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INM June '06 - Do Not Eat This Newsletter, Read It!
Kenneth J. Gruneisen, Founder and Contributing Writer, www.CANSLIM.net
CANSLIM.net


I am sorry if my attitude seems unsympathetic, but some people who just don’t like to follow the rules really deserve to suffer the consequences until they figure it out.  It isn’t like they are not reminded of the proper buy discipline and sell discipline under the “What to Look For and What to Look Out For” heading of many detailed write-ups I have labored over.  So, we should not be hearing from people complaining that they bought a stock like Lufkin Industries Inc (LUFK) at $71 asking, “What should I do?”, with the stock under its 50-day moving average line while they are sitting with a -15% loss, right? Good!  I’ll just try to forget I ever took that phone call.  Companies that sell beef jerky probably have trouble with those same people, as I am sure they eat those little silica gel packets marked “Do not eat!”, and then they complain to the company about it afterwards.

 

Early in my career, maybe because I didn’t know a lot about stocks and hadn’t been taught any better, I saw some clients sustain massive losses.  An investor may have picked up shares in a company with a lot of great characteristics and potential, but when things started to go wrong, these clients did not sell at -7% to -8% and take the loss while it was small. Since becoming a CAN SLIM® devotee, I have been smarter about advising clients to limit the damage, so investors I have worked with have avoided having those huge meltdowns that can really devastate you financially and emotionally. Hopefully you would never question the use of discipline to limit losses per the guidelines. 

 

Of course, my duty is not just to call you up (if you are a client) and say, “This is a good one, you should be buying it”, but it is also my duty to protect your profits and preserve capital when things are dropping. And once in a while the market sends up a warning flare. It lets you know that something bad is going down.  It is a visible signal, almost like spotlights in the night sky.  Disciplined investors noticed the changes happening and sold stocks, raising a lot of cash when the market direction recently turned negative. That is what happened around here!  I know it is frustrating to backpedal or not make great headway sometimes, but that comes with the territory too.  Hopefully, if you are handling your own buying and selling, you routinely follow the market action and let it be your guide.

 

I am sure the news media will continue to tug on every possible string to keep investors interested and amazed, so in the weeks ahead we will hear much talk about Mr. Bernanke, the new Fed chief, and Mr. Paulson, the proposed new Treasury head.  This might lead to some intriguing discussions, and there will be no shortage of opinions out there. 

 

Rather than rely on analyst opinions, CAN SLIM® teaches us to rely on the market action to dictate what we do next.  So, we are watching for the major averages to produce meaningful follow-through gains in the very near term.  It would be great to see at least a +1.7% gain from at least one of the major averages on day 4-7 of a new rally attempt, as that is the standard established by all prior history.  Technically, today was considered day 5, but the volume and size of the gains was unimpressive.  Along with that improvement from the major averages, we will also be watching for more leadership and a great increase in the number of high-ranked issues making breakouts to new 52-week highs with heavy volume behind the gains.

 

Before wrapping it up, let me quickly point out that my monthly column, “Investing for the New Millennium” was first introduced in June of 2000.  So we are officially going into INM’s seventh year!  Also, next week I will be turning 39, which means I have already gone 4 years past my original target age for retirement.  I am having so much fun, though, maybe I will stick to it another year or more.  There still seem to be a lot of people in need of professional input from a CAN SLIM Certified expert, and it would be a shame to let all of this talent go to waste.  Besides, I really can’t wait to see what the next big winners will be.  Let me correct that!  I can wait, and I can spot them when they are triggering buy signals.  Can you?

About Kenneth J. Gruneisen, Founder and Contributing Writer, www.CANSLIM.net :
Kenneth J. Gruneisen has successfully completed the CAN SLIM® Certification Program.  Mr. Gruneisen became a Registered Representative in 1987 and his career includes experience offering personalized assistance to investors with more than a decade of experience as a Registered Principal managing a branch office.

The recommendations made by CAN SLIM® certified individuals are their own and may not be attributed to the CAN SLIM® Certification Program, William O'Neil & Co., Investor's Business Daily or their affiliates. The CAN SLIM® Certification indicates only that the individual has successfully completed the CAN SLIM® Certification Program. CAN SLIM®, William O'Neil & Co., Investor's Business Daily and any of their affiliates are in no way responsible for any loss or damage caused as a result of the services provided by these individuals.


Comments contained in the body of this report are technical opinions only and are not necessarily those of Gruneisen Growth Corp. The material herein has been obtained from sources believed to be reliable and accurate, however, its accuracy and completeness cannot be guaranteed. Our firm, employees, and customers may effect transactions, including transactions contrary to any recommendation herein, or have positions in the securities mentioned herein or options with respect thereto. Any recommendation contained in this report may not be suitable for all investors and it is not to be deemed an offer or solicitation on our part with respect to the purchase or sale of any securities.

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The recommendations made by CAN SLIM® Certified individuals are their own and may not be attributed to the CAN SLIM® Certification Program, William O'Neil + Co., Investor's Business Daily or their affiliates. The CAN SLIM® Certification indicates only that the individual has successfully completed the CAN SLIM® Certification Program. CAN SLIM®, William O'Neil + Co., Investor's Business Daily and any of their affiliates are in no way responsible for any loss or damage caused as a result of the services provided by these individuals.

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