Index

Investment Views (April 9th 2001)

Markets in General

Last week we saw some signs of market recovery. But it's still tax-selling and profits-warning
season. So the markets remain 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 1800 and then 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 has retested its recent lows. It rebounded quickly after touching 6670.
We expect the Swiss Market to test at least 7200 again. Even a high of 7600 is possible.

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	7167.80	7073.10	6941.10	6954.90
SFr. 4000	2389	1351(1998)	+63%	Bachem	2280	2200	2140	2199
Gbp 15.77	8.28	4.9(1998)	--	C&W	4.75	5.20	4.64	4.95
E 368.90	210.10	140(1998)	-14%	Cap Gemini	130	128	115.50	120.90
E.102.50	E.16	14 (1999)	+21%	Evotec	15.90	19.15	16.37	16.99
E.104.60	70.10	81.73(2001)	-9%	Fresenius Medical	76.09	75.20	70	74.50
E 97	70.25	37.8(1998)	+52%	LVMH	57	58.90	57.10	57.40
Sfr.275	133	60(1999)	-5%	New Ventur	62	61	55	57
E.64.90	37.50	7.50(1997)	+256%	Nokia	27.21	27.70	25.93	26.70
SFr.456.33	218	46.66(1997)	+300%	SAP	195.50	204	185.50	186.75
SFr.850	660	460(1998)	+85%	Syn-Stratec	920	870	835	849
E 26.60	4	3(1999)	+257%	Zeltia	11.70	10.70	10.70	10.70
1004	508	540(2001)	+4%	Zurich Financials	560	588	557	563

*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 AT&S out
of our recommended list, even though it has "only" fallen about 10% from the price we
recommended it. We like Fresenius Medical and feel that the correction there is overdone.
We would add to this position and try some down averaging.

We added Zurich Financials to our recommended list, because it has fallen to a very
attractive level. With more than 3% dividends, we feel the downside risk is limited.
Zurich Financials' problem has been more one of indigestion rather than fundamental:
too many acquisitions in too short a time. We believe it will recover nicely, if the general
market recovers a bit too.

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Currencies and Bonds

The dollar has retreated a bit after weaker than expected employment data. We do
not expect the dollar to fall below SFr. 1.65 yet. The fundamentals for the dollar is still
strong. The budget is still in surplus and the economy is still growing. And the Fed
is pro-growth. We still think SFr. 1.80 is possible.

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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!