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    Investment Views  (September 28th 1998) 
     
    Instead of writing my clients individually I thought I might as well
    do a weekly summary of my views on the markets, the currencies,
    the economy, the world, and life in general.

     
    Markets in General 


    As we have emphasized last week, as long as the dollar is weak, we shall not see
    European markets showing any relative strength.  But we had not expected the
    European markets to react so negatively to the news about the Long Term
    Capital Management rescue.  On Thursday almost all the bank shares tanked.
    On Friday it was a blood bath.  UBS, the largest European bank lost almost
    28% in two days at one point.  Its stocks recovered a bit by the market
    close.  Still the UBS has lost more than half of its value, since July.  We think
    it is overdone.  The Long Term Capital Management losses are still not finalized.
    Until the Long Term Capital Management unwound its positions, no one
    really knows what kind of losses it will be involved.  Even if it were a total loss,
    the UBS has bit the bullet already.  So we do not think it is wise to sell now.
    In fact we think it will probably be a buying opportunity.  Although we would wait
    a few weeks until we decide to tiptoe into taking position on the stock.

    Germany has decided for a change of government.  The socialist won, but not
    a clear majority.  There is a chance that they will form a minority government
    with the Greens with the implicity support of the communists.  Or they can
    aim for a grand coalition with the Christian Democrats.  In case of the leftist
    alliance, we think the German markets will react negatively.  If a grand
    coalition is formed, the market will rally.

    Next week we expect the Fed to cut interest rates.  If they only cut it by 1/4%, then
    the markets around the world might plunge because of the disappointment.
    But if the rates are cut by 1/2%, then we expect the markets to rally.    The US
    markets have exhibited quite a bit of strength.  We therefore expect the markets
    to rally at least into the 8300 area.  The Swiss market will probably recover a bit
    too.  But it has been extremely weak in the last weeks.  We don't expect it
    to recover to a level higher than 6700 on the SMI.

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    Stocks 

    Our favorite stocks remains SAP, Nokia, Raisio Group, Ericcson, Cable and Wireless, Orange
    and Bachem.
     
     
    High of the Year Low of the Year Stock Last Week's 
    Close    		 Daily high Daily low This Week's Close
    SFr. 1495 1351 Bachem 1700 1825 1780 1825
    Gbp  8.13 4.67 C&W 5.30 5.65 5.21 5.44
    SFr.  51 25 Ericsson 30.50 27.10 25.80 26.75
    FIM  509 182 Nokia 410 404.90 394.30 404
    Gbp 8 2.40 Orange 5.30 6.20 5.70 5.83
    FIM  1080 640 Raisio Group 54.90 67.80 66 67
    SFr.  1029 419 SAP 736 650 620 647
    SFr.  2350 1820 Stratec 1590 1570 1520 1525
     

    SAP has been quite weak,  despite the firm has reaffirmed that they will be able achieve their
    profit goal.  We don't believe the SAP correction is over yet.  But we're convinced that
    it is a buying opportunity.  The company is still doing well.  We have no doubt they will
    do well in the next two years too.
    Nokia is also doing well.  Its new cellular phones are selling like hot cakes.  Its stock has
    exhibited good relative strength.  We would therefore be buyers of Nokia during
    general market weakness.

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     Currencies 

    The Japanese LDP has finally reached an agreement with the opposition parties on the banking
    reform.  The Long Term Credit Bank will be nationalized and then be allowed to merge
    with Sumitomo.  We feel quite optimistic that the Japanese are finally getting serious about
    cleaning up the banking mess and helping the rest of Asia to reflate their economies.  We therefore
    think that a world-wide depression can be avoided.  But a world-wide slow down is still in the
    cards for next year.

    The dollar has shown some strength last week.  We could see a slight recovery up to SFr. 1.45 area.
    It's too early to say, whether the dollar will not ultimately go below SFr. 1.35.

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

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