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    • Investment Views    (July 2nd 2001)

      Markets in General                                     

              We had taken our own advice and decided to stay away from the market for a few
              months.  The market climate has improved in the last few months, but the stock market
              remains like a mine field.  Earnings warnings can explode in your face anytime.  The economy
              still doesn't show much strength.  But the Fed has finally signalled an improvement.  Last
              week it has lowered the interest rates by a quarter of a percentage point instead of the half
              percent rate of last few times.  We feel that it is finally time to advise our clients who
              are long term investors to tip toe back into the markets.  We still feel that the Dow might
              retest the 10000 level.  If the 10200 support level hold, investors should step up to the plate
              and start doing some buying.  But don't be too aggressive.  Keep at least half of your funds in cash.

              The Dax has been much weaker than the Dow.  The European economy is slowing down
              quickly.  While the Fed had been very aggressive in cutting interest rates, the ECB has been
              very cautious, because the Euro has been extremely weak and the inflation rate has been above
               the targeted 2.5%.   We believe that the 5000 level will be tested again and that the Dax  will be moving
               between 5000 and 6000 for sometime.  The key is whether the US market will recover decisively.

              The Swiss Market  has retested its recent lows. Although the market closed the week at
              the 7240 level, we would not turn wildly bullish any time soon.  The Swiss market is very
              seasonal.  Buying now is not advisable, because the summer vacation is approaching.  The
              volume will be very thin.  October is traditionally the selling season.  So it might be better to
              wait until November or December.

    Stocks              


    Our favorite stocks remains SAP, Nokia, Cable  and Wireless.
     
     
               
    High of the Year Low of the Year Price and year of recommend.  Performance since recommend. Stock Last* Week's
    Close    		 Daily high Daily low This Week's Close
    8080
    		 6968

    		SMI 6954.90
            		7241
          		7113.90
            		7240.20
       
    SFr. 4000 2389 1351(1998) +63%
    Bachem    		 2199
    		 2200
    		 2140
    		 2199
    E.102.50 E.16 14 (1999) +12.86%   Evotec 16.99
          		15.80
          		14.42
          		15.80
     
    SFr.775
    		 SFr.581
    		 585(2001)
    		 +1.7%
    		 Feintools
    		 584
    		 595
    		 595
    		 595
    E.104.60
    		 70.10
    		 81.73(2001)
                  		+1.43%
                 		Fresenius Medical

    		 74.50
                 		84.64
                    		82.70
                    		82.90
               
    SFr.686
    		 SFr.522
    		 592(2001)
    		 +1.86%
    		 Hiestand
    		 592
    		 606
    		 592
    		 606
    E92.10
    		 68.60
    		 75(2001)
    		 +1.46%
    		 L'oreal
    		 76.10
    		 77.45
    		 74.75
    		 76.25
    E 97 70.25
    		 37.8(1998) +57.41% LVMH 57.40
          		60.20
            		58.50
          		59.50
     
    Sfr.275 133 60(1999) -16.67% New Ventur 57
                       		50
                       		50
                     		50
                 
    E.64.90 37.50 7.50(1997) +256% Nokia 26.70
          		26.80
          		25.50
          		26.77
     
    SFr.278           147
    		 46.66(1997) +466.65% SAP 186.75
          		252
          		240
            		249
       
    SFr.1170 810
    		 460(1998) +139.78% Syn-Stratec 849
            		1103
            		1085
            		1103
       
    E 26.60 4
    		 3(1999) +200%
    Zeltia    		 10.70
    		 12
    		 12
    		 12
    1004
    		 508
    		 540(2001)
    		 +13.52%
    		 Zurich Financials
    		 563
    		 615
                    		606
                    		613
               
     
    *We decided to calculate the performance since recommendation, because we have recommended the different stocks
    to buy at different times.  Since we're convinced that one should be long term investors, we think the performance
    since recommendation is a better reflection of  our goals.  *Because of my long absence, I decided to put in the
    prices of the stocks a day earlier instead of the prices of a week ago.

     
    We advocated systematically selling stocks that have lost 20%, because  we believe it is
    better to get rid of the losers than holding on to them. Thus we have taken Cap Gemini out
    of our recommended list, even though it has "only" fallen about 10% from the price we
    recommended it.  

    Lately we have recommended two quite defensive stocks:  Hiestand and L'oreal.
    Hiestand is an excellent food company specializing in baked goods with sales and
    profits growing more than 20% each year for the last few years.  We also like
    L'oreal because it is a stable personal care company.  Feintools is less defensive, because
    it is mainly engaged in auto parts business.  However, it has an excellent management and
    always managed to grow its sales and profits at least 10% a year.  Therefore we are not
    overtly concerned about its business despite of  the dismal economic conditions at the
    present.
     

    Go to Index


    Currencies and Bonds
    The fundamentals  for the dollar is still strong, since the budget is still in surplus and the Fed is
    pro-growth.  It is important for the dollar to close decisively above the SFr.1.80 level.  Otherwise the
    dollar and Swiss Francs will remain in a trading range between 1.68 and 1.80.

    Go to Index


    The World Economy


    As we have written a few years ago, we believe that the new economy is a deflationary one.   The developements
    in technology hasn't been accompanied by improvment in the world financial system.  Wealth is very
    unevenly distributed.  In the last few decades wealth has become more and more concentrated  in the hands
    of a few.  That means we don't have enough consumers with enough buying power in this world to absorb
    all the new products that our new technology has made cheaper and easier to produce.  Until the poorest
    countries' debts are forgiven and other developing countries are given better terms to repay their debts, we
    doubt the world economy can return to a steady growth pattern. 





     

              
     
     
    *The stock prices are   provided  for informational purposes only and  not intended  for   trading purposes.  The opinions expressed in these pages are what they   are: opinions!