Today was the first decent day for the market in quite a while. It was the first up day for the Russell 2000 after nine down days. New York advancers were almost twice declining issues, at 1,928 vs. 988. The Nasdaq was a little tighter but still favorable, with 2,288 advancing issues vs. 1,947 decliners Any market advance must continue to broaden as it did today, to avoid serious difficulties.

The rich sure do get richer. Cisco was up 4 ½, IBM was up 5 5/8, and Microsoft was up 2 3/4, to name a few rich guys. Compare that performance with many stocks you and I own, and there is no comparison. Although we might think that our stocks hold much promise and represent real value, the stock market is saying that such stocks are properly priced at their current low price.

I believe that the smaller Cap value stocks will come into their own before too long. Many of them are quite cheap, but represent value only when their base has been established and they are starting to move up. Buying in advance of such upward movement carries with it a high opportunity cost - the cost of an alternate investment. A further benefit of waiting for an upward move, is that it may spare you the pitfall of trying to determine how low is low for a stock price.

Invariably, most buys thought to be at a low prove to be quite a high price indeed, as the stock sinks to lower levels. In these treacherous markets, you must be patient. Be very slow to commit new funds, unless you are investing a constant dollar amount on a regular basis. No one knows which way the market is going, and don't let them kid you that they do know. We may get a rally next month, but when the troops are scared, they don't wait for Labor Day for the traditional market sell-off. Accumulate cash, and you will be able to take advantage of any downturn.

I'll be taking a totally non-deserved vacation starting tomorrow. I'll return Monday, August 10; I hope we have a better stock market picture then. Stay tuned.

The Market Pro - July 30, 1998