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    Investment Views  (June 19th 2000)

    Markets in General

    Last week was tripple witching: the expiration date of  stock index futures and
    options.  So we're not sure how much of the action was technical trading.  The
    trend should become clearer next week.  The markets have been stuck in a range
    in the last two weeks.  The Dow traded between 10300 and 10900 while the
    Nasdaq couldn't get over the 3900 level.  The latest series of economic data
    have been benign.  The economy does seem to be heading for a soft landing.
    The volatility has decreased.  Traders beware:  it's a dangerous time to be
    short!  

    Europe has been backing and filling as well.  Both CAC and DAX have basically
    not really moved much.  The volume has been extremely thin.  The markets are still
    spooked by the half point interest rates rise. The crude oil prices is also putting a
    damper on the enthusiasm for stocks.  The European markets are still waiting
    for Wall Street to recover first.

    The Swiss market hardly moved either way last week, even though the National
    Bank raised the interest rates by half a percent.  Most people took off for a
    long holiday, given the fact that the Euro 2000 football games began.  We have been
    taking it easy as well.  Our favorite team: the French, has been playing well.  We're
    convinced that the French will win the Euro 2000.

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    Stocks

    Our favorite stocks remains SAP, Nokia, Ericcson, 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
    7819.80 6968 SMI 7796.80 7875.20 7826.40 7845.60
    E 90 50 53.5 (2000) +48.60% AT&S 77.50 79.50 76 79.50
    SFr. 3650 2475 1351(1998) +155.37% Bachem 3590 3495 3450 3450
    260 (2000) +37.69% Biodata 346 360 346 358
    Gbp 15.77 8.28 4.9(1998) +150% C&W 11.83 13.12 12.25 12.25
    E 368.90 210.10 140(1998) +47.14% Cap Gemini 212 206 196.20 206
    SFr.44.25 21.5 10(1998) +247.50% Ericsson 37.85 35.95 34.45 34.75
    E190 66.40 149 (2000) -11% Epcos 141.20 143.79 131.50 132.60
    E.199 E.32 28 (1999) +250% Evotec 90.25 99 97 98
    E 474 370.10 189(1998) +127.25% LVMH 439.70 449 420 429.50
    Sfr.275 133 60(1999) +231.66% New Ventur 196 200 193.75 199
    E.64.90 37.50 7.50(1997) +715.86% Nokia 60.40 61.20 59.50 61.19
    SFR.19400 17600 SFr.16900**
    (2000)    		 -.08% Roche GS 17100 17030 16885 16885
    SFr.1369 655 140(1997) +468.57% SAP 788 803 792 796
    E 96 54 17.7(1999) +199.43% Sonera 57.60 56.50 53 53
    SFr.845 660 460(1998) +63.70% Syn-Stratec 770 760 745 753
    SFr1050 661 703(2000) +26.5% Think Tools  890 888 862 888
    E 63.50 16 14.9(1999) +277.18% Zeltia 55.80 56.45 55.60 56.20
     
    *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. **adjusted for Givaudan spinoff.

    Roche has spun off Givaudan, a fragrance specialty chemical division.  The
    market reacted by sending the Roche shares way down.  We think it is
    unjustified.  By spinning off the slower growing segments, we think
    Roche deserves a higher multiple.  We bought some more Roche.

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    Currencies and Bonds

    A few weeks ago we wrote:

    The dollar has remained strong against the Euro, even during the stock market  turmoil.
    While the US  trade deficit got worse, but dollar moved up against the Euro instead of
    falling.  Thus we have an unbroken upwards trend for the dollar.  The interest rates
    differentials are still positive and the shrinking federal deficit another positive factor.
    We remain cautiously optimistic on the dollar.  But Euro should have good support around
    the .90 level.  Soro's managers had obviously suffered huge losses betting on the Euros.  So
    the Euro weakness could have been exacerbated by hedge funds' liquidation.
    So the watershed event on the Euro might have taken place already.

    The Euro has fallen below the . 90 level again and again.  We have the Euro closing the
    day below .90.  But we kept on getting rebounds back above the .90 level.  All the
    analysts on CNBC have become Euro-pessimists and expect a very weak summer
    for the Euro.  Maybe the Euro has bottomed.

    I think we were correct in calling a Euro bottom.  Since our call, the Euro has recovered
    above the .95 level.  We remain convinced that the "correct" level of the Euro should
    be 1-1: that the longer term trend of the Euro should be up and not down.  Trade deficits
    and current account deficits are all indications for how strong an economy is.  In the
    long term the market exchange rates will reflect such fundamental trends.

    The dollar has also declined against the Swiss Francs.  SFr. 1.60 is critical.  If that level
    should break, we should see further dollar weakness.
     

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    Future Trends

    The internet will transform our world in a massive way.  I think it is time to
    begin and do some thinking on what kind of change it will bring and see if
    we can draw some conclusions that are relevant to our investment decisions.

    First, as we have opined in this column we do not believe many of the today
    sky high internet stocks will eventually make a lot of money.  The internet
    is such a competitive forum.  The pricing pressure is so great so that only
    providers with brand name recognition and meaningful contents will be able
    to have some pricing power.  We must remember what the internet eventually
    will bring is absolute international competition.  Price competition will be fierce.
    Middle men will be eliminated.  Therefore we see many service sector jobs
    will be eliminated.  For example, we see this trend in the financial sector already.
    More and more people are trading stocks on line.  With internet brokerage
    charging less than $10 per trade, we should see brokers and financial advisors
    being eliminated at major brokerages in a big way soon.  The same should
    happen in other tradable items.  For example, there will be less need for
    retail stores for items that one can buy easily on the internet.  Of course
    there will be branches of the economy that will profit.  For example:
    the telecoms, the Federal Expresses, and the computer software industries.
    But the question is: Will the general economy really profit or will the general
    deflationary trend continue and become worse and worse?  Without pricing
    power and with lots of jobs being eliminated and salaries on hold, we see
    the world economies trending toward deflation, even if it continues to grow.
    That means real estates and gold will become even less appealing.  If we
    believe our argumentation, we would not invest in the "internet" stocks
    themselves but in the companies that do have contents and pricing power
    as well as companies that will offer services to the internet providers
    and users: ie.  companies such as Sony, Time Warner, Dow Jones,
    and UPS. We would also recommend the stocks of Corsair (CAIR),Qualcomm,
    Ericsson, Nokia, Epcos  the equipment and software provider for the CDMA,
    the next wireless telephony standard as well as stocks of telephone companies
    like Sonera, ATT, Worldcom-MCI, Colt Communications, and Swisscom.  We also
    see internet companies needing ever more sophisticated software.  Therefore
    we're quite optimistic about the long term future of the likes of IBM, Oracle,
    SAP, Cap Gemini,Broadvision and i2 technologies.



     
     
    *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!