HI-TECH SPRING/SUMMER 2001

LONG TERM HIGH-TECHNOLOGY INVESTING

Historically markets have bottomed when interest rates are cut and stock valuations are low. Many current valuations are slightly undervalued, although they would need to fall 20% further to become “cheap.”
For the first time in year, a number of high-technology blue chips like IBM and CISCO are undervalued. At the same time, the US may well be in a recession in August (Saturn Square Pluto). Long term investors are advised to step and buy some stocks now, some in May and/or August. We are cosmic value contrarians, i.e. we like to buy low (when others are selling) and sell high (when others are buying).

Our advice continues to be:
INVESTORS SHOULD BUY AND HOLD STOCKS IN 2001 THAT:
1) Profitable
2) P/e UNDER 33
3) LESS than 10% more than Morningstar Value

VALUE WITH GROWTH
Obviously this eliminates many technology stocks. Furthermore, old-line technology companies such as Rockwell (ROK), Texas Instruments (TI), United Technologies (TUX) and IBM will continue toy outperform as investors look increasingly to VALUE (Remember the Jupiter and Saturn conjunction last May) with GROWTH, TMT (Technology, Media, Telecommunications) stocks included.

TECHNOLOGY UPGRADES/DOWNGRADES

We reiterate an Outperform rating on IBM.

Strong Buy
Cisco.

From hold to Accumulate
Compaq (CPQ), Motorola (MOT), AMD

From Avoid to Accumulate on Weakness:
Yahoo (YHOO)

From Avoid to Watch:
Hewlett Packard (HP)
Apple (APPL)
Gateway (GTW)

INTERNET STOCKS

Greed, stupidity and insanity no longer rule the day for Internet stocks. Fear and self-incrimination has take over.

Since the IIX broke 200, we are raising our rating on quality Internut stocks from "Sell" to "Accumulate on Weakness".
This is for former premium Internuts such as AOL worth 34, YHOO worth 14 and Earthlink (ELNK) worth 6.

When do we changing our tune and become aggressive buyers? When there is more Value to be found. So that means sometime between IIX 110 and 2008! :)

Good Companies, Good Horoscopes

We divide "Good" Technology companies into two categories:

1: The Best- Buy near 52 week lows or 68% correction from March 2000 highs, whichever is higher,
2. The Rest- Buy at 80-90% correction from March 2000 highs.

Do not buy higher than 10% over business valuation if investing for the long term. You can find a value pricing model at the Morningstar web site.

COMPUTER HARDWARE COMPANIES

As predicted most hardware computer pricing will continue to fall taking it with it the bottom line of most companies. However, the worst will be over soon and we recommend accumulating on weakness IBM, AMD, Compaq (CPA), Gateway (GTW) and Samsung (SSNGF).

COMPUTER SOFTWARE

We would consider some long term investing buys (on dips naturally) among the following four majors:

Adobe (ADBE)
Computer Associates (CA)
Intuit (INTU)
Real Network (RNWK)

SEVEN TECHNOLOGY FAVORITES

We plan on making Microsoft (MSFT) a core Technology holding mid-year. Previously we recommended selling Sun and Oracle. We are ready to rebuy them when they further approach value pricing. However, all the following technology favorites are recommended for accumulation upon weakness, or if your mandate MUST invest:

Compaq (CPQ)
AMD or Intel (INTC)
International Business Machines (IBM)
Motorola (MOT)
Oracle (ORCL)
Sun (SUNW)
Sony (SNE)

Microsoft (MSFT) is likely to become a long term buy for us Mid-year.

While we will continue biannual updates on selected computer stocks here, serious investors and traders can receive more timely updating on our Wall Street, Next Week premium Subscriber premium channels. Please see our Computer Stocks for current investment views as well as timing recommendations at our Daily Market Commentary .
Platinum subscribers may also visit Future Technologies.

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