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 July 12, 2002, the stock of International Business Machines (NYSE symbol: IBM) closed at $69.21 per share. Read on to see how we rate this stock. We are also featuring a few other stocks. Among them is Scientific-Atlanta, Inc. (NYSE symbol: SFA) that closed at $14.40 per share on July 12, 2002. Those wondering whether to buy or sell these stocks will want to read the “Buy & Sell” section.


The Nasdaq Composite index closed at 1373.50 on July 12, 2002, a 5-year low. The stock valuations are more reasonable than they were five months ago. Therefore, investors and speculators may start buying stocks. For a list of stocks and their recommended buy and sell target levels, please visit our section titled “Stocks for traders”.


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 Bought section to find out which stock was acquired recently. The majority of the stocks that were on our original Buy list have been bought during the past five months and added to our Model Portfolio.


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

If you were to walk inside of a car dealer’s showroom and saw a brand new vehicle that was previously priced at $30,000 on sale for $5,000, you would buy it wouldn’t you? Now, many stocks are trading at their lowest level and yet investors are waiting on the sidelines instead of buying them.

At this time the market has a supply and demand issue. The prices of stocks will fluctuate just like prices of any commodity, depending on the supply and demand. When the demand is greater than the supply the prices will continue to rise, but when the supply is greater than the demand the prices will continue to fall.

Lately no one seems to want to buy stocks although many of them are down as much as 90 percent from their high level. Due to the lack of visibility from Chief Executive Officers, dismal earnings, and the growing mistrust of the corporate management, the market continues its free-fall as the demand for stocks is at its lowest level. In the meantime investors continue to park their money in Certificates of Deposit, Money market, or short duration Treasury bonds.

The market could continue to fall until earnings and the demand for stocks improve. This may happen by the fourth quarter of this year if the economy continues to improve and the Federal Reserve maintains short-term interest rates at the 1.75% level. The Federal Reserve met on June 26, 2002, and left interest rates unchanged. Such action is positive for the market and when the earnings start to improve stocks may reverse their downtrend, perhaps by November 2002.

When the market crashed in 1929, the bear market lasted 33 months. Although our economy is in a much better shape than in 1929, the unemployment is at the low level, the gross domestic product continues to expand, single-family home sales are strong and yet the market has decoupled from the economy and continues to fall.

The recent bear market has already lasted 27 months and if it were to end in November 2002, it would be just as long and almost as bad as the bear market of 1929. Many stocks are already down 90 percent and near their bottom. Speculators may want to buy these stocks now. For a list of stocks and their recommended buy and sell target levels please visit our section titled “Stocks for traders.” Although it could take much longer for this bear market to rebound, many of the stocks could triple from recent low levels by the end of the first half of 2003.

This is the time of year when the sales of microprocessors fall from their high level reached by the end of the previous year. Typically this is reflected in the price of the stock of each chip manufacturer.

In March 2002, we stated, “As usual, the price of Intel Corporation (NASDAQ symbol: INTC) and Advanced Micro Devices (NYSE symbol: AMD) stocks is already falling. There is a probability that INTC may test its support level of $21.45 per share by the end of March 2002. At such a level we would rate this stock a strong short-term or long-term buy. The stock of Advanced Micro Devices may test its support level of $8.35 per share by the end of March 2002, or beginning of April, and would be a screaming buy at such a level.”

Both stocks continued to fall. The stock of Intel Corporation broke through its support level of $21.45 on June 13, 2002, while the stock of Advanced Micro Devices fell at a slow pace and closed at a low level of $8.04 per share on June 21, 2002.

On July 2, 2002, INTC closed at a low level of $16.57 per share. If the money flow continues to fall this stock could test its support level of $9.35 by the end of September 2002. At such a level we would rate this stock a screaming long-term buy. Typically, the demand for microprocessors starts to pick up in the third quarter and if this were to happen both of these stocks could test their resistance level by the end of this year or in January 2003.

We featured the stock of Albertson’s, Inc. (NYSE symbol: ABS) in the March 2002 Buy & Sell section. This company is the second largest food-drug chain in the United States. After the merger with American Stores Company that was finalized on June 23, 1999, Albertson’s operates over 2,400 stores in 38 states. Among the stores operated by the company are Albertson’s, Jewel, Osco Drug, Save-on, Lucky Stores, and Acme Markets.

After September 11, 2001, this equity proceeded to fall and reached a low level of $30 per share on September 21, 2001. Afterwards, as the money flow improved, this stock proceeded to establish a strong upward trend and closed at $35.44 per share on December 5, 2001.

This stock was not able to break through its previous resistance level and then it fell sharply and closed at $30.45 per share on December 18, 2001. As the money continued to flow out of this equity, this stock maintained its downtrend and closed at $27.39 per share on February 22, 2002. Then, as the money flow increased by $360 million this stock rose sharply and closed at $31.13 per share on March 1, 2002.

On March 15, 2002, this stock closed at $32.02 per share. At this level this stock was fully valued and we stated, “_ _ _ speculators who own it may want to sell it. This stock may test its support level of $27.39 and if it were to break through this level it may even fall below $24.75 per share in April 2002. On the other hand, if the money flow were to increase sharply, this stock may revisit its high and test its resistance level of $35.44 per share. Speculators should always remember that money flow is among the key factors that affect the price of a stock; therefore money flow should be monitored every day.”

During the next four weeks money flow rose $1.04 billion and the stock proceeded to test its resistance level. On April 16, 2002, this stock closed at $35.12 per share and then proceeded to fall. On July 12, 2002, the stock closed at $28.93 per share. If the money flow were to continue to fall, this stock could test its support level of $20.71 by December 2002. Once again, we would like to reiterate that money flow is among the key factors that affect the price of a stock; therefore it should be monitored every day.

Although many of the secondary technology stocks have fallen to their low level, the large-cap tech stocks are still trading near their high level. Eventually many large-cap stocks may test their low level reached last year. This could happen later than we projected, perhaps as late as the end of September 2002, and then we may have a double dip recession.

Investors should remember that historically, secondary stocks fall first and the large-cap stocks such as Hewlett- Packard Company (NYSE symbol: HPQ), Cisco Systems, Inc. (NASDAQ symbol: CSCO), Dell Computer Corporation (NASDAQ symbol: DELL), and Microsoft Corporation (NASDAQ symbol: MSFT) are last to reach their bottom.

Due to the negative sentiment of investors the indexes continued to fall. On July 12, 2002, the Nasdaq Composite index ended the day at 1373.50, a 5-year low. The Dow Jones industrial average fell 117.00 points and ended the day at 8684.53.

Once again we would like to remind investors to remain calm during this bear market. Do not let your emotions make your investment decisions but rather continue buying stocks that are listed on your buy list when they reach your buy target level. If you don’t have a buy list, write one up as soon as possible.

Some of the tech-stocks may never again reach such low levels and should be bought now. The market could rally in the second half of this year and these stocks may reach a much higher level. Investors who are willing to wait patiently should buy select stocks now and hold them at least two years. In our opinion, some of the tech-stocks could ascend to the levels approaching their previous high and reward speculators with gains as high as 400 percent during the next three years. On the other hand, speculators may want to sell some of these technology stocks by the end of this year to lock in a short-term gain as high as 100 percent.

Although a few stocks such as Rite Aid Corporation (NYSE symbol: RAD) could reach a higher level during the next five months, overall the market could continue its downtrend until mid October 2002. The Nasdaq Composite index could test a low of 1222 by October 2002.

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.

Afterwards, this equity established a strong upward trend and on April 12, 2002, AMAT closed at $50.60 per share. This stock may revisit its recent high of $55.52, after the stock split adjusted to $27.76 and speculators who own this stock may want to sell half of the shares to lock in their gain.

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. As the money flow continued to fall this stock closed at $18.48 per share on July 12, 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. This stock could test its support level of $13.75 by October 2002. At such a level we would rate this stock a strong long-term buy. 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. 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

The main reason why we like this company is because it has an 83 percent 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 year 2006.

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 may only be bought by speculators. This stock closed at $0.47 per share on July 12, 2002, and we maintain our rating of speculative screaming buy.


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, and provide Internet access and video conferencing.

This stock closed at a low of $11.24 per share on September 27, 2001, and then proceeded to rebound and closed at $21.79 on December 6, 2001. Then, on May 17, 2002, this stock closed at $17.25 per share and afterwards resumed its downtrend.

On July 12, 2002, this stock closed at $14.38 per share. This equity is in a very slow downtrend and may test its support level by mid September 2002. This stock may revisit its low of $11.24 reached on September 27, 2001, and at such a level we would rate it a strong long-term buy. Investors who already own this stock could add to their position. Previously we had stated that this stock may be held at least ten years. Although patient investors may want to hold this stock five years, speculators may achieve better returns by trading this equity short-term.


Compuware Corporation (NASDAQ symbol: CPWR) makes software that manages corporate networks, and improves productivity. The 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, 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 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.

On July 12, 2002, this stock closed at $4.21 per share and we maintain our rating of a strong long-term buy. Due to the negative outlook for this sector, we have revised our long-term target level to $28 per share, from $35 per share. Once this stock reaches our revised target level, two hundred shares will be sold immediately. The remaining 150 shares will be held at least three years.


Corning Incorporated (NYSE symbol: GLW) is a major supplier of fiber-optic cable. In our opinion, its inventory has been depleted to a low level and as the demand improves, 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.

On July 12, 2002, this stock closed at $3.72 per share and we rate it a strong short-term buy. The expansion of revenues in this sector may be slower than we expected, therefore this stock will be held in our Model Portfolio until next year. These 100 shares of Corning Inc. will be sold as soon as this stock reaches approximately $15.50 per share, perhaps by the end of July 2003.


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. On July 12, 2002, these warrants closed at $0.25. The risk of owning these warrants is above average, therefore only speculators may buy them. 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. 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 the U.S. Ericsson LM Telephone projects that by the year 2003 the number of mobile phone users could reach over 800 million. ADR’s of Ericsson split 4-for-1 on May 8, 2000. The long-term outlook for Ericsson is excellent.

On April 11, 2002, five hundred ADR’s of ERICY were bought at $3.56 per ADR. During the next two weeks after this equity was bought, money flow fell $480 million and ERICY continued to fall. On July 12, 2002, ERICY closed at $1.54. This equity is at its bottom and we rate it a strong long-term buy.

Now there are 1,300 ADR’s of Ericsson LM Telephone in our Model Portfolio. The 500 ADR’s that were bought last will be held in our Model Portfolio long-term and then sold as soon as this equity reaches approximately $20, perhaps in the second half of 2004.


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. After this merger was finalized, the only thing we can do is to hold HPQ shares long-term until they reach approximately $46 per share, perhaps in 2004.

While Compaq Computer was an independent company, it sold 83 percent of interest in Alta Vista Web site to CMGI, Inc. and retained 17 percent equity in the Alta Vista. In the future it could become one of the top three sites and generate a substantial amount of revenue.

On July 12, 2002, HPQ closed at $15.27 per share. 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. On July 12, 2002, HPQ closed at $15.27 per share.

Speculators should wait until mid September 2002, and if this equity were to break through its support level of $14.62 it could fall to a low level of $8.57 per share by October 2002. At such a level we would rate this stock a strong 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 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.

On January 8, 2002, this stock closed at $35.58 per share 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 $21.28 per share on June 14, 2002. Due to the negative outlook for the stocks in this sector INTC closed at $17.99 on July 12, 2002. If the money flow continues to fall, this stock could test its support level of $9.35 per share by the end of September 2002. At such a level we would rate this stock a screaming 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, 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 five years.

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 approximately $50.00 per share, then these 500 shares will be sold.

The 200 shares that were bought in October 2000 at $11.63 per share will be sold when this stock reaches approximately $65.00 per share, perhaps in 2006. On July 12, 2002, this stock closed at a low level of $0.24 per share, and we rate it a speculative, strong long-term buy.


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

On July 12, 2002, this stock closed at $3.55 per share. We maintain our rating of a speculative strong buy. 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 $15 per share, perhaps by the end of July 2003.


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 15-17 percent of its 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, this stock broke below $20 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.

This stock was in a slow downtrend. In April we stated, “In May 2002, this stock may test its support level of $11.20 per share and at such a level would be a screaming buy.” This equity reached this level on May 7, 2002. On May 10, 2002, this stock closed at $11.53 per share. During the next four weeks money flow fell $220 million and LSI closed at $9.31 per share on June 14, 2002.

Due to the negative short-term outlook for this sector this stock continued to fall and closed at $7.41 per share on July 12, 2002. If the money flow continues to fall, this stock could test its support level of $5.35 per share by mid October 2002. At such a level we would rate this stock a screaming buy. As the earnings improve, stocks of chipmakers may appreciate substantially by the end of 2003, and LSI could reach approximately $22.50 per share.

This stock will be held in our Model Portfolio and will be sold as soon as it reaches our revised target level of approximately $42 per share, perhaps at the end of 2004.


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.

During the past eight weeks money flow fell $2 billion and this stock continued to fall. On April 15, 2002, this stock established a new support level of $3.80 and then proceeded to rebound.

On May 10, 2002, this stock closed at $4.45 per share and we rated it a screaming buy. As the money flow fell, on July 3, 2002, this stock tested its support level and closed at $1.50 per share. This stock closed at $2.56 per share on July 12, 2002. Buy this stock and hold long-term. Investors who already own this stock may add to their position.

This stock is for patient investors who are willing to hold it at least two years. By the year 2005, this equity may reach our revised target level of $32.50 per share.

As soon as LU reaches our target level, 150 shares will be sold. The remaining hundred shares will be held long-term, at least five years.


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.

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.

On May 3, 2002, this stock broke through its support level of $49.71 and closed at $49.56 per share. This stock tested its resistance level on June 14, 2002, and closed at $55.25 per share. On July 12, 2002, MSFT closed at $51.86 per share. If money flow were to fall, this stock could test its support level of $43.38 in August or September 2002.

Speculators should wait at least five weeks and if this equity were to break through its support level of $43.38 it could fall to a low level of $32.25 per share by November 2002. At such a level we would rate this stock a strong long-term buy.


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 percent of its revenues from sales in Europe and 44 percent from sales in other continents.

The long-term outlook for Nokia is excellent, as the demand for the company’s products grows worldwide.

In April 2002, we stated, “These ADRs may test their support level of $15.20 by the end of May 2002, and at such a level should be bought immediately.” On May 6, 2002, this equity broke through its support level of $15.20 and closed at $14.90 per ADR.

On July 12, 2002, this equity closed at $13.63. This equity could maintain its downtrend and if it were to break through its support level of $12.25, it could fall to $9.80 per ADR in August or September 2002. At such a level we would rate NOK a strong long-term buy. This equity may reach $45.25 in 2005 and at such a level should be sold immediately.


Nortel Networks Corp. (NYSE symbol: NT) is the leading provider of networking solutions, including optical networking solutions and wireless networking systems. The stock is way off from its high of $86 per share. Although this stock could continue to trade at a low level during a quarter or two, as soon as the growth of revenue reaches double digits, perhaps next year, this stock may once again resume its strong upward trend.

Until September 2001, we were estimating that this stock could revisit its high of $86 per share in less than twelve months. Due to the continued slow-down, it could take this stock three years to reach such a level. The Internet is not going away. Quite the opposite is happening. Each month millions of new users are accessing the Internet. As this greatly increases the demand for bandwidth, the demand for the equipment made by Nortel Networks could continue to grow worldwide.

There were 300 shares of Nortel Networks Corporation in our Model Portfolio. On April 8, 2002, an additional 300 shares were bought at $3.55 per share. Now there is a total of 600 shares of Nortel Networks Corporation in our portfolio. If this stock were to reach approximately $8.95 per share in the first half of 2003, the 300 shares that were bought last will be sold immediately to lock in a short-term capital gain.

On April 12, 2002, this stock closed at $3.49 per share and we rated it a strong buy. Due to the negative short-term outlook for this sector, this equity continued its downtrend. This stock closed at $1.45 per share, on July 12, 2002. We maintain our rating of a speculative strong buy. This stock will be held in our Model Portfolio until it reaches approximately $48.75 per share, perhaps in the second half of 2005, and then it will be sold.


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.

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.

On January 31, 2002, this stock tried to break through its resistance level but was not able to make it and closed at $17.26 per share. A week later, on February 7, 2002, this stock closed at $15.92 per share. We stated in February, “If the money flow were to fall, this stock may proceed in a downward direction and may test its support level of $13.40 in March 2002.”

As the money flow fell $2.2 billion this stock continued to fall and closed at $11.51 per share on April 12, 2002. The money flow fell an additional $5.7 billion during the next four weeks and the stock closed at $8.01 per share on May 10, 2002.

The stock tested its resistance level and closed at $8.57 per share on June 14, 2002. As the money flow improved, this stock closed at $9.68 per share on July 12, 2002. This equity could test its resistance level of $11.93 by August 2002. Afterwards, if the money flow were to fall, this stock will reverse its trend and could test its support level of $6.33 per share, perhaps by the end of September 2002. At such price level we would rate this stock a strong buy. Speculators who buy this stock should sell it as soon as it reaches our revised target level of $19.54 per share, perhaps in the first half of 2003.


Pfizer, Inc. (NYSE symbol: PFE) is a diversified manufacturer of pharmaceuticals and consumer products. After the company merged with Warner-Lambert it became a pharmaceutical behemoth with an extensive R & D department. Among its brand name pharmaceutical products are Norvasc for hypertension, Zoloft for depression, Lipitor for lowering cholesterol level, and Viagra, a pill for erectile dysfunction.

Although the long-term outlook for the company is good, short-term this equity may proceed to test its support levels. During the past three months money flow fell $16.7 billion and this stock is maintaining its downtrend.

In June 2002, we stated, “This equity could test its support level of $32.63 in August or September 2002.” Due to the selling pressure and the high outflow of money for this equity, this stock closed at a low level of $31.03 per share on July 10, 2002, down $2.07 for the day.

On July 12, 2002, this stock closed at $32.20 per share. If money flow continues to fall, this stock could reach a low level of $18.57 by the end of 2002. At such a level we would rate this stock a strong long-term buy.


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.

On June 7, 2002, this stock broke through our previous buy target level of $12 per share and closed at $10.12 per share, down $5.12. The company cut its earnings forecast for the current quarter and the stock plunged immediately on June 7, 2002, on a heavy volume of 40.7 million shares.

The stock of RF Micro-Devices, Inc. reached our buy target level and on June 14, 2002, two hundred shares were bought at $9.07 per share and added to our Model Portfolio. In June 2002, we stated, “There is a slight probability that this stock could continue its downtrend and may fall below $7.25 per share by mid September 2002.” This stock reached such a level much sooner than we projected. On June 19, 2002, this stock closed at $7.09 per share, down $1.32 for the day. As money flow continued to fall, this stock closed at a low level of $6.44 per share on June 25, 2002.

On July 12, 2002, RFMD closed at $8.74 per share. This stock could test its support level of $6.44 in August 2002, and if it were to break through this support level it could reach a low level of $4.75 per share by the end of September 2002. At such a level we would rate this stock a screaming long-term buy.

When the earnings outlook and the money flow improve, RFMD could rebound to approximately $22.50 per share, perhaps in the second half of 2003. At such a level, speculators should sell this stock immediately. To find out more about RFMD, please read Stocks for traders.


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 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.

When earnings start to improve, this equity may reach approximately $10 per share by the end of 2002 and speculators should sell it immediately. Once again, we would like to remind investors that this stock is very risky; therefore it should only be bought by speculators.

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 short-term and as soon as this equity reaches our target level of approximately $10 per share, all of these shares will be sold to lock in a short-term gain. On July 12, 2002, this stock closed at $2.35 per share and we maintain our rating of speculative, strong short-term buy.


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.

As additional hundreds of millions of users access the Internet, the demand for servers could grow 50 percent 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 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.

On February 28, 2002, an additional 300 shares of SUNW were bought at $8.61 per share and added to our Model Portfolio. These 300 shares will be sold as soon as this stock reaches approximately $14.50 per share, perhaps by the end of 2002, to lock in a short-term gain.

In March we stated “There is a slight probability that SUNW may revisit its support level of $8.07 by the end of March 2002, and at such level would be a screaming buy.” This stock was falling at a slow pace and on April 12, 2002, closed at $7.97 per share. At that level we rated this stock a strong, short-term buy. On July 12, 2002, this stock closed at $5.27 per share and we maintain our rating of a strong short-term buy, and a screaming long-term buy.


Vertical Net, Inc. (NASDAQ symbol: VERT) is an Internet incubator that owns and operates over 50 Websites designed as online business-to-business communities.

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 per share. Furthermore, we stated that the risk of owning this B2B start up 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 level and continue to fall? When this stock fell below $5 per share it looked as 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. Due to the recent strategic changes by the management of this company, we have revised our long-term sell target level downward, from $45 per share to $10 per share. As soon as this stock reaches our revised target level, the 700 shares that are held in our Model Portfolio will be sold to lock in a long-term capital gain.

Once again, we would like to reiterate that this stock is not for the faint of heart and may be bought only by speculators. On July 12, 2002, this stock closed at $0.15 per share and we rate it a speculative strong buy.


WorldCom Inc. (NASDAQ symbol: WCOME) 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 worlds 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 recent sell-off in the telecommunications sector, this stock closed at a low level of $5.01 per share on April 12, 2002. Although the risk of owning this stock is above average, at that level we rated this stock a strong buy.

On July 12, 2002, this stock closed at $0.13 per share. Due to the $3.85 billion accounting debacle that has pushed WorldCom to the brink of bankruptcy now it’s unlikely that this stock would reach one dollar per share. Now it’s too late to sell this stock, therefore it will be held in our Model Portfolio as a reminder of what could happen to a stock of any company.


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. We project that this stock could rise twenty-fold from its present level during the next five 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 revised target level of $170 per share and then these one hundred shares will be sold.

On July 12, 2002, this equity closed at $12.94 per share. This stock is still in a downtrend and may test its support level of $9 per share by the end of October 2002. At such a level this stock would be a speculative, strong long-term buy. On the other hand, speculators may want to buy YHOO for a short-term trade and sell it as soon as it reaches approximately $18.02 per share, perhaps in the first half of 2003.

On June 21, 2002, the stock of Advanced Micro Devices (NYSE symbol: AMD) reached our target level and two hundred shares were bought at $8.11 per share. If the stock of Advanced Micro Devices were to fall to approximately $6.55 per share in September 2002, an additional 100 shares will be bought and added to our Model Portfolio.

The earnings outlook for this stock may improve substantially and, as more money flows into this equity, it could reach a high level in the first half of 2003. As the demand for chips made by Advanced Micro Devices improves, this stock could reach our revised sell target level of $19.60 per share. To find out more about this stock, please read Stocks for traders.

The stock of Motorola Inc. (NYSE symbol: MOT) is in a slow downtrend so we made a decision to sell this stock. On July 9, 2002, one hundred shares of MOT were sold at $14.72 per share. This stock was bought on March 20, 2001, at $15.00 per share. The cash receive from this trade was added to the cash in our Model Portfolio.

If this stock were to break through its support level of $11.80 it could fall below $9.98 per share perhaps by October 2002, and at such a level one hundred shares would be bought and added to our Model Portfolio.



On July 10, 2002, one hundred shares of Dell Computer Corporation were sold at $24.84 per share. This stock was bought on April 15, 1999, at $38.63 per share. At that time our overall strategy was to buy and hold. This stock was held in our portfolio too long and when it was finally sold it generated a loss of 37 percent. Although this was not bad in this bear market when some of the blue chip tech stocks fell 90 percent, it still diminishes the performance of our Model Portfolio.

Depending on the money flow, volume, and other key indicators, this stock could break through its support level of $16.63. There is a slight probability that this stock could fall to approximately $10.15 per share by October 2002. If this stock were to reach such a low level, two hundred shares would be bought and added to our Model Portfolio.

The cash from this trade was added to the existing cash and now there is $5,176 of cash in our Model Portfolio.

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 as soon as possible, while these stocks are at their lowest level. In the year 2002, the annual contribution limit for Roth IRA for these taxpayers who are under age 50, is $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 the 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. This equity will be held long-term until it reaches our target level of $20, perhaps in the second half of 2004, and then it will be sold.


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. This stock is for patient investors who are willing to hold it at least two years. In the year 2004, this equity may reach our revised target level of $32.50 per share at which it will be sold immediately.


Nortel Networks Corp. (NYSE symbol: NT) is the leading provider of networking solutions, including optical networking solutions and wireless networking systems. The stock is way off from its high of $86 per share. On May 10, 2002, one hundred shares were bought at $2.84 per share. This stock will be held long-term until it reaches approximately $48.75 per share. If this stock were to reach such a level in the second half of 2005, it should be sold immediately.


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 equity may be traded short-term. In the first half of 2003, this stock could reach our revised target level of $19.54 per share and should be sold immediately to lock in a short-term gain.


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 short-term and as soon as this equity reaches our target level of approximately $10 per share, all of these shares will be sold to lock in a short-term gain.


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 I I.

As additional hundreds of millions of users access the Internet, the demand for servers could grow 50 percent annually during the next five years. Patient investors may hold this stock until it reaches approximately $41.25 per share, perhaps in the second half of 2005. At such a level this stock should be sold immediately to lock in the long-term gain.