Index

Investment Views (April 2nd 2001)

Markets in General

I'm sure everyone is happy that the horrible first quarter is finally over. The markets
have been down and out. The question is: have we reached a tradable bottom. Bottoms
are notoriously difficult to pinpoint before the end has finally come. So what is an investor
to do? At this column we have advised investors to take a vacation from the market since
the autumn of last year. The problem with the modern world is we don't seem to treasure
free time and freedom from the ups and downs of the stock markets. Well, we have finally
reached the beginning of a bottoming process in the Dow. Until it's proven otherwise,
we still will say: don't fight the federal reserve bank. Those investors who are in cash
are in a great position to start to tiptoe back into the market. But we cannot emphasize
enough: the company must have real earnings. And good old fashion valuation criteria like PE's
and cash flow are back in fashion. Otherwise don't touch it! We expect a great deal of
backing and filling. The ride will not be smooth at all. So those who still want to enjoy life,
should not rush back in. Continue to enjoy your market-free life! The Dow will not be able
to heave itself above the 10000 level without a fight. The Nasdaq will have problems
getting above 2000.
The Dax has been extremely volatile. The 5000 level has been tested several time and has
basically held. We think the Dax will be moving between 5000 and 6000 for sometime.
The key is whether the ECB will cut the interest rates. Because the economies in Europe
are not as weak as the US we are convinced that the European markets will react positively
to a rate cut.

The Swiss Market Index has recovered from its low of 6500. At the moment it is getting a bit
overbought, after recovering more than 600 points within a few days. We expect the market
at least re-test its lows, if not making a new low.

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	7044.90	7167.80	7020.60	7167.80
E 48.30	12.40	26.75 (2000)	-5%	AT&S	26	26.20	25.40	25.40
SFr. 4000	2389	1351(1998)	+69%	Bachem	2300	2310	2275	2280
Gbp 15.77	8.28	4.9(1998)	-3%	C&W	4.74	5.05	4.66	4.75
E 368.90	210.10	140(1998)	-7%	Cap Gemini	131.40	135.70	128.60	130
E.102.50	E.16	14 (1999)	+19%	Evotec	15.90	17.50	16.50	16.70
E.104.60	70.10	87.3	-13%	Fresenius Medical	78.20	79.20	75.20	76.09
E 97	70.25	37.8(1998)	+51%	LVMH	58	59.20	56.55	57
Sfr.275	133	60(1999)	+3%	New Ventur	60	63	58.50	62
E.64.90	37.50	7.50(1997)	+263%	Nokia	27.25	28	26.20	27.21
SFr.456.33	218	46.66(1997)	+319%	SAP	198	206.25	195	195.50
SFr.850	660	460(1998)	+100%	Syn-Stratec	908	923	910	920
E 26.60	4	3(1999)	+303%	Zeltia	11.70	12.10	11.80	12.10

*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 Ericsson out
of our recommended list, even though it has "only" fallen about 10% from the price we
recommended it. But we figured it would be better to be holding on to cash rather than
let it sit and wait for Ericsson to turn around its business. We like Fresenius Medical and
feel that the correction there is overdone. We would add to this position and try a
down averaging.

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Currencies and Bonds
The dollar has recovered a great deal since we last wrote. With the world stock markets in turmoil, the
dollar has become the save haven of most of the world's investors. We have to see if the dollar will
rise to the SFr.1.80 level again. The Euro has been also weak. We could re-test its lows around
.82.

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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!