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    Investment Views  (May 29th 2000)

    Markets in General

    Last week we warned investors not to bottom fish yet.  Our caution turned out
    to be correct.  The Dow closed the week right near its support level:10299.
    Next week will again be crucial.  The Dow must hold above the 9950 level.
    Otherwise we could see another 1000 points loss.  The Nasdaq made
    lower low.  The 3000 level support has held.  We should see a rebound soon,
    unless the Dow remains weak.  The market has become oversold again.
    We should have seen a rebound last week.  But in bear markets, rebounds
    are extremely short lived.

    Last week the Dax and CAC have mostly followed the movements of Wall Street.
    The support levels 6800 on the DAX and 6000 on the CAC have held.  So we
    should also see some rebound next week, unless the Dow remains sickly.

    The Swiss market has exhibited strength again in face of worldwide correction.
    The SMI closed the week solidly above 7800.  But the momentum has declined
    as a result of the weakness in the US.  On Friday the market finally gapped
    down and corrected a bit.  SMI 7600 level is still crucial.

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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 7718.70 7908.50 7817.10 7821.70
    E 90 50 53.5 (2000) +43.93% AT&S 66 77.50 76 77
    SFr. 3350 2475 1351(1998) +160.55% Bachem 3370 3590 3400 3520
    260 (2000) +21.54% Biodata 359 319 307 316
    Gbp 15.77 8.28 4.9(1998) +110.20% C&W 9.87 10.41 8.50 10.30
    E 368.90 210.10 140(1998) +40.71% Cap Gemini 193.10 197 180 197
    SFr.44.25 21.5 10(1998) +217.50% Ericsson 33.50 31.90 31.05 31.75
    E190 66.40 149 (2000) -16.28% Epcos 137 125.44 121.35 124.75
    E.199 E.32 28 (1999) +185.71% Evotec 86.50 83.50 79.05 80
    E 474 370.10 189(1998) +136.83% LVMH 452 448.90 441 447.60
    Sfr.275 133 60(1999) +206.67% New Ventur 191 188.50 170 184
    E.64.90 37.50 7.50(1997) +592.67% Nokia 56.50 53.15 50.80 51.95
    SFR.19400 17600 SFr.17880
    (2000)    		 +.067% Roche GS 17550 18275 17925 18000
    SFr.1369 655 140(1997) +385.71% SAP 709 707 668 680
    E 96 54 17.7(1999) +157.06% Sonera 44.51 46.50 44.70 45.50
    SFr.845 660 460(1998) +55.65% Syn-Stratec 750 736 715 716
    SFr1050 661 703(2000) +11.52% Think Tools  798 788 766 784
    E 63.35 16 14.9(1999) +253.02% Zeltia 53.55 53.3 52.5 52.6
     
    *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.

    AT&S reported good earnings and a fantastic order backlog.  We remain
    positive on AT&S.

    We do not think the weakness in Roche's stock is justified.  Roche has
    won approval for several new medicine.  The problem is the banker
    Ebner.  Ebner tried to get on the board of Roche.  But Roche did
    not want him.  So our guess is: Ebner is paring his Roche holding.

    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!