Index

Investment Views (March 12th 2001)

Markets in General

Hi everyone, I'm back. I missed the incredible slaughter of the last few
weeks. I'm glad. The market action got really ugly. It's certainly
better not watching such a carnage.

When will all this doom and gloom be over? When will the massive over-valuation
on the Nasdaq be corrected. How can we tell if a stock is fairly valued again?
These are difficult questions to answer. From our experience from watching
the last stock market bubbles that bursted (Japan and Asian markets), it takes quite
a long time for the investors' confidence to return. Although a rebound is likely soon,
we wouldn't expect new highs on the market for some length of time. Although the
fundamental economic trends are still positive for the US economy, we do not know
how soon will the investors recover from their shock. Suddenly no one seems to care
that the Fed will be easing again during their March 20th meeting and that the US is
practically the only country in the world with a budget surplus. Thus there will be plenty
stimulus for the economy through tax cuts. My advice is: don't fight the fed. If they are
lowering interests rates, one should not short stocks aggressively. We are convinced
a mid-term low is soon in place. We should see a healthy rebound soon.
a fraction of their last highs. But the problem is picking the stocks. Will stocks like
Cisco and Intel recover? You bet! But when will these stocks bottom? That
is a difficult question. But we would be buyers should these stocks' PE fall to the low
20's. That is because we don't believe that the US economy will experience a deep recession.

As usual, Europe is waiting for a signal from Wall Street. Without a healthy bounce
on the Street, the European markets will limp along the current tight trading ranges, albeit
with a slightly downward bias. The European economy is still growing modestly. The mood
is certainly not quite as pessimistic as a few years ago. The main impetus remains the lower
Euro exchange rates. We do not find this phänomenon surprising. The European currencies had
become over-valued for some time. The had reached levels where the economies of
Europe cannot grow anymore just like that of Japan. Now with the new weakness in Euro,
the European economy is finally seeing some new strength. If the dollar should remain strong,
we see the European economies recover some more. That will be positive for the world economy.
Therefore we would not agree with the doom and gloom sayers of worldwide recession.

The Swiss market finally followed the world trend in stocks. The SMI has made
new lows. We expect the market to show some support at the level of 7500. After
all the Swiss market is heavy on old economy defensive stocks which should do better
than the new economy stocks for some time.

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
8080	6968			SMI	7569.8	7583.70	7511.90	7535.40
E 48.30	12.40	26.75 (2000)	+8.78%	AT&S	30.80	30.40	29.10	29.10
SFr. 4000	2389	1351(1998)	+78.38%	Bachem	2400	2444	2400	2400
Gbp 15.77	8.28	4.9(1998)	+43.06%	C&W	7.53	7.54	6.96	7.01
E 368.90	210.10	140(1998)	+29.78%	Cap Gemini	188.60	187.90	177.60	181.70
SFr.44.25	12	10(1998)	+40.50%	Ericsson	14.80	14.80	13.70	14.05
E.102.50	E.16	14 (1999)	+60.71%	Evotec	22	22.69	20.28	22.50
E.104.60	70.10	98.50	-11.25%	Fresenius Medical	87.21	88.09	86.59	87.42
E 97	70.25	37.8(1998)	+63.62%	LVMH	64.10	64.55	61.85	61.85
Sfr.275	133	60(1999)	+28.25%	New Ventur	75	77.95	74	76.95
E.64.90	37.50	7.50(1997)	+244.80%	Nokia	26.51	26.48	25.86	25.86
SFr.456.33	218	46.66(1997)	+407.92%	SAP	250	244.75	234	237
SFr.850	660	460(1998)	+106.08%	Syn-Stratec	965	970	947	948
E 26.60	4	3(1999)	+370%	Zeltia	13.90	14.10	14.10	14.10

*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 Roche GS
as well as Sonera from our recommended list.

Last week was full of news from different companies on our recommended list. Fresenius
reported earnings within analysts' expectation. The stock barely moved, because the
weak sales was anticipated by the market. On the other hand Synthes-Stratec reported
an increase in profits before goodwill of +38% and the market didn't like it at all. The stock
fell more than 20% in one day. But since then it has recovered about half of that loss. LVMH
has also reported lower than expected sales growth. The stock prices fell, even though the stock
is near its yearly low already.

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Currencies and Bonds

Since we last wrote, the dollar has fallen to the 1.60 level on the Swiss Francs and
around .94 on the Euro. We still believe that par is the "correct" level of the Euro.
Therefore our target of SFr.1.50 is still achievable.

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The World Financial System and World Trade

Lately we have seen a truely thoughtful review of the world financial system in the Business Week .
We certainly feel vindicated in our views stated during the last world financial crisis. We remember
the outcry in the Western press, when Malaysia imposed financial controls essentially forbidding
foreign investors to exit Malaysia. The Western press also made a big deal, when Hong Kong's
government intervened to support the market and driving out the short sellers. Ironically these
two countries are the most successful in recovery after the 1998 financial crisis, while Thailand being
the country that really tried to follow all the prescriptions of the IMF and other free market advocators, has
yet to see its economy recover from that vicious attack of international short sellers. We're happy
to see that people are slowly coming to see that unrestrained free markets can cause hevoc in
developing economies. That the world need a new financial order. Let's hope that the US
will not stand in the way of reforms of the world financial system.

*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!