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BUSINESS WEEK ONLINE
Transcript of Sept. 8, 1996, conference

THE HOTTEST FOREIGN INVESTMENTS

The Sept. 9 issue of Business Week featured the magazine's yearly report on
global investing, and to discuss how to spot the best opportunities outside
the U.S., the Sept. 8 online guest was John D. Boich, managing director of
Montgomery Asset Management, responsible for global equity research and
international portfolio management. He was on stage with William Glasgall,
senior writer for BW who edited the global investing report.

OnlineHost: Copyright 1996 America Online, Inc.

OnlineHost: Material entered into AOL by persons other than those identified
as Business Week's employees or authorized representatives, acting on behalf
of Business Week, is material for which Business Week assumes no
responsibility.

OnlineHost: Welcome to Business Week Online! We look tonight at the hottest
places to invest outside the U.S. That topic was covered in depth in the
Sept. 9 BW, and here with us is the editor in charge of the report, William
Glasgall (BillGBW), senior writer. And with Bill is John D. Boich (Jdbhome),
who's in charge of global equity research and portfolio management for
Montgomery Asset Management in San Francisco.

JackBW: Good evening to you on AOL. Welcome, John Boich, and thanks for
joining us. Hi, Bill Glasgall.

BillGBW: Hi, Jack.

Jdbhome: Thank you, Jack.

JackBW: I'm Jack Dierdorff of BW Online, your moderator tonight. Bill, will
you ask John Boich the first question about foreign investing?

BillGBW: Sure. John, the Dow's at a record high and the economy may be
slowing. Should I be investing outside the U.S. -- or will the rest of the
world economy slow if the U.S. does?

Jdbhome: Yes -- and no. You should be investing outside the U.S. as a matter
of diversification. There continue to be great opportunities for long-term
investors.

BillGBW: In that case, let's start with where things look most promising.

Jdbhome: Although the U.S. economy may be slowing, the general macro
environment is very friendly for equity investors around the world --
 moderate economic growth combined with low inflation and low interest rates.
Where we are in the economic cycle/interest-rate cycle may cause some
volatility in the markets, but that should be used as an opportunity to add
to your favorite positions.

JackBW: Jschm21571 has the next question, from the AOL audience.
Question: Do you believe the Japanese market will be a good opportunity for
the next 10 years?

Jdbhome: Yes, but selectivity is the key to performance. The Japanese economy
has some restructuring to go through over the coming years. That will give
rise to some winners and some losers. A bottom-up stock-picking approach with
keen eyes on sector trends will be a winning strategy in Japan in coming
years.

JackBW: Any sectors in particular you favor in Japan?

Jdbhome: One sector to keep an eye on is technology. The penetration rate of
personal computers in Japan is a fraction of what it is in the U.S.
Therefore, businesses such as information technology consultants or PC
retailers have good momentum ahead. In addition, there is a growing caste of
corporate managers who are embracing the concept of "shareholder value." I
believe that these managers/companies will be rewarded by foreign and local
investors.

JackBW: Here's a sort of devil's advocate question about foreign investing,
from Walmarc.
Question: Why invest overseas when the argument is made that you can invest
in U.S. companies with a strong amount of sales overseas -- i.e., Coca-Cola?

Jdbhome: Although Coca-Cola is a good proxy for general global consumption
trends, the non-U.S. opportunity set is huge, and the opportunities abundant.

JackBW: This question gives us a chance to learn the mechanics of buying
foreign stocks. It's from MikeMerc in South Plainfield, N.J.
Question: Do you agree that relatively novice investors should stick to
buying only foreign stocks that are available as American depositary
receipts?

Jdbhome: If one has the analytical expertise, they should explore the entire
international asset class. If not, they should not even be investing in ADRs.

BillGBW: John, instead of individual stocks, should one invest globally via
mutual funds instead?

Jdbhome: Yes. Mutual funds are a great way to get talented international
investors working for you as an individual.

JackBW: We've talked about Japan, but now look elsewhere around the world,
John Boich.
Question: In what countries can you find the best value for an investor?

Jdbhome: At Montgomery we use a bottom-up stock-picking approach complemented
with thorough sector and country analysis. Therefore, picking individual
countries is not our strength. What the investor should be concentrating on
is maintaining a geographically well diversified portfolio across all major
markets. Stock selection is the key to earning good returns over the long
run.

JackBW: You may have just answered at least part of the next question.
Question: What's your preferred style for foreign investment?

Jdbhome: It is impossible to be either purely bottom-up or purely top-down as
an international investor. One must take a "global view" of companies,
sectors, and companies. At Montgomery we do just that -- bottom-up stock
picking complemented by thorough sector and country analysis. We spend ~80%
of our time on company analysis and the remaining 20% on countries and
sectors.

JackBW: This question comes from Toporbottm.
Question: What are your three top foreign stock picks for long-term capital
gains, and why?

Jdbhome: At Montgomery we run portfolios with between 60 and 75 names. Our
single largest position is 2.5%. Therefore, we do not rely on any small group
of stocks for our performance. I would direct investors to the European
technology sector and select European financial services for some good
long-term ideas.

JackBW: This question requires some explanation. Bill, do you want to define
terms first for us?
Question: What is your comment on WEBS and CountryBaskets vs. closed-end funds?

BillGBW: Webs and CountryBaskets are basically open-end country funds that
trade on the New York or American stock exchanges. They have very low fees
and seek to replicate the performance of a country index, like the Nikkei in
Japan.

JackBW: And what do you think of this method of investing, John?

Jdbhome: I do not recommend WEBS or closed-end funds for international
investing. One's success in those products is based on their ability to
effectively time markets. And that is extremely difficult.

BillGBW: What about the issue of shareholder rights that is galvanizing
European markets now?

Jdbhome: Trends in shareholder rights in Europe are positive for
international investors. This moves managers to focus on things like return on
equity, which is good for us equity investors.

JackBW: How about this question?
Question: Are small-cap stocks an attractive proposition for an investor in
foreign shares?

Jdbhome: Yes. International small-cap investing offers a great opportunity to
"style diversify" your international portfolio. That is good for risk
control. In addition, there are some great stock opportunities to add value
in the international small-cap universe. At Montgomery we manage a fund that
focuses exclusively on international companies with market capitalizations of
less than $1 billion, the Montgomery International Small Cap Fund.

JackBW: How does the average investor identify foreign small-caps? Is a fund
the best route?

Jdbhome: International small-cap investing requires a lot of travel and
company visits. We visit between 500 and 600 companies annually outside the
United States. That is how we come up with our ideas. "Kicking the tires" is
important in small caps.

Question: What are the risks to the foreign investor if the U.S. dollar
continues to rise?

Jdbhome: The best defense against currency risk is a geographically well
diversified portfolio. A continued moderate rise in the U.S. dollar should
have little impact on international returns. The European Currency Unit (ECU)
is unchanged vs. the U.S. dollar for the year to date and over the past 12
months.

JackBW: John, we haven't asked you yet about emerging markets. How do you
view investing in emerging markets vis-a-vis the industrial giants?

Jdbhome: Emerging markets should be a constant component in any international
portfolio. Whether it is 5% or 20%, they should be there. Emerging markets are
the long-term beneficiaries of the economic trends in the OECD [Organization for Economic Cooperation & Development].

BillGBW: Do you think the current Iraqi tensions will unsettle markets?

JackBW: That will be our last question.

Jdbhome: Only if they continue to escalate. The big concern, naturally, is
oil. At current production/consumption profiles, the world can operate
without any material (sustainable) increase in oil prices. If prices continue
to rise from here, there will be renewed inflation concerns, and that will
rock markets a bit -- would be a great opportunity to build on positions in
stocks or funds that you like.

JackBW: That's it for tonight. Thanks, John Boich of Montgomery Asset
Management for your discussion of foreign investing. And thanks, Bill
Glasgall of Business Week.

BillGBW: Thanks, Jack and John.

JackBW: Transcripts of this and all BW Online conference are available soon
after the event. Look under Talk & Conferences on our opening screen.

JackBW: Thanks again to all, especially those on AOL who sent in questions.
And goodnight, all!

Copyright 1996 by The McGraw-Hill Companies, Inc. All rights reserved.