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There are a large number of uncertainties related to the tobacco industry due to Medicare suits, fresh negotiations with state attorneys general, and the death of the national settlement proposed by Sen John McCain. A large number of tobacco industry suits concerning cancer and Medicare have been settled, but the industry is still vulnerable. These stocks are suitable mainly for aggressive long-term investors and not conservative accounts.

Pending Medicaid litigation from the states and potential legislation in Congress have made the tobacco a hot economic topic during the late 1990s, and it is difficult to speculate what may occur. In addition, the US market for tobacco companies has become competitive, but the international tobacco product market is booming. These stocks are not timely in 1998 and are best avoided by investors.

Support seems to be waning for the passage of legislation by which the tobacco industry would be exempt from litigation in exchange for sweeping restrictions and possible regulation, and a legal settlement is not near. However, industry results as a whole were good in 1997, but 1998 is not expected to be nearly as good as previously. The future of the industry is still unsettled and risk-averse investors should avoid these stocks.

The tobacco industry is expected to have higher sales and earnings for 1997 after a good 3rd qtr, due primarily to the booming markets outside the US. The impact of the settlement between the tobacco industry and its adversaries is not yet known, and there are a number of outstanding legal cases, although several have been resolved. Individual stocks in this industry are best suited for aggressive portfolios and investors.

The tobacco industry will continue to experience strong sales and profit growth due to its success in emerging markets, but tobacco stocks are likely to be volatile as a result of the proposed settlement between tobacco companies and their critics. Conservative investors should avoid tobacco stocks because the proposed settlement has yet to be accepted by Congress or the President.

Tobacco stocks have become more volatile during the past three months because of litigation and settlement talks between the industry and its opponents. Conservative investors should avoid tobacco stocks, which will continue to trade erratically in the next three to six months. An industrywide settlement would benefit tobacco stocks, and aside from the litigation issue, tobacco companies are healthy.

Profits for the tobacco industry increased by 25% in 1996 with strong US and international markets. The 1997 earnings potential for multinational tobacco companies is strong, but tobacco consumption in the US will be only slightly positive or flat. Litigation may impact tobacco companies in 1997 and could affect investment opinion significantly. These stocks are not appropriate for non-aggressive investors in 1997 due to potential litigation losses.

Investment in the tobacco industry is considered hazardous for the immediate and long range future despite the good financial operating results reported by companies within the industry. A plethora of public and private legal actions and little possibility of private settlement of these cases makes investment in the tobacco industry an unpredicable and risky undertaking. Some companies with strong balance sheets might possibly be an investment source but only on a long term basis/

The tobacco industry's future in the international market looks profitable, but in the US declining sales and pending litigation pose threats. Another problem is the prospect of Food and Drug Administration regulation of cigarets and smokeless tobacco products. Tobacco company stocks do not appeal to most investors for the short term. Only companies with international markets or diversified interests offer promise as long term investments.

Tobacco industry securities declined sharply in the 1st qtr 1996 but experts are predicting that the industry will have high earnings and prices for the next six months to one year and probably for several years beyond 1996. Tobacco industry expansion into new or developing foreign markets should offset and surpass the negative impact of Liggett's liability case settlement, the anti-tobacco furor that has caused pension funds to stop investing or withdraw from tobacco companies, and an increase of state government suits to recover Medicaid costs. Tobacco industry stocks are a good investment for those who are willing to risk litigation outcomes.

Economic recovery in Europe appears remote for 1996 with weak exports, low consumer confidence, and high unemployment. There is possible growth in 1997, however, after interest rate reductions in late 1995 and early 1996. Taxes on dividends to nonresidents are still withheld by foreign countries, also. Several European stocks should perform well, however, since they react well to early expansion and operate in several markets.

European multinational companies will have a difficult year in 1996 with weak economic growth. Economic recovery is not likely with low savings, high unemployment, and declining personal income in Germany, the UK, and elsewhere. Interest rates have been cut by central banks as a response to layoffs and the need to create jobs. Investments should be made elsewhere, as results will be difficult for these stocks in 1996.

Falling manufacturing output, lower retail sales, and higher unemployment kept the British economy weaker in the 3rd qtr of 1995. Personal debt and weak consumer confidence are keeping domestic spending low. US trade, aided by the weak pound, will help the UK economy. Lower interest rates will help employment, but fear of inflation can offset this. There are several good stocks here, but investors must heed safety and timeliness rankings.

Exports accounted for a much of British economic growth since 1994, due to good overseas economies and high unemployment in the UK. However, the US market is softening and the Gross Domestic Product is expected to decline from 4% in 1994 to 3% in 1995, in addition to inflation and unemployment problems. British companies face unsettled conditions in 1996 because of lower return on sales abroad and higher domestic material costs. Investors must select stocks with good niche and export market potential.