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 October 18, 2002, Albertson’s, Inc. (NYSE symbol: ABS) closed at $25.56 per share. Read on to see how we rate this stock. We are also featuring the stock of Great Atlantic & Pacific Tea Company Inc. (A&P) (NYSE symbol: GAP) that closed at $6.78 per share on October 18, 2002. Those wondering whether to buy or sell these stocks will want to read the “Buy & Sell” section.


The stock valuations are more reasonable than they were six months ago. Therefore, investors and speculators may proceed to accumulate 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 eight 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

Cash is king! Investors should preserve the cash they have on hand and proceed to accumulate equities at a moderate pace. Do not commit more than 10 percent of cash to equities at this time because it could take this lengthy bear market several more months to reach its bottom.

On Monday, October 19, of 1987 the market crashed and the Dow Jones industrial ended the day at 1738.74, down 508 points, or 22.6 percent. The Dow Jones industrial ended the year of 1987 with a gain of 2.26 percent for the year. At that time the market tumbled in a short time but then it rebounded rapidly.

In 1990 there was a recession that lasted less than eight months. During that time the stocks of major computer manufacturers fell approximately 50 percent, except for IBM that fell only 23 percent. By the time the recession ended, the majority of computer manufacturers had seen their stocks rebound to the high price levels that preceded the recession.

The latest bear market is totally different from the previous bear markets. Instead of falling rapidly, the market has been eroding at a slow pace for 30 months and there is no end in sight. As the stocks reach low levels, the analysts proceed to downgrade them and these equities descend to lower levels. Furthermore, during the previous bear markets the stocks from all sectors fell at approximately the same time and then rebounded almost at the same time.

During the latest bear market the Internet stocks fell first and then were followed by networking stocks and the telecommunication stocks. As recently as four months ago retail stocks were touted as defensive stocks but now these are also beginning to plummet to low levels. On October 17, 2002, the stock of Sears, Roebuck and Co. (NYSE symbol: S) closed at $23.15 per share, down $10.80.

In our opinion there is no such thing as a defensive stock. During a bear market, stocks in any sector can fall, perhaps with the exception of gold stocks as these have been excellent performers throughout the past twelve months.

In February 2002 we started to accumulate stocks for our Model Portfolio. Some of these stocks had already fallen as much as 89 percent and we saw future upside potential in these equities. Unfortunately due to this vicious bear market these stocks have not reached their bottom yet.

On June 21, 2002, two hundred shares of Advanced Micro Devices, Inc. (NYSE symbol: AMD) reached our target level and were bought at $8.11 per share. This stock was already down 84 percent from its all time high.

On September 20, 2002, we stated “If this equity were to fall to our revised buy target level of approximately $3.74 per share by the end of November 2002, an additional 200 shares will be bought and added to our Model Portfolio.”

After the company announced on Wednesday, October 2, 2002, that its third-quarter revenue will come in below estimates, the stock was pummeled on Thursday, October 3, 2002, and closed at $3.63, down $1.74 for the day. On October 4, 2002, an additional 300 shares of Advanced Micro Devices were bought at $3.58 per share and added to our Model Portfolio.

Lately no one seems to want to buy stocks although many of them are down as much as 90 percent from their high levels. Due to dismal earnings, growing mistrust of corporate management, and the lack of visibility on the part of Chief Executive Officers, 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.

Although many of the secondary technology stocks have fallen to their low level, the large-cap tech stocks are still trading at a high level. Eventually many large-cap stocks may test their low levels. This could happen later than we projected, perhaps as late as mid December 2002.

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 the last to reach their bottom.

Once again we would like to remind investors to remain calm during this lengthy 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. Investors may start to accumulate stocks but at this time should not commit more than 10 percent of cash to new equities. The market could rally in the second half of next year and the technology 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.

After closing at a low of 7286.27 on October 9, 2002, the Dow Jones industrial average proceeded to ascend. On October 18, 2002, the Dow Jones industrial average closed at 8538.24, a gain of 1251.97, or 17 percent in just seven trading days. Due to the fact that there weren’t any positive economic indicators to push the market higher therefore there is a strong probability that this was just another bear market rally. When the indexes test their resistance levels the market could reverse its upward trend and plunge at a fast pace. Some of the large-cap blue chip stocks may descend at a slow pace and reach a bottom by April 2003.

In January 2002, we stated in Investing “Warning! Speculators who have marginal accounts should minimize the margin level as soon as possible. Sell some of the stocks in your account during the market rallies in January 2002. Bring your margin level to zero, if possible. Speculators who do not bring their margin level to zero should be prepared to have enough cash on hand to add to their marginal account.”

The market has not reached its bottom yet. Speculators who are still on margin should sell some of their blue chip stocks before they generate a loss. Continue to build cash position. As the remainder of the large-cap stocks continues to fall, these marginal accounts could generate margin calls during the next five months.

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

AMD could continue to spend a large percentage of its gross revenues on research and development and try to keep pace with Intel by introducing faster processors to the market. As AMD sells a larger quantity of higher priced processors, the average selling price will continue to rise, thus improving profit margins.

The stock of AMD reached a high of $94.63 per share on June 21, 2000 (after the 2-for-1 stock split that was issued on August 22, 2000, this high was adjusted to $47.32). Before the company issued the split, the stock was already in a downtrend. During the sell-off in chip stocks, this stock closed at $13.81 per share on December 29, 2000.

Due to the strong money flow, this stock proceeded to rebound and closed at $20.00 per share on January 4, 2002. On January 8, 2002, this stock closed at $19.90 per share and we stated: “…in our opinion it is fully valued at this level.”

On April 12, 2002, this stock closed at $13.15 per share. This stock maintained its downtrend and on April 18, 2002, broke through its support level of $12.85 and closed at $12.60 per share, down $2.21 for the day. As the money flow continued to fall, this stock maintained its slow downtrend and closed at $9.60 per share on June 14, 2002.

This stock reached our buy target level on June 21, 2002, and 200 shares were bought at $8.11 per share and added to our Model Portfolio.

The money flow fell sharply and this stock closed at $6.40 per share on September 20, 2002. On September 20, 2002 we stated “Depending on the money flow and other key indicators this equity may continue its downtrend and could reach a low of approximately $3.74 per share by the end of November 2002, and at such a level speculators may want to buy more shares.” After the company announced on Wednesday, October 2, 2002, that its third-quarter revenue will come in below estimates, the stock was pummeled on Thursday, October 3, 2002, and closed at $3.63 down $1.74 for the day. On October 7, 2002, this equity closed at a low level of $3.20 per share

Afterwards this stock proceeded to rebound and closed at $4.40 per share on October 18, 2002. Investors may want to accumulate this stock at any level below $3.50 per share.

The trend of this stock is much slower than we projected. It took this equity much longer to fall, and it may also take AMD much longer to build an upward momentum. Depending on the money flow and other key indicators, it may take this stock several months to reach a higher level. Therefore, we have revised the time frame when this stock may reach its high.

Before March 2002, we projected that the stocks of chipmakers may appreciate substantially by the end of the first half of 2002. Due to the much slower trend, the stocks in this sector could reach their higher level in the second half of 2003. The stock of Advanced Micro Devices may reach approximately $15.75 per share by November 2003. At such a level speculators should sell it immediately to lock in their gain.


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

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

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

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

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

On October18, 2002, AMAT closed at $13.44 per share. If the money flow were to fall, this stock could test its support level of $6.27 per share by March 2003. At such a level we would rate this stock a strong long-term buy. Investors who bought this equity at approximately $13.75 per share may want to average down and acquire more shares. Long-term, this stock could reach $48.25 per share. Hold this stock at least four years.


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

CMGI, Inc. has developed a strategy to acquire start-up Internet companies, and then either sell them outright, or sell a minority interest and reinvest the cash proceeds. The company has a history of acquiring successful Internet companies. 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 by the year 2006.

Once this stock reaches our revised target level of $59.75 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 $0.51 per share on October 18, 2002, and we maintain our rating of speculative long-term buy.


Cisco Systems, Inc. (NASDAQ symbol: CSCO) makes data networking equipment, data switches, and networking gear. Cisco Systems continues to expand its market share. 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 resume its acquisition spree and the annual revenues may reach $50 billion in six years. Cisco Systems, Inc. is positioned to offer the latest equipment to service providers, such as IP internetworking technology which allows any company to host Internet applications and expand their service from basic voice traffic to broadband which can carry data and provide Internet access and video conferencing.

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. Afterwards, as the money flow fell, this stock reversed its upward trend and proceeded to descend.

On October 18, 2002, this stock closed at $10.53 per share. This equity is in a very slow downtrend and may test its support level by January 2003. If the money flow were to continue falling, in a worst case scenario this stock could test its support level of $5.75 and at such a level we would 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 a better return by trading this equity.


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 2002 we stated, “This stock may test its support level of $9.90 by the end of March or the beginning of April 2002 and investors may want to buy it at such a level.”

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

On October 18, 2002, this stock closed at $4.09 per share and we maintain our rating of a long-term buy. Due to the negative outlook for this sector, we have revised our long-term target level to $25.75 per share from $35.00 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. This stock continued its overall downtrend and closed at a low of $1.10 per share on October 8, 2002.

This equity closed at $1.55 per share on October 18, 2002. The expansion of revenues in this sector may be slower than we expected, therefore this stock will be held in our Model Portfolio long-term. These 100 shares of Corning, Inc., will be sold as soon as this stock reaches approximately $15.50 per share, perhaps in the second half of 2005.


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

These warrants trade under the symbol ELANZ and expire on August 31, 2005. As this stock tumbled the price of warrants fell along with it. On October 18, 2002, these warrants closed at a low level of $0.08 per warrant. The risk of owning these warrants is high, 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. Ericsson’s telecom equipment is among the most advanced in the world.

On April 11, 2002, an additional five hundred ADR’s of ERICY were bought at $3.56 per ADR. After this equity was bought the money flow continued to fall and ERICY reached new lows. On October 18, 2002, ERICY closed at $0.62 per ADR.

There was a total of 1,300 ADR’s of Ericsson LM Telephone in our Model Portfolio and the rights to acquire 1,300 of new ADR’s class B shares were exercised on Friday, August 16, 2002. The order was filled in September 2002, and now there is a total of 2,600 ADR’s of ERICY in our Model Portfolio.

The company is planning a reverse stock split and if it were approved by shareholders the quantity of ADR’s in ones portfolio may fall 90 percent. If this were to occur then speculators who bought ERICY at any level above $15.25 per ADR may never be able to break even. Due to the recent negative events the risk of owning this equity is very high therefore we wouldn’t even recommend it to speculators.


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 2006.

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 this Web site could generate a substantial amount of revenue.

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

On October 9, 2002, HPQ broke through its support level and closed at a low of $11.16 per share. Then, as money flow rose $402 million this stock proceeded to ascend and closed at $13.09 per share on October 18, 2002. Speculators should wait until this equity tests its $11.16 support level and if it were to fall below that level in a worst case scenario this stock could reach a low of $5.75 per share during the next six months. At such a level we would rate this stock a long-term buy.

Speculators may buy this stock and trade it, while patient investors may want to hold it until it reaches our target level of approximately $46 per share. As soon as this stock reaches our target level, the 63 shares of HPQ that are held in our Model Portfolio will be sold immediately.


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

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

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

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

On October 18, 2002, this equity closed at $14.46 per share. If the money flow continues to fall, in the worst-case scenario this stock could reach a low level of $7.85 per share by January 2003. At such a level we would rate this stock a strong long-term buy.


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

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

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

On April 12, 2002, five hundred shares of Internet Capital Group were bought at $0.57 per share. These 500 shares will be held in our Model Portfolio long-term until this equity reaches our revised target level of $22.75 per share; perhaps by 2006. At such a level all of the shares will be sold immediately. On October 18, 2002, this stock closed at $0.21 per share, and we rate it a speculative 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.

Due to the negative outlook for this sector this stock continued to descend and closed at a low level of $1.62 per share on October 7, 2002.

On October 18, 2002, this stock closed at $1.99 per share. We maintain our rating of a speculative long-term 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 $12.26 per share, perhaps in the second half of 2004.


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, 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.

Due to the negative short-term outlook for this sector this stock continued to fall and closed at $8.26 per share on August 16, 2002. This equity proceeded to test its support level and closed at $6.65 per share on September 20, 2002. As the analysts proceeded to downgrade the stocks in this sector this equity continued to descend and closed at $4.49 per share on October 18, 2002.

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

On October 18, 2002, LSI closed at $4.49 per share and investors may want to accumulate it at a moderate pace. There is a very slight probability that this stock could fall to a low of $1.25 per share by April 2003. At such a level we would rate this stock a strong long-term buy.

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

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

This stock will be held in our Model Portfolio and will be sold as soon as it reaches approximately $41.75 per share, perhaps at the end of 2006.


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.

This high flying stock closed at a high of $81.75 per share in December 1999 and has been in a downtrend ever since. At that time who would have thought that this equity could fall below $10.00 per share. As the money flow fell this stock continued to plunge and closed at $0.58 per share on October 11, 2002.

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

This equity closed at $0.68 per share on October 18, 2002. Due to this latest negative announcement we would not recommend this stock even to speculators. We rate this stock a weak hold.


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.

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

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

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

This equity closed at $43.77 per share on September 4, 2002, and then as the money flow rose $9.1 billion the stock closed at $53.15 per share on October 18, 2002. If the money flow were to fall $42 billion during the next three months, in a worst case scenario this stock could fall to a low level of $32.45 in December 2002, or January 2003. At such a level we would rate this stock a long-term buy.


Sold 280 ADR’s of Nokia Corporation on October 18, 2002, at $16.37 per ADR. 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.

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.

This equity was in a slow downtrend and on August 5, 2002, closed at $10.76 per ADR. As the money flow rose $790 million NOK proceeded to rebound and closed at $14.77 per ADR on August 22, 2002. Afterwards, this equity proceeded to descend and closed at $12.84 on September 20, 2002.

On October 18, 2002, this stock closed at $16.39 per ADR. This equity is still in overall downtrend. If the money flow were to fall $21 billion during the next six months, in a worst case scenario this equity could descend to a low level of $2.95 per ADR. At such a level investors may want to buy this equity. As the revenues and the profit margins improve NOK could reach $35.75 by 2006 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.

There were 300 shares of Nortel Networks Corporation in our 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 Model Portfolio.

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.

In September 2002, the company announced that it plans to do a reverse stock split of 1-for-20, or higher, in the beginning of 2003. Due to this horrendous plan, now we wouldn’t recommend this stock even to the speculators. It is too late to sell this stock now therefore we will continue to hold 600 shares of NT in our Model Portfolio. On October 18, 2002, this stock closed at $0.63 per share.


Oracle Corporation (NASDAQ symbol: ORCL) is the world’s third largest software company. The company makes database management system software. Approximately 90 percent of corporate websites are using Oracle’s database software.

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 closed at $9.49 per share on October 18, 2002. If the money flow were to fall $24 billion during the next five months this stock could descend to a low level of $4.97 per share.

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 2005.


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.

In 1999, the company’s wafer fabrication facility had a maximum production capacity of approximately 35,000 four-inch wafers per year. The company planned to increase the annual capacity to 60,000 four-inch wafers by the end of the calendar year 2000. Furthermore, in order to expand manufacturing capacity, the company began construction of a second wafer fabrication facility in 1999. The construction was completed in 2001 and eventually the total annual output from this facility alone could reach 210,000 four-inch wafers.

The company plans to increase the production capacity gradually to meet the market demand. RF Micro-Devices, Inc. estimated that the cost to build and equip this facility would be approximately $140 million for the first phase and $180 million for the second phase.

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.

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.

This equity continued to descend and closed at a low of $5.19 per share on August 5, 2002. Then, as the money flow rose $300 million this equity tested its resistance level and closed at $8.81 per share on August 19, 2002.

On September 20, 2002, we stated “If the money flow were to fall $700 million during the next two months this equity could test its support level of $2.97 per share. At such a level we would rate this stock a speculative strong long-term buy.”

Instead of falling, money flow rose $292 million and this stock closed at $7.14 per share on October 18, 2002. This equity is in a very slow downtrend. If the money flow were to fall $1.4 billion during the next six months then this stock could descend to $1.65 per share. At such a price level we would rate this stock a long-term buy.

When the earnings outlook and the money flow improve, RFMD could rebound to approximately $17.90 per share, perhaps in the second half of 2004. At such a level, speculators should sell this stock immediately.


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

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

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

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

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

On October 18, 2002, this stock closed at $2.00 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. On March 20, 2001, one hundred shares were bought at $18.82 per share. These one hundred shares will be held in our Model Portfolio approximately four years, and as soon as they generate a gain of 200 percent, all of the shares will be sold.

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

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 in 2004.

As the money flow continued to fall this equity proceeded to break through its support levels. On August 6, 2002, an additional 300 shares of Sun Microsystems were bought at $3.71 per share and added to our Model Portfolio. These 300 shares will be sold as soon as the stock reaches approximately $14.50 per share, perhaps in 2004.

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

This equity closed at $2.74 per share on October 18, 2002. If this stock were to break below its support level of $2.42 it could fall to a low level of $1.15 per share in December 2002. At such level we would rate this stock a long-term buy. Investors may want to average down and buy more shares at this low level. Patient investors may hold this stock until it reaches approximately $41.25 per share, perhaps in the second half of 2006. Investors should sell this stock immediately at such a high level to lock in a long-term gain.


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

This stock was featured in our “Buy & Sell” section in August 2000. At that time, we stated that this stock could fall to approximately $35 per share. Furthermore, we stated that the risk of owning this B2B startup is high; therefore this stock should only be bought by speculators.

At that time, who would have thought that this stock would break through a $35 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. On July 15, 2002, the company issued a 1-for-10 reverse stock split and now there are only 70 shares of VERT in our Model Portfolio.

On October 18, 2002, this stock closed at $0.86 per share. Due to the reverse stock split we have revised our sell target level from $10.00 to $22.50 per share. As soon as this stock reaches such level all of the shares held in the Model Portfolio will be sold.

We have revised our rating on VERT from a speculative strong buy to a hold.


Vitesse Semiconductor Corporation (NASDAQ symbol: VTSS) makes gallium arsenide semiconductors that are used by manufacturers of networking equipment. On August 20, 2002, this equity was removed from the S&P 500 Index and 31.6 million shares were traded on that day. On September 20, 2002, four hundred shares of Vitesse Semiconductor Corporation were bought at $1.04 per share and added to our Model Portfolio.

At its height, this stock closed at $103.83 per share in February 2000 and then proceeded in a downtrend. Among the company’s major customers is Cisco Systems and Lucent Technologies. When that sector rebounds, the stock of Vitesse Semiconductor Corporation could ascend to a higher level. Although this equity may not reach its previous high of $103.83 per share, if it were to reach approximately $50.25 per share by 2007, it would provide speculators with a gain of 4,900 percent.

On October 18, 2002, this equity closed at $0.83 per share. This stock will be held in our Model Portfolio long-term and if it were to reach $50.25 per share it will be sold immediately. Speculators may want to buy this stock and it should account for less than three percent of a portfolio.


WorldCom Group (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 world’s largest and most advanced digital networks that connects local markets in the United States to more than 280 countries and locations worldwide.

Due to the sell-off in the telecommunications sector, this stock closed at $5.01 per share on April 12, 2002. Although the risk of owning this stock was above average, at that level we rated this stock a strong buy.

Due to the accounting debacle that has pushed WorldCom to its bankruptcy this stock became worthless. This equity will be held in our Model Portfolio as a reminder of what could happen to the 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 ten-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 $89.75 per share and then these one hundred shares will be sold.

On August 5, 2002, this equity closed at $10.89 per share and then proceeded to test its resistance level. On August 16, 2002, this stock closed at $12.10 per share and we stated, “If money flow were to fall $30 billion during the next three months, in a worst case scenario this equity could fall to approximately $2.77 per share.” At such a level this stock would be a speculative, strong long-term buy.

On October 18, 2002, this stock closed at $15.03 per share. This stock is still in a long-term downtrend. Investors should wait patiently until this equity reaches our buy target level of approximately $2.77 per share, perhaps by March 2003 and then buy it.

On October18, 2002, all of the ADR’s of Nokia Corporation that were held in our Model Portfolio were sold at $16.37 per. The sale of these 280 ADR’s generated $4,563 in cash, after deducting the cost of commission. The basis cost for this equity was $1,472 in April 1997 therefore its sale generated a long-term gain of $3,091 or 210 percent.

This equity is still in overall downtrend. If the money flow were to fall $20 billion during the next six months, in a worst case scenario this equity could descend to a low level of $2.95 per ADR. If this equity were to reach such a low level then 800 ADR’s of Nokia Corporation will be bought and once again added to our Model Portfolio. The remainder of cash will be used to buy shares of EMC Corporation and Sun Microsystems, Inc.

The stock of Advanced Micro Devices fell below our revised buy target level and an additional 300 shares were bought at $3.58 per share on October 4, 2002.

The earnings outlook for this stock may improve substantially in 2004 and as more money flows into this equity it could reach a higher level. As the demand for chips made by Advanced Micro Devices improves, this stock could reach our revised sell target level of $15.75 per share by November 2004.



On October 9, 2002, one thousand shares of Delia’s Corporation (NASDAQ symbol: DLIA) were bought at $0.43 per share. The company sells clothing and accessories for girls and women. Over half of the sales are generated at the company’s Web site.

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

Due to the negative outlook for this sector this stock fell and closed at a low level of $0.40 per share on October 8, 2002. As the sales improve and if the money flow were to ascend $210 million during the next eight months this equity could rebound to approximately $4.50 per share. At such level all of the shares of Delia’s Corporation will be sold immediately.

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



After these trades there is $10,711 in cash left in our Model Portfolio.


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

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

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



We will continue to monitor Dell Computer Corporation (NASDAQ symbol: DELL). This stock closed at $28.45 per share on October 18, 2002, and is trading at approximately 49 times earnings. Depending on the money flow, volume, and other key indicators, this stock could break through its support level of $16.65. There is a slight probability that this stock could fall to approximately $10.15 per share by April 2003. If this stock were to reach such a low level, 200 shares will be bought and added to our Model Portfolio.



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



We also added the stock of EMC Corporation (NYSE symbol: EMC) on October 18, 2002. If this stock were to reach a low of $2.55 per share, five hundred shares will be bought and added to our Model Portfolio. To find out more about this stock please read our section titled “Stocks for traders.”

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 Shares were bought at $2.29. This equity will be held long-term. Due to the recent negative events the risk of owning this equity is high therefore it may only be bought by speculators.



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 speculators who are willing to hold it at least four years.



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. We maintain our rating of a speculative long-term buy. This stock will be held long-term.



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



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

After several missteps and a very heavy debt load, the company was almost driven into bankruptcy. New management sold assets and pared down debt. After reaching a low level of $2.13 per share in December 2000, this stock proceeded to rebound and closed at $9.74 per share on June 15, 2001. Then, the stock reversed its trend and proceeded to fall. On May 10, 2002, one hundred shares were bought at $3.07 per share. These 100 shares of RAD will be held short-term and as soon as this equity reaches our revised target level of approximately $7.71 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 30 percent annually during the next five years. Patient investors may hold this stock until it reaches approximately $41.25 per share. At such a level this stock should be sold immediately to lock in the long-term gain.