Beware the Ides of March

Caesar may not have been wise to ignore warnings about the Ides of March but richSOB.com suggests some dire warnings of current market soothsayers may be misguided.

Baltimore, Maryland (PRWEB) March 9, 2004 --Caesar may not have been wise to ignore warnings about the Ides of March but richSOB.com suggests some dire warnings of current market soothsayers may be misguided.

We are the last to claim to know where this market is going, but we see many signs of strength which suggest the last act is far from over. At the same time, it is clear that investor nervousness has increased, resulting in greater market volatility. while the risks have increased, and these should not be underestimated, the rewards seem to be aplenty, albeit somewhat tempered. It is this changed mix which the author believes some soothsayers are misinterpreting as a market top.

What is required then, is not necessarily greater cash on the sidelines, but greater cash to support buying on pullbacks, greater patience to ride out the inevitable and often painful volatility, greater willingness to take profits when reasonable price objectives have been met, and greater selectivity in the choice of stocks. The risk/reward ratio is not as succulent, the opportunities not as outsized, but the game is still afoot.

We have already observed that perhaps with the exception of Intel, we do not see much upside opportunity in the stocks constituting the Dow Jones Industrial Averages (R) over the near-term. This conclusion is supported by repeated proprietary studies at richSOB.com and richDOB.com as recent as last Friday. But the potential for gains remain in the technology sector (Avaya, Ericcson, Evolving Systems, Cognizant Technology Solutions, Novell, Asyst Technologies, Sprint PCS, AMD, and Research In Motion), Basic Materials (IMC Global), and Energy (Veritas DGC). If one wants to picks among lower-prices issues, often with thinner trading volume (and therefore the likelihood of still greater volatility), numerous other potential gains can be found among the Healthcare sector, in technology (one familiar name: IVillage; another: Lucent), Transportation, Broadcasting, Media, Chemical Manufacturing, Auto parts (Tenneco), Apparel (Guess?), Energy, Consumer Non-cyclicals (Parlux Fragrances), and Capital Goods (Milacron, a financially troubled company whose prospects nevertheless seem interesting).

One particular example is Evolving Systems, a stock in which the author holds positions. While this stock has traded all over the place in recent months and had explosive gains in price last week, the stock is still well down from recent highs and seems to present a considerable opportunity. The company showed great promise previously but fell out of favor during a period of management reshuffles. The stock has recently shown up among lists of undervalued small-cap stocks. On Monday, the stock opened down $2.50 following a disappointing earnings announcement and closed lower in a general market selloff (the author added to his position). Volatile, indeed. Opportunity?

Any balanced assessment must also consider that there are many stocks to avoid, issues whose downside risk looms unacceptably large. In the technology sector, one example is Looksmart, a search company recently trading around $2. Another company whose potential for price gain seems dim is Sorrento Networks. So too, Iomega, Concord Camera, and elsewhere, Scor SA, a French reinsurer, and Bay View Capital.

Well-intentioned advise attempting to protect against risks in the stock market may in fact be misplaced and signal a different kind of opportunity. In addition to practicing prudent risk avoidance, consider whether your investment decisions are also having the unintentional effect of undue opportunity avoidance as well.

E tu Brutus?

Except as noted above, richSOB.com and its officers have no interest in any of the foregoing companies. All such studies examining future prospects of companies are inevitably uncertain. No investment advise, suitability or appropriateness is implied. Use these comments as a starting point for additional research. Consult your investment advisor.

For additional information, contact chiefSOB@richSOB.com.

About richSOB.com and richDOB.com

These web sites were inaugurated following almost two decades of a major analytical development effort by David Turetsky in pursuit of a proprietary quantitative model to facilitate improved investment decision-making. Long before the headlines brought disquieting news about manipulated earnings, dubious research, and shady practices, Mr Turetsky set out to bring the discipline of quantitative decision-making and the power of modern computers to bear on the task of making investment judgments in murky circumstances with imperfect and necessarily incomplete information. Mr Turetsky's background in the financial services industry goes back over 25 years. His pioneering work with computers reaches back to the mid-1960s. He has degrees in Computer Science and Quantitative decision-making.

CONTACT INFORMATION:

David Turetsky, chiefSOB
richSOB.com/richDOB.com
410-499-7614
http://www.richSOB.com "Power to the Investor"
http://www.richDOB.com "Smart women making smarter investment decisions"

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