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Investment Views (May 22nd 2000)

Markets in General

The market seems to be stuck in a narrow range: Dow 103500-10860, Nasdaq
3200-3860. Next week will again be crucial. Will the support levels hold? If the
support levels do not hold, we have a real possibility of a further downwards
spiral. The interest rates environment is really quite negative. The Fed seems to
be determined to raise rates further. We think that the Fed should not be too
aggressive in this endeavor, because the inflation pressure is still quite tame. The
strong dollar is doing a great job in keeping the inflation in check. The Fed
has to keep in mind what had happened in Japan, when the Bank of Japan
raised the interest rates too aggressively: an almost total financial collapse.
A US financial collapse will affect the whole world. The Fed should remember
its role as the Central Bank of the world.

Last week the Dax and CAC have mostly followed the movements of Wall Street.
These markets are finally beginning to correct seriously. Now it is important that
key support levels hold: Dax 6850; CAC 6000. The Neue Markt has corrected
far more sharply than the chips. The Neue Markt follows the movements
on the Nasdaq very closely.

The SMI is finally exhibiting amazing strength. The SMI finally has broken above
the 7800 level, but could not hold the level. It closed the week above the 7700 level.
This is really positive indeed. But since the market is still overbought, we expect
that the SMI to correct a bit further. The level to watch is 7600. But because the
Swiss market is full of defensive stocks, we expect the whole market to hold up
well in comparison to the German and the French as well as the US.

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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	7736.70	7819.80	7713.90	7718.70
E 90	50	53.5 (2000)	+23.36%	AT&S	75.50	69	66	66
SFr. 3350	2475	1351(1998)	+149.44%	Bachem	3300	3370	3275	3370
		260 (2000)	+38.08%	Biodata	370	366	359	359
Gbp 10.91	8.28	4.9(1998)	+101.43%	C&W	9.49	10.31	9.81	9.87
E 368.90	210.10	140(1998)	+37.93%	Cap Gemini	208.50	203.70	190	193.10
SFr.44.25	21.5	10(1998)	+235%	Ericsson	34.40	36.50	33.100	33.50
E190	66.40	149 (2000)	-8.05%	Epcos	135.50	148	135.65	137
E.199	E.32	28 (1999)	+208.93%	Evotec	109.90	93.10	86.50	86.50
E 474	370.10	189(1998)	+139.15%	LVMH	461.20	469.60	448.90	452
Sfr.275	133	60(1999)	+218.33%	New Ventur	200	199	191	191
E.60.56	37.50	7.50(1997)	+653.33%	Nokia	60.60	60.50	56.25	56.50
SFR.19400	17600	SFr.17880 (2000)	-1.85%	Roche GS	18100	17800	17455	17550
SFr.1369	655	140(1997)	+406.43%	SAP	775	745	705	709
E 96	54	17.7(1999)	+153%	Sonera	56.30	52	43.15	44.51
SFr.845	660	460(1998)	+63.04%	Syn-Stratec	782	760	740	750
SFr1050	661	703(2000)	+13.51%	Think Tools	730	819	778	798
E 63.35	16	14.9(1999)	+259.40%	Zeltia	52	55.40	53.05	53.55

*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.

Cable and Wireless reported great earnings: lots of cash on hand and still quite a few
assets for sale. We remain positive on Cable and Wireless, despite of the general
correction in the telecom stocks.

Sonera is really quite weak, because of its lackluster earnings. The problem is:
Sonera is investing heavily to upgrade its systems and to reposition itself
in the wireless market. We still like its strategy of developing more of
its own software. Buy on weakness.

Several weeks ago, we advised investors to take profits on tech stocks
that have more than doubled. We hope that investors will not be tempted
to bargain-hunting yet. We feel that this tech correction still has some ways
to go.

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Currencies and Bonds

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.

The Swiss Francs remain stronger than the Euro after the National Bank raised the interest
rates by a surprising 3/4% last February. But the dollar remains positive against the Swiss Francs.
The downside level to watch is SFr. 1.50. Until then we should see further gains in the dollar.
Target: SFr. 1.75 and then 1.80

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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!

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