Feb. 9–The tug of war between bulls and bears is likely to continue for much of the year.

With high valuations, there isn’t that much upside. With low interest rates and an improving economy, there isn’t that much downside.

But even if the market stays flat over the long-term, there will be short-term volatility. In this type of market, the best way to make money is to buy stocks when they go down and sell them when they go up.

This may sound easy, but it’s the most difficult thing for most investors, including me, to do. Most investors sell stocks that drop, fearing something is going wrong. They buy stocks that shoot up, not wanting to miss out on the big move. The trend is your friend is a good strategy in a momentum market, but not in one that treads water.

Here are stocks I not only own, but also add to when they drop. They’re companies I believe have great long-term promise. I intend to wait for them to succeed.

InterActiveCorp, run by Barry Diller, is the leading Internet transaction company, with such businesses as Expedia, HSN, Hotels.com, and Ticketmaster. Diller is a visionary. I believe he will continue finding new growth areas on the Web. I’ve owned this stock for a decade. I hope to own it for another decade. When it drops, I buy more.

Imax makes large format movies. As more people buy big screen TVs, movie companies are going to have to find a product that makes people leave their living rooms. Imax has cut deals with Warner, Disney, and others. Over time, there should be more first run movies and theaters converting to Imax. I don’t know when these announcements will occur, but at these prices, I like the risk/reward.

Paxson Communications owns a TV network and 63 stations. The breakup value of this company is many times the current price. Nothing should happen until the courts finally clarify the new FCC regulations. But when they do, someone will buy PAX. I’ve owned this stock for years, and made no money, but I know the value of the assets, so I’ll be patient.

My largest holding is Hartville Group, a company that sells health insurance for pets. In the next few weeks, I expect Hartville to announce the acquisition of another insurance company and an equine brokerage, report earnings and gain a listing on one of the exchanges. This is a well-managed company in a great niche that no one knows.

These stocks are all part of my core portfolio. I will give you more names in coming weeks.

Peter Siris (guerrillainvesting@hotmail.com) is a New York hedge fund manager.

—–

To see more of the Daily News, or to subscribe to the newspaper, go to http://www.NYDailyNews.com

(c) 2004, Daily News, New York. Distributed by Knight Ridder/Tribune Business News.

IACI , IMAX, TWX, DIS, PAX, HTVL,

Feb. 2–Like most of you, I’ve been trying to figure out where this market is going. Both the bull and the bear case are easy to understand. The only question is — which one wins.

The bull case is simple. The economy is improving. Earnings keep surprising on the upside. Interest rates are low, and the Fed is still accommodating. With bonds dropping and money funds offering puny returns, stocks look very attractive. So, money keeps flowing into stocks and momentum carries the market higher.

The bear case also is simple. It is tough to have record growth and low rates over an extended period. With a declining dollar, foreigners are fleeing our markets. With the costs of continuing wars and higher health care costs, the deficit should continue to rise.

Moreover, the consumer’s tapped out. Much of the recent consumer spending boom has come from cash people have pulled from their homes. If rates go up, consumers will refinance less, and spending will slow.

I am not sure which scenario will emerge, but I am concerned about stocks’ lofty valuations and the current bullishness. So today, I’ll give you a list of stocks that I would not own. In fact, I’m betting they will go down in the next few months.

Semiconductors scare me. While business is improving, valuations are too high. I have shorted SMH, the semi-conductor holders, as a way of betting against the entire group.

Taser International, which makes stun guns, sells at 27 times sales, a valuation way out of whack with reality.

Internet stocks are in a new mini-bubble. Monster, Ask Jeeves, J Com, and Amazon are all fine companies, but they are too expensive for me. If you want an Internet stock, buy Interactivecorp.

Netflix is the rage, but soon we’ll be downloading films from the Internet. Netflix’s snail mail technology isn’t worth seven times sales.

Casual dining stocks are selling at prices that assume growth will continue forever. Planet Hollywood and Rainforest Cafes were once hot stocks, like Cheesecake Factory, P.F. Changs, Panera and Krispy Kreme. Enjoy eating the food, but don’t buy the stocks.

Until people sprout a third foot, shoes will not be a growth industry. Rocky Shoes and Deckers Outdoors are both riding growth trends, but in this business, growth can slow quickly. Steve Madden is also struggling with a slowdown.

So, these are some of the stocks I’m betting against. Next week, I will talk about the stocks I’m buying.

Peter Siris (guerrillainvesting@hotmail.com) is a New York hedge fund manager.

—–

To see more of the Daily News, or to subscribe to the newspaper, go to http://www.NYDailyNews.com

(c) 2004, Daily News, New York. Distributed by Knight Ridder/Tribune Business News.

TMPW, ASKJ, AMZN, IACI, NFLX, CAKE, CBRB, PFCB, PNRA, KKD, DECK, RCKY,