With today being a market holiday, it lets you stop and think a little more about what's been happening.

Yesterday was more of the same. While the Dow Industrials were up 46 points, and the Nasdaq was up 31 points, advancing issues slightly trailed declining issues with a ratio of 34 to 35. It's still a high Cap' market with no end in sight. Of course, nothing lasts forever, but you'll go broke betting against such a firmly entrenched trend. Forget the gurus who advise when the top is coming. That just entices you to buy puts and sell naked calls. Sure, a time will come when that strategy will pay off in spades. But if you go against the market, and have been doing so, you'll have lost your speculative money and won't be in a position to take advantage of the big decline when it does come.

I just can't bring myself to buy the big favorites. Those BIG p.e.'s are too spooky. I'm content tracking 100+ stocks, and buying those issues whose prices do not reflect either their present or their future. From time to time, their short term random price fluctuation creates profitable opportunities. On March 26, I wrote about Protein Design Labs, their prospects, and their crazy price action. Let's see what happened since that article:

On March 26 I asked, "What on earth is going on here?!!!" My reaction is unchanged. Remember, the stock has $8 in cash per share, which is an almost 7 year cash burn rate on hand. There has been no news, and at these modest volumes, it appears that random changes in supply/demand account for the big price changes. This kind of situation provides the kind of opportunity I look for. Even if the stock price goes against you, the fundamentals will most likely rescue you. If you listened to your father when he said "never date a girl you wouldn't want to marry," you probably didn't go too far wrong. The same applies to these value stocks. Even if you're just in for a trade, never trade a stock you wouldn't mind holding for the longer term. Don't just anguish over the market's erratic behavior - try to profit from it. Stay tuned.

The Market Pro - April 2, 1999