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SIVY ON STOCKS from money.com
November 20, 2000

=========================================
Monday, November 20 at 8:00pm ET
Money.com presents Ron Insana, co-anchor of CNBC's Business Center and
author of The Message of the Markets, in a chat about today's turbulent 
market.
AOL users go to Keyword: Live
http://www.money.com/chat/
=========================================

 From Sivy's mailbox

Here are my answers to recent e-mails about tech, telecom, John Malone and
junk bonds.

By Michael Sivy

I've been receiving a lot of e-mail lately about both the election and the
carnage in tech stocks, and it's hard to say which upsets readers more. The
one thing that seems fairly certain is that neither is over yet.

The Florida Supreme Court may force a decision on the election before
Thanksgiving -- or the legal wrangling may continue for several weeks.
Either way, we're looking at gridlock in Washington. That means the surplus
will balloon, as increases in government spending and tax cuts are both
stymied.

The swelling surplus could reduce the outstanding volume of Treasury bonds
by as much as 15 percent over the next couple of years. That would be very
bullish for all high-quality bonds -- Treasury, agency, blue-chip corporate
and municipal. On the other hand, using the surplus to reduce debt instead
of spending it (or returning it to taxpayers who would spend it) would sap
the economy's energy. That could mean more earnings disappointments from
economically sensitive companies over the next couple of months.

In the long run, though, gridlock could lay the foundation for a resumption
of the stock market boom. Debt reduction and an economic slowdown will
probably encourage Fed chairman Alan Greenspan to cut interest rates
substantially next year, which would be a boon to the overall market.

Now here's a look at some specific questions:

What's up with Cisco and Oracle?
The Nasdaq has been getting walloped and is now down 40 percent from its
highs. I've said that the damage to the tech sector isn't over and that the
group may not rally as usual going into the new year. Earnings fears are
the chief cause of the selloff. In addition, the most popular tech stocks
on the Nasdaq, such as Cisco and Oracle, carry P/Es as high as 50. I
imagine that there will be a great buying opportunity for these stocks --
but they could get cheaper still.

When are the big telecoms, such as AT&T, WorldCom and Lucent going to come
back?

I've recommended all three of these stocks as value buys (see "The shining"
[ http://www.money.com/money/depts/investing/sivy/archive/000731.html ] and
"After the tech wreck"
[ http://www.money.com/money/depts/investing/sivy/archive/001101.html ]).
And though each has since dropped, I still believe each has asset values at
least 50 percent above current share prices. But in this environment, they
probably won't rebound quickly. If I already owned them, I'd certainly hold
them. And I'd consider buying now, though there's no rush. Lucent looks
like the most straightforward play, followed by WorldCom. AT&T presents the
most potential problems.

What's going on with Liberty Media and why can't I find the ticker symbol?

I've recommended Liberty Media Group a couple of times (see "The media
master is back" [
http://www.money.com/money/depts/investing/sivy/archive/000927.html ] and
"Leader of the free world" [
http://www.money.com/money/depts/investing/sivy/archive/001110.html ]).
Since AT&T acquired cable TV giant TCI, Liberty's programming operations
have traded as an AT&T tracking stock with the symbol LMG, class A. On some
quote systems, the symbol is given as LMGa, on others as LMG_A. If you
can't find it, try the MONEY.COM Website, where the stock is LMG.A [LMG.A].

To my mind, the case for Liberty is the case for John Malone. He was the
master of the industry back when he was CEO of TCI, but he nearly
disappeared from view after the acquisition. Now with the spotlight back on
Liberty, Malone has the chance to be a player again, particularly since
AT&T has announced that it intends to spin off Liberty as an independent
company.

If the slowing economy is bullish for bonds, why is my high-yield bond fund
down almost 10 percent?

The slowing economy and the prospect for lower interest rates are extremely
bullish for bonds of unquestioned financial strength. Junk bonds suffer in
an economy slowdown, however, because investors worry that the companies'
chances of default will increase. If you own a junk mutual fund, though,
I'd hang on at this point (I have a junk fund too and I'm down nearly 10
percent). The worst of the decline is most likely behind us, and junk bonds
can rally powerfully after an economic slowdown ends.



###

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