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ICCI Stock Watch ICCI does not endorse or recommend any particular
investment, GENERAL INFORMATION ON THE STOCK MARKET AND THE ECONOMY The Federal Reserve has continued to cut interest rates aggressively. This has helped prop the market. However, the impact of the rate reductions on the economy has not been felt as yet. Typically, the effect of rate cuts is felt after 6-9 month. This means that the initial impact of the first cut will be felt starting next month. Keep in mind that the Federal Reserve has cut rates more than the 1.75% that it raised from June 1999 to May 2000 in under 5 months. What this means is that the economy will see a very significant impact at the end of this year. Consequently, the economy should be growing at a very good rate early next year. However, it needs to be kept in mind that there are two major factors that can create problems with this positive scenario. Firstly, the world economy may slow down dramatically due to delayed reaction from the impact of the US slowdown and higher energy prices since last year. Secondly, the energy crisis in California has the potential to throw California into a recession. If that happens, it is inconceivable that the US economy will not be impacted significantly. Assuming that these two negative problems do not materialize, we can expect the stock market to start factoring in a better 2002. That translates into higher stock prices in the second half of the year. However, do not expect the market to go up in a straight line. Corrections will occur along the way as happened in May after a dramatic rise in the Nasdaq in April. HIGHLIGHTED STOCKS The list in this section includes stocks that either have been considered for procurement in the recent past, or are currently indicated to be good candidates for further pre-buying research. New stocks will be added to the list every month. New stocks being highlighted this month: Jones Apparel JNY Advent Software ADVS Symantec SYMC Alza AZA Owens & Minor OMI Forest Labs FRX Before any procurement decision is made, it is highly recommended that independent research should be conducted in order to determine whether the stock is a good buy based on its fundamentals and your investment objectives. STOCK TIPS OF THE MONTH Do not confuse the company with the stock A company’s reputation and the price of its stock should not be related for investment purpose. An excellent company can be a mediocre investment because its shares may be overvalued or for other reasons. An investor should focus on the current and potential value of the company’s shares, rather than its historical performance. Never get attached to a company Remember that you are in a stock market to make money. The aim is to buy a good company and sell it for a profit after it has appreciated or sell it sooner if it fails to appreciate. You should never become emotionally involved with a stock because it can affect logical decision making.
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