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 May 10, 2002, the stock of VeriSign, Inc. (NASDAQ symbol: VRSN) closed at $10.00 per share. Read on to see how we rate this stock. We are also featuring the stock of McAfee.com Corporation. Those wondering whether to buy or sell these stocks will want to read the “Buy & Sell” section.


The Nasdaq Composite index closed at a low of 1600.85 on May 10, 2002, and is down 17.92 percent for the year. The stock valuations are more reasonable than they were four 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.


To read about recent additions to our Model Portfolio, see Bought. This month’s section details our purchase of LSI Logic Corporation (NYSE symbol: LSI) at $11.05 per share and Oracle Corporation (NASDAQ symbol: ORCL) at $8.37 per share. In this section a potential investor will also find our “sell target level” for these stocks.


Read our Buy Alert section to find out which stocks we will be buying and at what target levels. Among these are technology stocks for which we have compiled a list of potential purchases.


Finally, 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.


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

JESSICA BEZOLD, Editor

In March 2002, the ADR’s of Ericsson LM Telephone (NASDAQ symbol: ERICY) were added to our buy list of equities posted in Buy Alert. Our target level to buy ERICY was set at $3.79. When the ADR’s of Ericsson LM Telephone fell below our target level, five hundred ADR’s of ERICY were bought at $3.56 per ADR on April 11, 2002.

Due to the warning of lower unit sales, this equity proceeded to fall to a much lower level and on May 6, 2002 closed at $2.18 per ADR. We maintain our rating of strong long-term buy for ERICY. These 500 ADR’s 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 2003.

On many occasions, a speculator may buy equity when it reaches its buy target level and then watch it break below that level. When this happens, the speculator should just hold that equity patiently in a portfolio until it reaches its sell target level.

Every speculator should have a list of large cap stocks to buy at specific target levels. Speculators should be patient and wait until each stock reaches its buy target level. Do not buy the stock before it has reached your buy target level because you fear that it may have already started its upward trend. If a stock runs away from you and reaches a much higher price level instead of reaching your buy level, forget about that stock.

That is correct, forget about that stock. Is your objective to buy a stock and then brag to your friends that you own it, or is your objective to buy a stock at its lowest level and then sell it at its highest level to lock in your short-term gain? Surely, the latter would be more rewarding. If one or two stocks run away from you but you still have several other stocks on your buy list that you may be able to buy at their low level, be patient and then buy those stocks.

A speculator may have a list of stocks that would require more cash to buy than is available at that time. It is advisable that a similar amount of cash should be committed to each stock. Therefore, if a speculator has $10,000 of cash on hand and intends to buy stocks of five companies, $2,000 should be committed to each stock. Such a speculator may have a list of eight stocks and if the price of three of these equities were to run away, there will still be five stocks left on the list that may be bought near their buy target level. Speculators should remember the phrase “near target level.” Remember, you may never buy a stock at its lowest level and then sell it at its highest level, but if you can lock in approximately 60 percent of the upside appreciation of each stock, you will do well. Don’t be greedy. Remember the adage “bulls make money, bears make money, pigs lose their shirt.” Each speculator should always be open minded and willing to buy a stock, preferably a large cap one that was not on the list, when it has fallen to a very low level.

There are many factors that influence investors’ decisions. Two of these factors are greed and fear. Here is a basic example of greed. An investor buys 100 shares of ABZ stock at $22 per share after it has fallen from its 52-week high of $45 per share. After eight months, the stock has reached its previous high and once again is trading at $45 per share. The investor continues to hold this stock, hoping that it may reach a higher level.

Unfortunately, two months later the stock starts to fall. Four months into the downtrend of this stock, its chart specifies that the 50-week moving average fell below the 200-day moving average. This technical indicator reinforces the downward trend and after an additional eight months this stock is down to $22 per share. Had this investor sold the stock at $45 per share, the sale would have generated a short-term gain of approximately 100 percent. Although this investor would have to pay tax on this short-term capital gain, the sale could still net approximately a 62 percent gain for someone who is in the highest tax bracket.

Although there is the adage “Let your profits run,” it is very beneficial for an investor to set a target level at what price a particular stock will be sold. When the stock nears that level, monitor it closely, every day. If an investor had bought the stock of ABZ at $22 per share, set a target level of $40, and sold this stock at $40 per share, the investor would have locked in a short-term gain of approximately $18 a share, or 81 percent, before taxes. Surely, it would have been better to sell this stock at $40 per share and pay taxes on the short-term gain, than to hold this stock and watch it fall to $22 per share.

Now, lets take a look at “fear,” another major factor that influences investors’ decisions. The stock of XYZ has traded as high as $55 during the past 52 weeks. An investor buys 100 shares of a blue-chip XYZ stock when it has fallen to $32 per share, after analyzing its fundamentals. Four weeks later, this stock falls $8 a share in one day, to $24 per share. The investor is concerned that this stock could continue to fall and sells it the next day at $23.50 per share, with a loss of $850 plus the cost of commission. Five weeks later, this investor is shocked when the stock reaches $32 per share. Furthermore, to make matters worse, after an additional eight weeks, XYZ stock reaches $37 per share. Had the investor continued holding this stock it would have generated a gain of $5 a share.

First, it makes a big difference whether this is a large-cap blue chip stock or, for example, an Internet stock. If it was a large-cap blue chip stock surely, investor could have held it. Secondly, the price of each stock will fluctuate. The price of some of the stocks fluctuates as much as $15 per share within three months, and that is why investors should look at the chart of each stock before buying it. Surely, if the stock is at the three months high, one should not buy it at this level. An investor should wait four to six weeks and then buy it. Once again, monitor the chart, and once the stock reaches a bottom and then starts to rebound, buy it. If a stock reached a high level of $42 per share two months ago and, after falling to $26.50 a week ago, now trades at $30 per share, it could be bought at this level. Once the stock revisits its recent high of $42 per share, it could be sold to lock-in a short-term gain of $12 a share, or 40 percent. On the other hand, if more money were to flow into this stock, it could reach $47 per share within three months, thus generating a gross short-term gain of $17 a share, or approximately 56 percent.

These are simplistic scenarios that take into account money flow and fluctuations in the price of the stock. In real trading situations investors should pay attention to other factors. Another major factor is earnings in the specific quarter, and this could influence the price of the stock substantially in either direction, depending whether announced earnings are better or lower than expected. Our latest motto is: If the projected earnings for the quarter are lower than earnings for the same quarter a year ago, sell the stock before the company makes its earnings announcement.

Last but not least is the investment strategy. Investors have been told to buy stocks and hold long-term. Such a strategy is excellent when an investor buys a stock that continues its overall upward trend over the course of five or ten years, and generates a return as high as 3,000 percent. This type of investment strategy would be great if it were possible to select stocks that would perform in such a manner, but it is almost impossible to estimate beforehand which stock out of several thousand could generate such a return.

On the other hand, it is much easier to monitor the charts of a group of stocks and buy each one, selectively, after they have reached their 52-week low and start rebounding. Such stocks could be traded monthly, quarterly, or held as long as eleven months, and then sold as soon as each stock reaches its target level. Some of the large-cap blue chip stocks fall as much as 40 percent from their 52-week high. When such a stock is bought at a low level, once it rebounds to its 52-week high it could generate a return of approximately 60 percent in less than one year.

At this time, a conversion from a traditional IRA into a Roth IRA is probably the last thing on the minds of investors. In our opinion, now is the best time to do such a conversion, when the total value of ones portfolio is at the lowest level. Anyone may convert a traditional IRA into a Roth IRA. Although the conversion would be considered a taxable distribution from the traditional IRA, it would not be subject to the 10% tax penalty for early withdrawal. The total amount of this conversion would be added to the taxpayer’s annual income, and the tax would be due in the year when the conversion was done, at the taxpayers prevailing tax bracket. Before you convert your traditional IRA into a Roth IRA, consult with your financial planner, or a CPA. Depending on the situation and the tax bracket of the individual, a financial planner may, or may not advise the IRA conversion.

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.

An investor could do a partial conversion. For example, if an investor had a traditional IRA with a total value of $100,000 only $20,000 could be converted into a Roth IRA. This could be done every year, or every other year. In our opinion, now is the best time for investors to convert a part of a traditional IRA into a Roth IRA while stocks are at their lowest level, thus the tax consequences will be minimized. Once again, investors should consult with a financial planner or a CPA to find out if such a conversion is advantageous and what will be its tax consequences.

On May 4, 2002, the media proceeded to inform the public that unemployment rate rose to 6 percent in April, an 8-year high and the near term outlook for the economy is bleak. What the media forgot to mention was that three years ago unemployment fell to 4 percent, a 30-year low.

Before 1999, economists used to consider 5 percent as full employment level and if the number were to fall below, it would cause inflationary pressure. The economists were wrong because when the unemployment rate fell to a low level of 4 percent in 1999, it did not cause inflationary pressure. Unfortunately, the members of Federal Reserve Board feared that such low unemployment level could accelerate inflation and they proceeded to raise interest rates. In our opinion, such action was unnecessary and it stopped the expansionary cycle in its tracks.

The economy started to contract sharply and the Fed proceeded to lower interest rates at the end of 2000, but by then it was too late. As the economy continued to contract, the unemployment rate proceeded to reach a higher level. Investors should not be concerned about the recent rise in the unemployment rate. Although the economy is already in the recovery mode, with the GDP rising to 5.8 percent in the first quarter of 2002, it is typical for the unemployment rate to rise to slightly higher level.

Historically, at the beginning stage of the expansionary cycle the unemployment rate would continue to rise and after approximately six months the unemployment rate would start to fall. At this time corporations are still trying to squeeze more profits by cutting their expenses and one of the ways to achieve it is to decrease the amount of workers, or cut their hours. There is a slight probability that unemployment rate could reach 6.5 percent during the next three months and then start falling in the fourth quarter of 2002.

Once again we 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.

The stock of Compuware Corporation (NASDAQ symbol: CPWR), Corning Incorporated (NYSE symbol: GLW), and several other stocks that are in our Model Portfolio fell to a very low level and speculators and investors should buy them now.

Some of these 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 three hundred percent during the next two years. On the other hand, speculators may 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 three months, overall the market could continue its downtrend until mid September 2002.

This year we may not have a summer rally. Investors should remember that historically secondary stocks fall first and the large cap stocks such as Intel Corporation (NASDAQ symbol: INTC) are last to reach their bottom.

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 event on 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.

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 may even fall, this stock may test its support level. Although this stock may not fall to its support level of $13.93 per share that was reached last year, it may test its support level of $15.80 by September 2002. At such a level we would rate this stock a strong 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 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 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 2004.

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 $1.01 per share on May 10, 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.

On August 31, 2001, this stock closed at $16.33 per share. In the September, 2001 issue, we stated that this stock could test its support level and may fall to approximately $15 per share. At such a low level this stock would be a strong buy.

This stock closed at a low of $11.24 per share on September 27, 2001, then proceeded to rebound and closed at $21.79 on December 6, 2001.

On May 10, 2002, this stock closed at $15.42 per share. This equity is in a slow downtrend and may test its support level in July 2002. Although this stock may not revisit its low of $11.24 reached on September 27, 2001, at approximately $12.00 per share it would be 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 hold this stock five years, speculators may achieve better return 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 May 10, 2002, this stock closed at $6.36 per share and we rate it a strong 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 long-term, 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.

On May 10, 2002, this stock closed at $6.38 per share. 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 $17.50 per share, perhaps by the end of July 2003.


Dell Computer Corporation (NASDAQ symbol: DELL) is the world’s number one direct-sale computer manufacturer in the world. The Company makes personal computers, notebook computers, servers, and workstations.

In March of 1999, the Company issued a 2-for-1 stock split, the seventh in eight years. On March 22, 2000, the stock reached an intra-day high of $59.68 per share. Then the stock proceeded to fall.

On September 21, 2001, this stock closed at a low level of $16.63 per share, and then proceeded to rebound to $29.67 per share on December 5, 2001. This stock closed at $23.88 per share on May 10, 2002. By the end of June 2002, this stock may test its support level and at approximately $17 per share would be a strong buy.

Although it is not likely that the stock of Dell Computer Corporation may appreciate at such a fast pace as it did between 1994 and 1999, in our opinion, this stock could generate a gain of approximately 1,500 percent in six years.


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 a symbol ELANZ and expire on August 31, 2005. On May 10, 2002, these warrants closed at $0.45. 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 $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. Immediately after this equity was bought, during the next two weeks money flow fell $480 million and ERICY continued to fall. On May 10, 2002, ERICY closed at $2.21 per ADR. 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 2003.



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 rate 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. Both companies will promote this site. In the future it could become one of the top three sites and generate a substantial amount of revenue.

This stock could test its support level of $14.96 by August 2002. At such a level this stock would be 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, 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 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. 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 is still in a downtrend and on May 10, 2002, closed at $27.01 per share. In June, or July 2002, this stock may fall below $21.45 per share. At such a level we would rate this stock a strong long-term buy.


Internet Capital Group (NASDAQ symbol: ICGE) is a venture capital group that owns a stake in over 52 Internet companies. This venture capital group owns a stake in Vertical Net, 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 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 $95 per share perhaps in 2006. On May 10, 2002, this stock closed at a low level of $0.36 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. The outlook for this company may start to improve and this stock may double in value during the next six months.

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 May 10, 2002, this stock closed at $3.78 per share. At this level we rate this stock a strong buy. These 200 shares will be sold as soon as this stock reaches approximately $15 per share, perhaps by the end of November 2002, to lock in a short-term gain.


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 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. Stocks of chipmakers may appreciate substantially by the end of 2002 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 2003.


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 a low level of $4.45 per share. At this level we rate this stock a screaming buy. 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. In the year 2004, this equity may reach our revised target level of $55 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 is still in a downtrend and on May 10, 2002, closed at $50.05 per share. If money flow were to continue to fall, this stock may break through its September 21, 2001, support level of $49.71 and could test its support level of $43.38 in June, or July 2002. At such a level we would rate this stock a strong buy.


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.

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 five percent. 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.

This equity remained in its downtrend. On May 10, 2002, MOT closed at $14.76 per share. This stock may test its support level of $11.80 in June, or July 2002, and at this level we would rate it a strong buy. Hold this stock until it reaches our target level of approximately $50 per share in three years.


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.

American Depository Receipts of Nokia Corporation closed at $15.17 on May 10, 2002. 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 July 2002. At any level below $12.25 we would rate NOK a strong long-term buy. This equity may reach $45 level in 2005 and at such 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 approximately 50 percent, 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. This greatly increases the demand for bandwidth therefore 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 $9 per share by the end of August 2002, 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 and closed at a seven year low of $2.70 per share on May 10, 2002. This stock will be held in our Model Portfolio until it reaches approximately $50 per share, perhaps in the second half of 2004, 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 continued to expand and during the past four weeks fell an additional $5.7 billion. On May 10, 2002, this stock closed at $8.01 per share. At such price level, we rate this stock a strong buy. Speculators who buy this stock now should sell it as soon as it reaches our revised target level of $22.50 per share, perhaps by the end of 2002.


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 is Norvasc for hypertension, Zoloff for depression, and Lipitor for lowering cholesterol level. The latest addition is Viagra, a pill for erectile dysfunction.

On June 30, 1999, the company issued a 3-for-1 stock split. Although the long-term outlook for the company is good, short-term this equity may proceed to test its support levels. During the past four weeks money flow fell $10.9 billion and this stock is maintaining its short-term downtrend. On May 10, 2002, this stock closed at $36.22 per share. This equity could test its support level of $32.63 in June 2002, and at such level we would rate it a long-term buy.


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 may 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 May 10, 2002, this stock closed at $3.10 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 May 10, 2002, this stock closed at $6.26 and we maintain our rating of 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. 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 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. These 500 shares will be held in our Model Portfolio long-term until this equity reaches approximately $45 per share, then these 500 shares will be sold to lock in 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. The 200 hundred shares that were bought in February 2001, at $3.72 per share will be held in our Model Portfolio until the stock reaches approximately $140 per share, perhaps in 2005, and then will be sold to lock in long-term capital gain. On May 10, 2002, this stock closed at $0.40 per share and we rate it a speculative strong buy.


WorldCom Group (NASDAQ symbol: WCOM) has already 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. The risk of owning this stock is above average. At that level we rated this stock a strong buy.

We had a long-term sell target level of approximately $50 per share for this equity. Now it seems that there is a very slight probability that this stock will ever achieve such level.

On May 10, 2002, this stock closed at $1.58 per share. Due to the very negative short-term outlook for the company, we have revised our rating for WCOM from a strong buy, to a hold.


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.

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 one 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 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 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 target level of $300 per share and then these one hundred shares will be sold.

Money flowing into this stock reached its highest level on January 10, 2002 and then proceeded to fall. On April 12, 2002, this stock closed at $15.72 per share. Due to the strong money flow of $1.4 billion during the prior two weeks, this stock went up and tested its resistance level.

On May 10, 2002, this equity closed at $15.46 per share. This stock is still in a downtrend and may test its support level of $9 per share by the end of August 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 $20.50 per share, perhaps by the end of 2002.

The stock of LSI Logic Corporation (NYSE symbol: LSI) broke through our buy target level on May 6, 2002, and closed at $11.10 per share. On May 7, 2002, three hundred shares of LSI were bought at $11.05 per share and added to our Model Portfolio. At this price level we rate LSI a screaming buy. As the demand for microprocessors made by LSI Logic Corporation continues to grow and the earnings outlook improves by the fourth quarter, this stock could reach our sell target level of approximately $22.25 by the end of 2002. As soon as this stock reaches our target level, these 300 shares will be sold. To find out more about this stock, read Stocks for traders.


On May 10, 2002, two hundred shares of Oracle Corporation (NASDAQ symbol: ORCL) were bought at $8.37 per share. Although there were already 300 shares of ORCL in our Model Portfolio, when this stock fell to such a low level a decision was made to buy more shares. If money flow were to improve during the next three months, ORCL could reach approximately $14.43 per share by August 2002, and at such level these 200 shares would be sold immediately. Otherwise, this stock will be held in the portfolio until it reaches our revised sell target level of $22.50 per share by the end of 2002. At such price level all of the shares in our Model Portfolio would be sold immediately.

The stocks listed below will be bought when they reach their support level and added to our Model Portfolio. All of these stocks will be traded short-term. If these stocks were not to reach our “buy” target level, then a smaller quantity of each stock will be bought.


Three hundred shares of Advanced Micro Devices, Inc. (NYSE symbol: AMD) will be bought as soon as this stock tests its support level. We are maintaining our buy target level of $8 per share. We will wait until this equity tests its support level, perhaps in June, or July 2002, and then this stock 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 may reach high level in the fourth quarter of 2002. Due to the slow price trend of this equity, we have revised our sell target level for this stock from $27.50 per share to approximately $22.50 per share. As the demand for chips made by Advanced Micro Devices improves, this stock could reach our sell target level of $22.50 in the fourth quarter of 2002. To find out more about this stock, read Stocks for traders.


Two hundred shares of RF Micro-Devices, Inc. (NASDAQ symbol: RFMD) will be bought as soon as this stock falls to our revised target level of approximately $9.06 per share. Due to the slow price trend of this equity, we have revised our buy target level downward. In May 2002, we revised our buy target level on this stock from approximately $12 per share to approximately $9.06 per share. This stock may reach our buy target level by August 2002. At such price level we would rate this stock a speculative screaming buy.

When the money flow improves, RFMD may rebound to approximately $29 per share, possibly by the end of November 2002. If this stock were to reach such a level, speculators should sell it immediately. To find out more about RFMD, read Stocks for traders.

Cash $4,740

Total $66,084

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 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 2003, 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 $55 per share and 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. If this stock were to reach approximately $9 per share by the end of August, 2002, it will be sold immediately to lock in short-term capital gain, otherwise these one hundred shares will be held long-term until the stock reaches approximately $50 per share.


Oracle Corporation (NASDAQ symbol: ORCL) is the worlds 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. By the end of 2002, this stock could reach our revised target level of $22.50 per share and should be sold immediately to lock in a short-term gain, which would not be taxable in the Roth IRA.


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.