November 1998 Newsletter
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NEW BUY RECOMMENDATION
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In our opinion, the "Dow" and the S& P 500 remain fully valued! The mini-micro caps within the US are the cheapest segment that offer minimum risk with very attractive long-term appreciation potential.
The risk outside of the US is much less - those markets have already been slaughtered, namely, Asia, Russia and Latin America. The "real" risk in those markets, in our opinion, is not having a position in them. The next move in these areas of the world is UP!
Within this newsletter we intend to concentrate on the riskiest area of the world, namely, RUSSIA! This market is roughly 90% off its 52-week high.
The opportunities mentioned are geared toward risk tolerant, patient and investor type that can relax for 3 to 5 years. These opportunities are not geared toward day traders!
The internet offers excellent information with respect to foreign investments.
We still remain nervous about the earnings projections for 99 and suggest investors take profit in the current rally. It is evident that the Fed will most likely lower rates at least once before year end. The market looks for an additional easing as early as mid-November, 1998. This scenario, of course is currently being factored into the market. The recent GDP of over 3% for the third quarter means something, but has little to do with possible devaluation within important industrial nations, namely China and Brazil. The world economy continues to slow and lowering of interest alone within the US doesn't guarantee an economic "soft landing" within the US. We again suggest that investors should lighten up on expensive Dow and SP500 issues and carefully nibble at the depressed and out-of-favor issue.
Yours truly, William Velmer (Nov 2, 1998)
New Buy Recommendation
The major shareholders of LUKOIL at present are the Russian Government (26.6% of the issued shares), Bank of New York - as a nominee for ADR and GDR holders (28.2%), companies of the Russian NIKOIL Group (17.7%), LUKOIL-Garant pension fund (5.3%). As at June 30, 1998 the officers of LUKOIL comprised 65.5 thousand holders of ordinary shares and 52.6 thousand holders or preference shares.
On October 29, 1998, LUKOIL announced that output of oil and gas condensate was 39.67 million tons.
Everything about Russia indicates risk to the average investor type, but for us at S.A. Advisory we smell opportunity. If everything was wonderful, LUKOIL and the like would be 10x the current price. In our opinion, the real risk is not owning this issue.
Russia has stumbled, but we believe that it cannot turn back.
We believe that LUKOIL may be the cheapest non-domestic investment opportunity that we have ever seen.
We continue to buy LUKOY at current levels. We believe that it will remain volatile, but offer a double play on Russia, that is, high oil prices and greater stability in Russia. The current price indicates the worst!
Broker contact: Greg Nelson at 1-800-269-9460;
LUKOIL Investor Relations: phone (+7) 095-927-4885. e-mail: firstname.lastname@example.org
LUKOIL internet address: http://www.lukoil.com
Press service: phone (+7) 095-927-1677, e-mail: email@example.com
We intend to monitor LUKOIL within our international portfolio and also our model portfolio for percentage gain performance.
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