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Subject:  Re: Limited Funds: How to choose.... Date:  3/29/2000  12:06 AM
Author:  SlyAce Number:  1847 of 8809

Aridian wrote:

The ratings are based on these (flawed?) propositions:

1. The farther off the high for this year represents the best short-term entry point.

2. The smallest market cap indicates more room for rapid stock price growth.

3. The smallest amount of growth this year indicates that stock has not "exploded" this year yet.

I liked your list enough to print it and I hold all but five, and four of the five are the last four, so maybe I have been using your methodology without knowing it.

A few thoughts. First, the most important thing is the list itself. If one were to invest equally in all 15 companies, in 5 years, one would probably be one happy camper. Second, I also have looked at market cap when deciding which companies on the Silicon Investor lists had the most upside potential. Obviously, this factor alone is not dispositive, but it is something I consider. Third, I was surprised that RMBS and CREE scored so well given how much they have already run this year. Fourth, I suck at market timing so don't listen to me. As soon as I decide I like something, I buy it (if I have the funds). I have been reading stuff by the IBD guy lately (O'Neil) in an effort to learn to time the market, but I am not all that happy with the 25 or so sell rules and the fact that taxes seem to be ignored. Besides, once I decide to buy something, I don't feel like waiting for 4 to 15 weeks for a cup and handle to form. Nevertheless, I would be a much happier camper today if I sold CRA at 275 and RMBS at 450. If they go back up, I probably won't care. In short, if your methodology turns out to work, I will follow it with enthusiasm. Fifth, even after seeing how your methodology ranked the 15 companies, I am not all that confident that BLDP is a better short term play than is JNPR. If anything, BLDP to me seems like a pretty long term play (along with ELON, LHSP, CRA, and GMST). In fact, if somebody put a gun to my head and made me pick only 5 of the 15 to hold for 5 years, I am not sure I could do it, but here goes and why (in no particular order):

1. CREE -- I like the management, know about the businesses, and believe the company will do well even without blue lasers, so I get some performance over the next 5 years and some upside potential at the same time. I am not sure where this fits into the gorilla game, by the way.

2. SEBL -- again, I like the management. Also, this is the gorilla in CRM (I need one true gorilla in my "gun to the head" portfolio).

3. GMST -- here is my speculative play. VCR Plus and TV Guide are already out there making money, and there is huge upside potential if this become the Yahoo of interactive television. Maybe a gorilla some day?

4. SCMR -- even though a royalty play, I have to believe that this royalty game will be going strong in 5 years. For reasons I cannot articulate (probably a bad sign), I would pick this one over RBAK and if I were limited to five, I would not pick two in the same game.

5. ELON -- also speculative since there is no tornado as of yet, but if Moore says it is a gorilla, that works for me. I can see all of my appliances talking to one another in five years.

Why did I eliminate CTXS, ITWO, PMCS, BRCD, and JNPR? I don't own them and to include them on my list would make me pretty stupid now, wouldn't it? My methodology reminds me of Bill Murray as the movie critic on SNL's Weekend Update when he makes his Oscar predictions by process of elimination and he has not seen half of the movies. As to the other five I eliminated, I guess I don't like them as much as the five listed above.

Bottom line: you have a good list so go ahead and pick the ones you like.

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