Well, I see that the Dow Industrials have been down three days in a row now, and the troops are getting a little uneasy. They're squirming in their seats, as they wonder if the Fed will really lower rates next Tuesday. Since a lowering seems to be priced into the market, a drop in rates may help a little bit, but inaction by the Fed will hurt a whole lot.

You know, it's November 11, and still no large scale tax-loss selling, even though it's always going on to some extent. Therefore the market is particularly vulnerable as the seasonal factor is added on to everything else. As ever, I don't like the crazy market action of the Internet stocks which have been soaring of late. I think stock market profits are great, but excesses to the upside invariably lead to excesses on the downside, which always puts a damper on market psychology. Caution is still called for. I do expect a strong rally to begin anywhere from late December to early January, but there's a lot of time between now and then.

In our article of September 30, 1998, I touched upon one of my favorite long- shots that I expected to take off between then and the 1st half of next year. I have acquired about all I can handle for now, but I will add to my holdings when I think it's appropriate to increase my portfolio's risk factor.

I had told you that Stock "X" is a technology company developing revolutionary patented products in energy generation systems, advanced display systems, audio and sound systems, and other areas. Their forte is electro-magnetics and optics, and they have many, many patents.

Stock "X" is Aura Systems (AURA). It has had a ten year price range of 15 ½ reached in 1991 and 29/32 reached on Friday, October 9, 1998. That's $.90625!!! Today it closed at 1 15/32 up 5/32. So in five weeks, it has come back 50%. This is still cheap, and could always relapse, until when and IF good news comes out. They have a lot of shares out at around 80 million, and in their quarter ended August 31, 1998, they lost $.07 vs. earning $.01 in the prior year's quarter.

So why do I like this little time bomb? I'm glad you asked. It is not for their "lesser" businesses of state of the art sound systems, and their majority owned subsidiary's computer peripherals business. And it isn't for their revolutionary automobile engine improvements, which are currently being tested by two of the Big Three, plus Fiat, and perhaps others.

I'm interested in two of their products. The first is the AuraGen(TM) Mobile Generator, which is far superior to the alternator. It has many applications including the military, which recently concluded successful field trials, and production facility evaluation. A large military contract is a very real possibility, and an imminent one at that. The retail market can be very large; these units will have a suggested retail price of $2600 plus installation. Gross profit before tax is in the area of 30%. Within three years, they anticipate production of 200,000 units annually, or gross profit before tax of $160 million.

Their second product is even more intriguing. Aura has a technology known as Actuated Mirror Array, with applications in television, computer monitors, professional projectors and related applications..This technology has been licensed to Daewoo, a Korean corporation, and the 28th largest in the world with sales of $88 billion in 1997. Daewoo's scientists have further perfected this system and it is very impressive. AMA is approximately ten times brighter than other available technologies. It is a sandwich consisting of semi-conductor, piezoelectric actuator and mirror layers. In normal room lights, it is capable of lighting up a very large screen with only a few hundred watts.

I saw this displayed at Aura's annual meeting on August 19, 1998. The meeting room had all the lights on, and images were projected on to a screen perhaps 10 feet by 12 feet, and the images were very bright and sharp. Everyone was impressed, as we had never seen anything like it. Daewoo's chairman said their investment would begin at several hundred $million , and could grow to $billions. He estimated that the potential market size could approximate $10 billion annually by 2002.

I asked him when they planned to bring their first product to market; he said he didn't like to be specific, but it would be as soon as possible. Aura will be receiving royalties on all sales, and as you would expect, Aura's management team seemed delighted at the question. Daewoo's product(s) will be introduced in North America in January, 1999, at the "Consumer Electronics Show" in Las Vegas. And Daewoo WILL BE TAKING ORDERS.

So. What do you think about that? I'll tell you what I think. Aura may fall flat on its face for any number of unknown reasons. But I'll tell you this - at $1.46875 per share, you're getting one hell of a lot of bang for the buck. It will take patience, but the potential is here. You can buy 2-3 shares for the price of some fast food chicken. And if you lose your money, just figure you're out so many chicken dinners. But if you hit - wait - if WE hit, it's pheasant under glass, here we come!!!!! Stay tuned.

The Market Pro - November 11, 1998