EMC Corporation’s hardware and software is the most expensive, 98% of customers are willing to recommend it to their colleagues and business associates. As 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 10 years. During the past decade, this was the top performing stock on NYSE. The company consistently splits its stock, and the most recent stock split was 2-for-1 on June 5, 2000. After the split, the stock continued to ascend and closed at $103.18 per share on September 20, 2000. Although we don’t expect this stock to appreciate at previous pace during the next decade, it could provide investors with a gain of approximately 1,600 percent. At such rate of return, $2,000 invested in this stock now, could reach approximately $32,000 after ten years. Patient investors may buy this stock at its low level and hold it ten years. On the other hand, speculators who like to see short-term results may trade this stock. During the recent carnage in the technology sector this stock proceeded to fall and closed at $39.76 per share on February 28, 2001. In March we stated that the stock of EMC Corporation could fall to $30 per share during the next two months. By March 12, 2001, this stock had already reached such low level. On April 30, 2001, this stock closed at a low level of $25.20 per share, down $4.12 for the day. Afterwards, as Nasdaq Composite Index moved higher, this stock build a strong upward trend and closed at $45.12 per share on April 20, 2001. On May 31, 2001, EMC closed at $31.60 per share. Last month we stated “If this stock were to break through its support level of $30.25 then it could fall to the next support level of $25 per share by June 19, 2001, and then resume its upward trend.” This stock broke through its support level of $30.25 on June 14, 2001 and closed at $28.25 per share. Although this stock did not fall to our target level of $25, it did close at $26.41 per share on June 22, 2001. On June 29, 2001, this timely stock closed at $29.25 per share. Last month we stated that EMC could reach approximately $50 per share by the end of July 2001. We maintain our target level, but this stock may reach it in August 2001. Speculators may buy this timely stock on pull back and then sell it as soon as it reaches approximately $50 per share to lock in short-term gain. Advanced Micro Devices, Inc., (NYSE symbol: AMD) manufactures microprocessors, flash memory devices, data communications products and network products. AMD and Intel continue their fierce competition. 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 could continue to spend 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. The stock of AMD reached a 52-week high of $94.63 per share on June 21, 2000 (after the 2-for-1 stock split that was issued on August 22, 2000, this high was adjusted to $47.32). Before the company issued the split, the stock was already in a downtrend. Although this timely stock could be held long-term, speculators who trade it short-term may achieve better return on investment. During the sell-off in chip stocks, this stock closed at $13.81 per share on December 29, 2000. On January 31, 2001, this timely stock closed at $24.60 per share and we rated it a strong buy. Some of the traders started to lock-in their gains and the stock closed at a low of $19.70 per share due to selling pressure. At this level, investors started buying this stock and it closed at a high level of $31 per share on April 30, 2001. After reaching a high of $32.95 on May 2, 2001, this timely stock proceeded to fall. Approximately two weeks later this stock closed at $27.20 per share on May 14, 2001. On May 21, this timely stock broke through its resistance level and closed at $34.40 per share. On June 8, 2001, this timely stock rebounded and closed at $31.10 per share. Due to the strong resistance, AMD was not able to reach its recent high level of $34.40 and the stock reversed its course. On June 20, 2001, this stock closed at $24 per share and found a very strong support at that level. Afterwards, this timely stock reversed its downward trend and rose to $28.90 per share on June 29, 2001. We maintain our rating of strong short-term buy. Buy this stock on dips and then sell as soon as it reaches our target level of $60 per share. American Power Conversion Corporation (NASDAQ symbol: APCC) designs, manufactures, and markets surge suppressors, uninterruptible power supplies and related software for computer related equipment. The company also makes equipment to protect wide area networks (WANs), local area networks (LANs), Internet equipment, telecommunications equipment and integrated services digital network (ISDN) equipment. The company has manufacturing facilities in the United States, Ireland, Denmark, Switzerland, China and the Philippines. American Power Conversion Corporation is one of the ten major worldwide companies whose sole focus is to provide power protection equipment. As the E-commerce continues to grow, the demand for power protection for servers and other equipment will continue to ascend. The company continues to introduce new products to the market, such as APC Power Stack ™, which is a rack-mount unit designed to protect hubs, routers and switches. During the past ten years, this stock was an excellent performer, and the company has issued five stock splits. This stock ascended from a low level of $15.88 in May 1999, to $45 per share reached in April 2000. Afterwards, this stock proceeded to fall. On January 23, 2001, APCC closed at $18.24 per share, and then pulled back to $11.69 on March 1, 2001. During April, this stock once again proceeded to establish a strong upward trend and closed at $15.38 per share on April 20, 2001. On June 26, 2001, APCC fell to a low level of $13.40 per share. This timely stock found strong support at that level and then reversed its downward trend. On June 29, 2001, this stock closed at $15.75 per share. This timely stock could reach our target level of $22.50 in August 2001 and when it does, speculators should sell it immediately to lock in their short-term gain. LSI Logic Corporation (NYSE symbol: LSI) makes chips for: cellular phones, satellite set-top boxes, DVD products and personal computers. The company derives 58% of revenues from international sales. LSI Logic has manufacturing facilities in the United States, Europe and Japan. The company may continue to invest 15-17% of revenues in R & D. As the demand for cellular phones and set-top boxes continues to grow in double-digits, 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 in NASDAQ, this stock broke below $20 per share and closed at a low level of $16.43 per share on December 21, 1999, way down from its high of $90.38. On April 4, 2001, LSI closed at a low level of $13.98 per share. As the market rebounded LSI built a strong upward trend and closed at $20.44 per share on April 30, 2001. In our opinion, due to the strong demand for cellular phones and handheld wireless devices the demand for chips made by LSI will continue to grow. While the long-term outlook for LSI Logic is positive, we recommend this stock to speculators to buy it now and sell as soon as it reaches approximately $60 per share for a probable short-term gain of approximately 200 percent. This timely stock could reach our target level of $60 per share before September 2001. On June 29, 2001, this timely stock closed at $18.80 per share. We rate LSI a strong short-term buy. As soon as this stock reaches our target level of approximately $60 per share, speculators should sell it immediately to lock in their gain. Computer Associates International, Inc., (NYSE symbol: CA) designs business application software and systems management software that allows computers to run efficiently. In addition, the company provides software that allows corporations to manage Web infrastructure. The company is the third largest after Microsoft Corporation and Oracle Corporation. Computer Associates International has offices in 44 countries. During fiscal year 2000, the company generated $1.566 billion of cash from operations and in our opinion it is sufficient to cover the repayment of debt. In our opinion, the short-term and the long-term outlook for the company is very good. As the debt level falls, earnings could reach $2.50 a share for fiscal 2002, thus propelling the stock to a probable level of approximately $98 per share. After reaching a high of $79.44 in January 2000, the stock proceeded to descend and closed at $24.78 per share on July 31, 2000. Due to the bear market in NASDAQ, this stock proceeded to descend and closed at a low level of $19.50 on December 29, 2000. Afterwards, this timely stock proceeded to establish a strong upward trend and closed at $37.50 per share on January 30, 2001. On February 28, this stock closed at $31.19 per share and we stated that it could once again test its support level and may fall to approximately $27 per share by the end of March 2001. As the market moved higher, this stock proceeded to establish a strong upward trend and closed at $37.19 on April 20, 2001. Due to the profit taking, this stock edged lower and closed at $32.19 on April 30, 2001. This timely stock closed at $36 per share on June 29, 2001. Speculators who bought the timely stock of Computer Associates International, Inc., below $30 per share should monitor it very closely. As soon as this stock reaches our target level of approximately $40 per share, perhaps by the end of July 2001, it should be sold immediately to lock in the short-term gain. CMGI, Inc., (NASDAQ symbol: CMGI) finds, acquires, develops and operates Internet companies. It is one of the worlds 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 out right, or sell a minority interest and reinvest the proceeds. The company has a history of acquiring successful Internet companies. CMGI, Inc. acquired a majority stake in Alta Vista, while Compaq retained 17% equity ownership in the Alta Vista business. To find out more about Alta Vista, visit the company’s Web site at www.altavista.com and to find out more about CMGI, Inc., visit the company’s Web site at www.CMGI.com In our opinion, tremendous growth opportunities are ahead. On January 12, 2000, the company issued a 2-for-1 stock split. It was a fourth 2-for-1 stock split issued during the past four years. This stock has been in a downtrend since March 2000. On September 27, 2000, this stock broke through our initial target level of $28 and closed at $26.63 per share. Due to the tremendous sell-off in the Internet sector, this stock broke through our revised target level of $23 per share and closed at $15.38 on October 17, 2000. Afterwards, this stock proceeded to reach new lows and closed at $1.76 per share on April 6, 2001. On May 4, 2001, this stock closed at $6.22 per share. Then, this stock proceeded to pull back and on June 29, 2001, this timely stock closed at $2.99 per share. As more money continues to flow into this stock it could slowly build upward momentum. We are maintaining our target level of $90 per share but this stock could reach this level a year later than originally projected, probably in the first half of the year 2002. We maintain our rating of speculative screaming buy. Unisys Corporation (NYSE symbol: UIS) is a major provider of customer services and information services. The Company makes network servers and software. Unisys derives 67 percent of revenues from services, where profit margins are much higher than margins on hardware. In September of 1999, this stock reached a high of $49.68 and then proceeded to fall. In February 2000, the stock proceeded to revisit its high, but after a strong resistance at $35 level descended once again. Due to the sell-off in the tech sector, this stock continued to descend and closed at $9.54 per share on July 27, 2000. In January 2001, we stated that this stock could retest its recent high, but in our opinion will find strong resistance at $20 level. Nevertheless, if this were to happen, it could provide speculators with a short-term gain of approximately $7.25 per share, or 60 percent, during the next six weeks. After reaching a high of $18.91 per share on February 16, 2001, this stock proceeded to fall and on April 17, 2001, tested its resistance level and closed at $11.30 per share. Money flowing into this stock could rise and UIS could reach approximately $22.50 per share before September 2001. On June 29, 2001, this timely stock closed at $14.71 per share and we maintain our rating of strong short-term buy. Boston Scientific Corporation (NYSE symbol: BSX) is among the worlds leading companies that design and market minimally invasive medical devices. The company makes coronary stents for less invasive treatment of cardiovascular disease. The stock has reached a high of $47.06 on July 19, 1999. Afterwards, the stock proceeded to fall at a fast pace and by October 1999, fell to an intra-day low of $17.55 per share. This stock closed at a low level of $12.88 per share on November 30, 2000. We have downgraded this stock to accumulate from buy. In March, this stock has built a strong upward momentum and closed at $20.18 on March 30, 2001. During April this stock proceeded to fall. On April 24, 2001, this stock found strong support level at $15 and proceeded to close at $15.88 per share on April 30, 2001. By the end of June, this stock closed at $17 per share, on June 29, 2001. This stock could retest its resistance level of $20.18 per share in June 2001. If money flowing into this stock continues to improve, this timely stock could break through its resistance level of $20.18 and reach our target level of approximately $25 per share by August 2001. Once BSX reaches our target level, speculators should sell it immediately. Bank One Corporation (NYSE symbol: ONE) is among the largest bank holding companies in the United States. Due to the losses in its credit card division, earnings fell and the stock reached a low of $24.44 per share on March 7, 2000, after reaching a 52-week high of $63.54 in May of 1999. After Bank One announced that James Dimon, formerly of Citigroup Inc., would become its CEO, the stock closed at $34.25 per share, up $3.38, on March 28, 2000. Money is flowing into stocks in this sector and this timely stock proceeded to build a strong upward momentum. On January 31, 2001, this timely stock closed at $39.19 and then pulled back and closed at $35.26 per share on February 28, 2001. On April 6, 2001, this stock tested its support level and closed at $33.61 per share. Afterwards, money flowing into this equity rose substantially and the stock closed at $38.55 on May 3, 2001. On May 31, 2001, this timely stock closed at $39.60 per share. This stock found strong resistance at this level and proceeded to pull back. On June 29, 2001, this timely stock closed at $35.80 per share. If this stock were to break through its resistance level of $39.85, it could reach approximately $43 per share by the end of July 2001 and speculators should sell it to lock in their short-term gain. 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Model Portfolio Advanced Micro Devices, Inc. (NYSE symbol: AMD) manufactures microprocessors, flash memory devices, data communications products and network products. AMD and Intel continue their fierce competition. 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 could continue to spend 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. The stock of AMD reached a 52-week high of $94.63 per share on June 21, 2000 (after the 2-for-1 split that was issued on August 22, 2000, this high was adjusted to $47.32). Before the Company issued the split, the stock was already in a downtrend. Although this timely stock could be held long-term, speculators who trade it short-term may achieve better return on investment. Worldwide demand for microprocessors continues to grow 17 percent annually. At this time chipmakers do not have sufficient manufacturing capacity to meet this growing demand and that will guarantee that every processor made, will be sold almost immediately. Starting in September, the sales of chips typically rise and the demand reaches the highest level by December. On January 31, 2001, this stock closed at $24.60 per share and we rated it a strong buy. The stock reached an intra-day high of $26.75 on February 15, and then edged lower to close at $21.50 per share on February 28, 2001. On June 29, 2001, this timely stock closed at $28.90 per share. Due to the pricing pressure on chips, the revenues and earnings may not grow as fast as we had projected. We revised our target level downward to $60 from our previous target of $81 per share. As soon as this stock reaches our target level, 150 shares will be sold and the remaining fifty shares will be held long-term. 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; 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 October 14, 1997, and on March 16, 2000, Applied Materials split its stock 2-for-1. On June 29, 2001, AMAT closed at $49.10 per share. Buy this stock on dips and hold at least four years. Boston Scientific Corporation (NYSE symbol: BSX) is one of the worlds leading companies that designs and markets minimally invasive medical devices. The Company makes coronary stents for less invasive treatment of cardiovascular disease. This stock has reached a high of $47.06 per share on July 19, 1999. By November 30, 2000, this stock fell to $12.88 per share. We downgraded this stock to accumulate from a buy. On June 29, 2001, this stock closed at $17 per share. As soon as this stock reaches our revised target level of approximately $25 per share it will be sold immediately. CMGI, Inc. (NASDAQ symbol: CMGI) was added to our list “Buy 10 Tech Stocks” on November 10, 2000, at $16.25 per share. We liked the stock then, and at the recent price we like it even more. On January 30, 2001, three hundred shares of CMGI, Inc., were bought at $6.78 per share and added to our Model Portfolio. Although the risk of owning this stock is high, so is the potential for the appreciation. CMGI, Inc., is one of the worlds largest companies with stakes in the Internet start-ups. The main reason why we like this company is because it has an 83% interest in Alta Vista. CMGI planned to issue an Initial Public Offering in Alta Vista but due to the negative market condition the IPO has been postponed. When the market improves and the company does an IPO on Alta Vista, the stock of CMGI could establish a strong upward trend and may even reach $90 per share in the first half of the year 2002. On June 29, 2001, this stock closed at $2.99 per share. Once this stock reaches our revised target level of $90 per share, all three hundred shares will be sold to lock in the gain. We would like to remind investors that the risk of owning this stock is high therefore it should only be bought by speculators. To find out more about CMGI, Inc., read the section Stocks for traders. Cisco Systems, Inc. (NASDAQ symbol: CSCO) makes data networking equipment, data switches, and networking gear. Cisco Systems continues to expand its market share. The annual revenues have grown from $2.2 billion in fiscal 1995, to $12.2 billion in fiscal 1999. John T. Chambers, who is a CEO of Cisco Systems, continues to steer the company on a path to high growth and the long-term outlook for the company is excellent. In our opinion, Cisco Systems, Inc. could continue 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, such as IP internetworking technology which allows to host Internet applications and expand their service from basic voice traffic to broadband which can carry data, provide Internet access, and video conferencing. During the past six months this stock continued to fall. On June 29, 2001, this stock closed at $18.20 per share. This stock could test its support level and may fall to approximately $14 per share. At such level this stock would be a screaming buy. Investors who already own this stock could add to their position. Hold this stock at least ten years. Compaq Computer Corp. (NYSE symbol: CPQ) is the second largest computer manufacturer in the world. The Company designs and makes notebook personal computers, servers, consumer PCs and networking equipment. The turnaround is taking longer than expected. Although revenues continue to grow, the earnings are still below the levels reached three years ago, therefore we are changing our rating on this stock from a long-term buy, to a hold. The company sold 83% of interest in Alta Vista Web site to CMGI, Inc. Compaq Computer Corp. retained 17% equity in the Alta Vista. Both companies will promote this site. In the future it could become one of the top three sites and generate substantial amount of revenues. Due to the sell-off in the tech sector, this stock broke through its support level and closed at $15.05 per share on December 29, 2000. During January this stock proceeded to rebound and closed at $23.71 per share on January 31, 2001. On June 29, 2001, this stock closed at $15.32 per share. As soon as this stock reaches approximately $29 per share it will be sold immediately. Compuware Corporation (NASDAQ symbol: CPWR) makes software that manages corporate networks, and improves productivity. The revenues are growing at a fast pace, and for the fiscal 1999, reached $1.65 billion. The stock of Compuware Corporation reached $40 per share in December 1999. On March 31, 2000, we have stated that there is a probability that this stock could fall to $16 per share during the next three months. When this stock fell below $13 per share, an additional 200 shares were bought at $12.38 on April 14, 2000. Due to the negative sentiment for this sector, we revised our target level to $28 per share, from $35 per share. On December 29, 1999, this stock closed at $6.25 per share. Afterwards, this timely stock proceeded to build a strong upward momentum and closed at $12.44 per share on January 31, 2001. On June 29, 2001, this stock closed at $13.99 per share and we rate it a strong buy. Once this stock reaches our revised target level, two hundred shares will be sold immediately. The remaining 150 shares will be held long-term, at least three years. Delia’s, Inc. (NASDAQ symbol: DLIA) sells a variety of apparel and accessories for young women. The Company conducts sales through its Web site and through brick and mortar stores. This stock reached a 52-week high of $40 per share in April 1999, and then proceeded to fall along with other Internet stocks. By November 1999, this stock reached a low of $5.50 per share. Afterwards, the stock proceeded to rise, buoyed by optimistic expectations of higher holiday sales and reached an intra-day high of $13.25 in November 1999. On April 30, 2001, this stock closed at $2.96 per share and we rated it a speculative buy. As more money flowed into this timely stock it closed at $8 per share on June 29, 2001. This stock will be held in our Model Portfolio until it reaches our revised target level of $25 per share and then all of the shares will be sold. Recently, Delia’s, Inc. merged with iTurf, Inc. and after the conversion of existing stock into the newly issued shares, now there are 342 shares in our Model Portfolio. Dell Computer Corporation (NASDAQ symbol: DELL) is the third largest computer manufacturer in the world. The Company makes personal computers, notebook computers, servers and workstations. On March 5, 1999, the Company issued a 2-for-1 stock split, the seventh in the past eight years. On March 22, 2000, the stock reached an intra-day high of $59.68 per share. Then, the stock proceeded to fall. Due to the sell-off of stocks of box makers, this stock broke through its support level. On November 30, 2000, this stock closed at $19.25 per share. The stock continued its downtrend and reached a low of $16.25 per share. On February 7, 2001, this stock reached an intra-day high of $27.50 per share. Two weeks later, on February 21, this stock tested its support level of $20.43 per share. On June 29, 2001, this timely stock closed at $26.15 per share. At the present level this stock presents a great buying opportunity. Although it is not likely that the stock of Dell Computer Corporation will appreciate at such a fast pace as it did between the year 1994 and 1999, in our opinion, this stock could generate a gain of approximately 1,500% in six years. Ericsson LM Telephone (NASDAQ symbol: ERICY) is a leading supplier of mobile phones and telecommunications equipment. The company’s main manufacturing facilities are located in Sweden. Ericsson’s telecom equipment is among the most advanced in the world. The sales of equipment have increased significantly in China and surpassed the sales in U.S. Ericsson LM Telephone projects that by the year 2003 the number of mobile phone users could reach over 800 million. The long-term outlook for Ericsson is excellent. ADR’s of Ericsson split 4-for-1 on May 8, 2000. On June 29, 2001, ADR’s closed at a low level of $5.42. Buy these ADR’s now and hold at least seven years. Intel Corporation (NASDAQ symbol: INTC) is the leading manufacturer of microprocessors. The company has high name recognition, and still has approximately 85% share of the market. The company continues to switch production to 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 100% stock dividend 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. Since the original 30 shares were bought, after these stock splits there were 480 shares in the portfolio. 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. On June 29, 2001, this stock closed at $29.25 per share. Buy this stock and hold long-term. 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, a group of online trading communities where transactions for parts and raw materials are made among corporations. 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. There is a very slight probability that this stock could revisit its high of $143.55 per share during the next two years. We will monitor this stock closely. As soon as this stock reaches approximately $130 per share, one hundred and fifty shares will be sold immediately. The remaining fifty shares will be held long-term. On June 29, 2001, this stock closed at a very low level of $2 per share, and we rate it a speculative strong buy. LSI Logic Corporation (NYSE symbol: LSI) makes chips for: cellular phones, satellite set-top boxes, DVD products and personal computers. The company derives 58% of revenues from international sales. LSI Logic has manufacturing facilities in the United States, Europe and Japan. The company may continue to invest 15-17% of revenues in R & D. As the demand for cellular phones and set-top boxes continues to grow in double-digits, 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 in NASDAQ this stock broke below $20 per share and closed at a low level of $16.43 per share on December 21, way down from its 52-week high of $71.32. On January 31, 2001, this stock closed at $24.75 per share. This stock broke through its support level of $19.80 and closed at $16.11 per share on February 28, 2001. This timely stock closed at $18.80 on June 29, 2001. In our opinion, due to the strong demand for cellular phones and handheld wireless devices the demand for chips made by LSI will continue to grow. This stock will be sold as soon as it reaches approximately $60 per share for a probable short-term gain of approximately two hundred percent. Lucent Technologies, Inc., (NYSE symbol: LU) is the largest manufacturer of the telecommunications equipment. Lucent Technologies makes fiber-optic equipment and optical network equipment that allows the phone companies to increase the capacity and to provide a high speed Internet access. On October 30, 2000, an additional 200 shares of Lucent were bought at $20.75 per share and added to our Model Portfolio. Now, there is a total of 250 shares in our Model Portfolio. As soon as this stock reaches our target level, 150 shares will be sold. The remaining hundred shares will be held long-term, at least ten years. On January 31, 2001, this stock closed at $18.60 per share. Afterwards, this stock proceeded to test its support level and closed at $9.97 on March 30, 2001. This stock broke through its support level in April and then slowly proceeded in upward direction. On June 29, 2001, this stock closed at $6.21 per share. We rate this stock a speculative long-term buy. Investors who already own this stock may add to their position. 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 $17 billion in cash and short- term investments. The anti-trust trial affected the stock negatively. While the Justice Department accused Microsoft Corporation of wielding a monopoly power, the company denied any wrongdoing. Is the break-up of Microsoft Corporation the only solution? Of course not. As soon as this chapter in Microsoft’s history is closed, the stock could resume its strong upward momentum, but in the meantime this stock will be very volatile. Although these timely shares may not appreciate at previous fast pace, this stock could generate a gain of 700% 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. Recently, the stock of Microsoft Corporation rallied after the U.S. court of appeals overturned an order to split the company in two. This stock closed at $73 per share on June 29, 2001. Buy this stock on dips and hold long-term. Motorola Inc. (NYSE symbol: MOT) is a major supplier of cellular phones, semiconductors, and pagers. The stock of Motorola continued to fall and reached an intra day low of $14 per share, an eight year low, on March 22, 2001. This stock is trading at such a low level, as if the U.S. economy were to enter a recessionary stage, even though it may not. Christopher Galvin who is the CEO of Motorola, could once again steer the company on a path of high growth and profitability. The stock of Motorola was held in our Model Portfolio between February 1995, and April 1997. On April 23, 1997, all 50 shares of Motorola were sold at $57.50 per share, with a loss of 5%. On the same day, the funds received from the sale of shares of Motorola were used to buy 50 ADRs of Nokia Corporation at $58.88. To cover the balance of this trade, $179.85 of cash was deducted from the cash position in our Model Portfolio. Nokia continues to be the second best performer in our Model Portfolio. The stock of Motorola is great for trading. In our opinion, this stock could reach $50 per share in the year 2002, and once it does it will be sold. On June 29, 2001, this stock closed at $16.56 per share and we maintain our buy rating. 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. Nokia derives 56% of its revenues from sales in Europe and 44% from sales in other continents. The long-term outlook for Nokia is excellent, as the demand for company’s products grows worldwide. The Company issued a 2-for-1 split on April 16, 1998, one on April 11, 1999, and a 4-for-1 split on April10, 2000. These timely ADRs closed at $22.19 on June 29, 2001. Buy these ADRs and hold long-term, at least seven years. Nortel Networks Corp. (NYSE symbol: NT) is the leading provider of networking solutions, including optical networking solutions and wireless networking systems. During the past four months this stock has fallen to a low level, due to the fear of a slowdown of orders for fiber-optic network equipment. The stock is way off from its 52-week high of $86 per share. Although this stock could trade at a low level during a quarter, or two, as soon as the growth of revenues reaches 50%, this stock may once again resume its strong upward trend. In our opinion, this stock could revisit its 52-week high in less than twelve months. The Internet is not going away. Quiet the opposite is happening. Each month millions of new users are accessing the Internet. This greatly increases the demand for bandwidth therefore the demand for the equipment made by Nortel Networks will continue to grow worldwide. After the company announced that it will take a restructuring charge of $19.2 billion the stock fell to new low level. On June 29, 2001, this stock closed at $9.03 per share and we maintain our rating of screaming long-term buy. One hundred shares of Nortel Networks will be held in our Model Portfolio until the stock reaches approximately $80 per share and then this stock will be sold. Office Depot, Inc. (NYSE symbol: ODP) is a major retailer of office products, with stores located in the United States and Canada. The Company also conducts sales through its Web site at www.officedepot.com and through a catalog. On April 12, 2000, the stock rose to $14.19 per share on a heavy volume of 4.45 million shares, and then proceeded to fall. Then, on May 26, 2000, the stock fell $3 from the previous close, and finished the day at $7.32 per share, on a very heavy volume of 16 million shares. In our opinion, this stock has a strong upside potential. On June 29, 2001, this stock closed at $10.38 per share and we rate it a strong buy. This stock will be held in our Model Portfolio until it reaches our target level of $19 per share, and then all four hundred shares will be sold, for a probable long-term gain of approximately one hundred percent. Oracle Corporation (NASDAQ symbol: ORCL) is the world’s second largest software company. The company makes database management system software. Approximately 90% of corporate Web sites are using Oracle’s database software. In the year of 1999, Oracle Corporation consolidated its computer system from approximately 40 locations around the world, down to two locations. The company launched its Internet store and all of its sales will be made through this online storefront. Oracle Corporation has already achieved annual savings of $1 billion from this E-engineering. This stock fell from its 52-week high of $46.47 to as low as $13 per share. Once the summer rally starts, this stock could break through its recent resistance level and reach approximately $25 per share, perhaps in July 2001. As soon as this stock reaches our target level of approximately $25 per share, all of the shares will be sold immediately and the cash will be added to the existing cash in our Model Portfolio. On June 29, 2001, this timely stock closed at $19 per share. Buy this stock on pull back and sell as soon as it reaches approximately $25 per share. Pfizer, Inc. (NYSE symbol: PFE) is a diversified manufacturer of pharmaceuticals and consumer products. Among its brand name pharmaceutical products is Norvasc for hypertension and Zoloff for depression. The latest addition is Viagra, a pill for erectile dysfunction. The company issued a 3-for-1 stock split on June 30, 1999. Warner-Lambert agreed to be acquired by Pfizer, Inc. The shareholders will receive 2.75 shares of Pfizer stock for each share of Warner-Lambert stock. The deal is valued at $85 billion. After the merger is completed, Pfizer, Inc., will become a pharmaceutical behemoth with extensive R & D department. The long-term outlook for the company is excellent. On June 29, 2001, this stock closed at $40.05 per share. Buy this stock on dips and hold long-term. 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. Sun Microsystems revenues have doubled during the past three years, to $19 billion. In our opinion, the company could attain a greater market share during this economic slowdown, and once again double its annual revenues in three years. As additional hundreds of millions of users access the Internet, the demand for servers could grow 50% annually during the next five years. This stock will be held in our Model Portfolio approximately three years, and as soon as it generates a gain of 400%, all of the shares will be sold. On June 29, 2001, this stock closed at $15.72 per share and we rate it a strong buy. Vertical Net, Inc., (NASDAQ symbol: VERT) is an Internet incubator that owns and operates 55 Websites designed as online business-to-business communities. These Websites, known as vertical trade communities are grouped in several industry sectors such as Advanced Technologies, Communications, Environmental, Food and Packaging, Food Service, Healthcare, Manufacturing and Metals, Textile and Apparel, and Service. This stock was featured in our “Buy & Sell” section in August 2000. At that time, we have stated that this stock could fall to approximately $35 per share. Furthermore, we have stated that the risk of owning this B2B start up is high, therefore this stock could only be bought by speculators. Who would have known then that this stock would break through a $35 level and reach a ridiculously low price of $2.68 per share on February 23, 2001. In August 2000, we have stated that this stock could ascend to $140 per share, short-term. We maintain our price target level, but it could take this stock approximately two years to reach it. Once again, we would like to reiterate that this stock is not for the faint of heart and may be bought only by speculators. These two hundred shares will be held in our Model Portfolio until the stock reaches approximately $140 per share, and then these 200 shares will be sold to lock in long-term capital gain. On June 29, 2001, this stock closed at $2.49 per share and we rate it a speculative screaming buy. WorldCom, Inc., (NASDAQ symbol: WCOM) has already grown from a small telecommunications provider to a behemoth, through mergers and acquisitions. This stock is down from its 52-week high of $52.50 per share. On September 14, 1998, World Com merged with MCI Communications Corporation. Once this merger was finalized, World Com was in possession of one of the worlds largest and most advanced digital networks that connect local markets in the United States to more than 280 countries and locations worldwide. On August 4, 1998, the company acquired a 51.79% voting interest and 19.26% economic interest in Embratel, a national telecommunications provider in Brazil. World Com plans to continue expanding globally through mergers and acquisitions. In our opinion, at the recent price level this stock is undervalued and has a potential to reach $50 per share during the next twelve months. As soon as this stock reaches our target level of $50 per share, all one hundred shares will be sold to lock in a probable short-term gain of approximately 120 percent. On June 29, 2001, this stock closed at $14.20 per share and we maintain our rating of strong buy. Yahoo Inc., (NASDAQ symbol: YHOO) is a global Internet media company that provides comprehensive information and shopping services to over 140 million users worldwide. The company’s Website www.yahoo.com is the most visited site and has the highest name recognition. Yahoo Inc., continues to provide the widest choice of content that has generated an average of 465 million page views per day in December 1999, an increase of 178 percent from December 1998. The Company provides Web content around the world in 12 languages. As the advertising market on the Web continued to grow, in the fourth quarter of 1999, there were 3,550 advertisers, versus 2,225 in the same quarter of 1998. Average revenue per advertiser rose to $57,000 in the fourth quarter of 1999, from $34,000 in the fourth quarter of 1998. Advertising revenues on the Web in the United States alone are projected to reach over $8 billion annually in two years. 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 2002. Yahoo Inc., is among the few Internet companies that already generate positive cash flow. We project that this stock could rise twenty-fold from present level, during the next four years. The risk of owning this stock is above average and it is not for a timid investor. This timely stock will be held in our Model Portfolio until it reaches our target level of $300 per share and then these one hundred shares will be sold. On June 29, 2001, this stock closed at $19.98 per share. This stock may once again test its support level and could pull back to approximately $14 per share by July 9, 2001. At such level speculators should buy it immediately. Back to Top |
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Model Portfolio Update
Vertical Net, Inc., had a challenging year. For the year ending December 31, 2000, annual revenues rose to $112.454 million, from $18.428 million for 1999. Due to the amortization expense of $139.84 million and other charges, the company posted a loss of $316.580 million, or $3.81 a share for the year 2000, versus a loss of $53.48 million, or $0.86 a share for 1999. As of December 31, 2000, the company had $123.803 million of cash on hand, versus $7.636 million in 1999. Long-term debt fell to $45.287 million, from $116.750 million in 1999. Vertical Net, Inc., has a commercial agreement with Microsoft Corporation. The agreement has a three-year term and under its terms, Microsoft will purchase 80,000 storefronts, and e-commerce centers from Vertical Net, Inc., and distribute these to third party businesses. Under the terms of this deal, Microsoft will pay Vertical Net, Inc., $161.9 million over the course of three years for these storefronts. Then, Microsoft will provide these storefronts and e-commerce centers to business customers for a 12-month subscription period. Later on, Vertical Net, Inc., will pay Microsoft a portion of proceeds received from these business customers who renew their storefronts after the initial 12-month period. This commercial agreement with Microsoft had a tremendous positive effect on the number of storefronts issued, and by the end of the year 2000, over 17, 100 companies were online in one or more of Vertical Net’s e-marketplaces, through over 18,700 storefronts. Microsoft Corporation paid for approximately 15,870 of these storefronts. There were only 2,900 storefronts in December 1999. In April 2000, the company entered into a significant business relationship with Microsoft Corporation, and Microsoft made a $100 million equity investment in Vertical Net, Inc., through the purchase of 100,000 shares of Series A 6% convertible redeemable preferred stock. These shares are initially convertible into 1,151,080 shares of Vertical Net’s common stock. In addition, Microsoft Corporation received warrants to purchase 1,500,000 shares of Vertical Net’s common stock at an exercise price of $69.50. Furthermore, Microsoft Corporation received a right to nominate one member of Vertical Net’s board of directors, and in October 2000, Satya Nadella became a director. Satya Nadella is 33 years old and he has been Vice President of Microsoft bCentral. Vertical Net, Inc., continues to expand through acquisitions and through internal growth. The company owns a 90% equity stake in Vertical Net Europe. Vertical Net, Inc., also owns a 40% equity stake in PaintsandCoatings.com Inc., a joint venture with Eastman Chemical Company. In addition, Vertical Net, Inc., owns approximately a 20% equity stake in Converse, Inc., an operator of independent marketplace serving the high-tech supply-chain community. In our opinion, as more companies proceed to conduct their business online, the revenues of Vertical Net, Inc., could continue to grow in high double digits. This stock is not for the faint of heart. It has traded at a high of $138.88 per share in the first quarter of 2000 and then due to the sell-off in Internet stocks, it closed at a low level of $1.35 per share, on April 4, 2001. On June 29, 2001, this stock closed at $2.49 per share and we maintain our rating of a speculative screaming buy. Back to Top |
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Model Portfolio Chart 6-29-2001
a) The quantity of shares was adjusted for a 100% stock dividend issued by Intel Corporation on June 22, 1995, a 2-for-1 stock split issued on July 14, 1997, a 2-for-1 stock split issued on April 11, 1999 and a 2-for-1 stock split issued on July 30, 2000. (There were 480 shares of INTC on October 29, 2000. On October 30, 2000, two hundred shares were sold and now there are 280 shares). c) The quantity of shares was adjusted for a 100% stock dividend issued by Applied Materials, Inc. on October 14, 1997 and a 2-for-1 stock split issued on March 16, 2000. d) The quantity of ADR’s was adjusted for a 2-for-1 split issued by Nokia Corporation on April 16, 1998, a 2-for-1 split issued on April 11, 1999, and a 4-for-1 split issued on April 10, 2000. e) The quantity of ADR’s was adjusted for a 2-for-1 split issued by Ericsson Telephone on May 22, 1998, and a 4-for-1 split issued on May 8, 2000. h) The quantity of shares was adjusted for a 2-for-1 stock split issued by Microsoft Corporation on March 26, 1999. i) The quantity of shares was adjusted for a 3-for-1 stock split issued by Pfizer on June 30, 1999. j) The quantity of shares was adjusted for a 2-for-1 stock split issued by Cisco Systems, Inc. on March 23, 2000. k) Two hundred shares of Delia’s, Inc., were bought in December 1999, at $7.19 per share. After Delia’s, Inc., merged with i Turf, Inc., these shares were converted into newly issued stock and now there are 342 shares in our Model Portfolio. The original acquisition cost has been adjusted to $4.20 per share. After the trades done on March 20, 2001, and the recent trades done on May 31, 2001, our Model Portfolio is heavily weighed in tech stocks. The risk of such asset allocation is much greater than owning a portfolio of stocks in several sectors. Furthermore, more stocks will be held short-term. Although it is not likely that a typical investor will acquire all of the stocks that are in our Model Portfolio, each investor has to be aware beforehand that short-term trading is risky, and will greatly increase tax liability. Between April 1994 and July 1998, a total of $28,336 of cash was invested in the Model Portfolio. Due to the excellent performance of the technology stocks, over the course of six years the total value of the portfolio has risen to $145,374 as of June 30, 2000. Our Model Portfolio has generated a gain of $117,038, or 413 percent in just six years (as of June 30, 2000). Investors who are just starting out should not be deterred by the size of our Model Portfolio. Notice that a total of $28,336 was invested over the course of four years, averaging an investment of $7,000 per year. Investors who are just starting out could invest as little as $2,000 each year, but be consistent and invest that amount every year. After several years, investor could have a portfolio consisting of several blue-chip stocks. Back to Top |