The small cash hoards recently held by mutual fund managers (near a 25-year low of just 4.8 percent of the average portfolio) leave little wiggle room for the stock market, says Individual Investor magazine (1633 Broadway, New York, NY 10019). "If investors turn sour and cash in, managers might have to sell huge chunks of their holdings. It could happen: Half of the 82.8 million American fund investors made their first purchases after 1990 and might panic in their first brush with a bear market."Golden Oak Growth Portfolio, which has produced a smashing 31.7 percent average annual returns over the past five years, uses quantitative models to screen 4,500 stocks for accelerating earnings, high cash flow and potential earnings surprises. It then considers a smaller group of companies, focusing on mergers and acquisitions, stock splits and litigation risk. Recent favorites: GE, Microsoft, Amgen, EMC, Wal-Mart, Qualcomm.

Overcapacity and rising fuel costs are squeezing profit margins in the airline industry. But Thomas Longman, analyst with Arnhold & S. Bleichroeder Inc., thinks the airlines will soon benefit from higher load factors and stabilizing energy prices. Analysts expect these airlines to post average profit gains of 19 percent this year. They recently sold for average P/Es below 10-to-1: AMR, Atlantic Coast Airlines Holdings, Continental Airlines, Frontier Airlines, Midwest Express Holdings, SkyWest.

Using Bank of New York's American Depositary Receipts (ADR) Index, Forbes recently sifted through more than 1,900 foreign stocks trading on U.S. markets, hoping to find some that were both cheap and liquid. It found nine ADRs that have enterprise values of 10 times operating income or less, and projected five-year average earnings growth rates over 10 percent: ABB Group (Sweden), Bass (United Kingdom), Koor Industries (Israel), Luxottica (Italy), Norsk Hydro (Norway), Rhone-Poulenc (France), Sulzer Medica (Switzerland), Telefonica del Peru (Peru), Telefonos de Mexico (Mexico).

For the past five years, closed-end municipal bond funds have traded at average discounts of 4 percent to net asset value, notes Paul Sturm of Smart Money magazine (1755 Broadway, New York, NY 10019). "Recently, these discounts averaged more than 9 percent, making the funds screaming buys." Strum's favorites have discounts ranging up to 15 percent: Colonial High Income Muni, Dreyfus Strategic Muni, MSDW Muni Income 2, MSDW Quality Muni Income, Municipal High Income, Muniinsured, Nuveen Investment Quality Muni, Nuveen Select Quality Muni.

"The fundamental picture for silver is very positive," observes Adrian Day's Investment Analyst newsletter (P.O. Box 6644, Annapolis, MD 21401). "Warehouse supplies that have met the mounting deficit over the past decade are now virtually depleted. We now have a large deficit without the above-ground supplies to fill it. This means either demand must fall, supply increase or prices rise. And few primary silver mines would make money at today's price. So there's little chance of production increasing anytime soon."

For ground-floor investors, here, courtesy of Venture Economics Information Services, are the venture capital firms whose initial public stock offerings have performed best over the past three years: Robertson Stephens (up 361 percent, after the first day of trading), Goldman Sachs (up 290 percent), Mohr Davidow Ventures (up 242 percent), Morgan Stanley Dean Witter (up 236 percent), AT&T Ventures (up 192 percent), Crosspoint Venture Partners (up 192 percent).

Investor's Notebook is a digest of investment opinion from the world's leading financial advisers. It does not recommend any specific investments, and no endorsement is implied or should be inferred. For more information, contact the individual firms cited.

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