CANSLIM.net Help Lines
954-785-1121 OR 1-888-CAN-SLIM

 


>>> UPGRADE YOUR MEMBERSHIP NOW AND GET IT ALL - CLICK HERE
INM Mar '08 - Titanic Losses Are Usually No Accident
Kenneth J. Gruneisen, Founder and Contributing Writer, www.CANSLIM.net
CANSLIM.net


I am not sure if I have mentioned the old TV set of mine that has the ticker tape literally burned in on the bottom of the screen from having been locked on CNBC for most of its operating hours, but simply mentioning that gives you an idea of how diverse my television viewing habits are.  But, anyhow, I "accidentally" switched over to the History Channel yesterday and saw an interesting story where they thoroughly investigated the sinking of the Titanic.  It got me thinking about the fact that, after every great disaster, it seems as if the flaws or weaknesses (that always existed) jump out as rather obvious.  Such is the case with a lot of investments that sink, too.

 

Hopefully you have read the special January 29, 2008 article “Putting Some Recent High-Profile Breakdowns In Context” (read here).  It took a look at the drastic breakdowns in stocks including Citigroup Inc. (C), Garmin Ltd (GRMN), Google Inc (GOOG), and Intel Corp (INTC).  Incidentally, they are all lower now, which is not surprising when you consider what the M criteria would argue right now.  But one of the most important points of that article was to help everyone understand that behind every broken down stock there is usually a “captain’s log” of evidence that shows you why the stock sank.  Anyone who is inclined to look at a badly beaten stock and think the market is making a “mistake” could find themselves sitting in some cold water for a very long time.  It is no accident that Citigroup and Garmin are still closing at fresh lows. 

 

Some of you might wonder why a company like Garmin, which is still putting up very strong sales revenues and earnings reports in each quarter to date through Dec 31, 2007, is being treated about as badly as Citigroup, a company that is showing disappointing downturns in sales revenues and earnings.  Maybe that alone can be satisfied by the standard comment concerning the investment system’s  M criteria – which says that 3 out of 4 stocks go right along in the same direction as the broader market.  But there is another argument that has long been made by technical analysts or chart readers.  That argument is that the stock market is a forward looking indicator, and the charts of stocks have an uncanny track record for turning down before the fundamental flaws begin to surface.  While there is a chance that Garmin could rebound, the more likely scenario is that its future earnings reports will start showing us the “evidence” behind the scenes.  This begs the question, “What does the market know?”  Healthy stocks typically trade above their 50-day and 200-day moving average lines, but that’s not the case with Garmin.   Meanwhile, many other high-ranked leaders with strong sales and earnings are in much better shape, technically.  If you want to argue with the market, be my guest.  I will listen to what the chart says and leave it at that. 

 

I know that some of the readers will look at the thinly traded stocks highlighted in another section and some are sure to write in and complain about the choices.  Ironically, it seems that whenever we hear from people who are upset about the ideas that are written up, those ideas have often turned out to be great winners.  So let’s get back to what we started off talking about at the start of this month’s pontifications. 

 

I know that in recent years the revisions of the book “How to Make Money in Stocks” put less emphasis on companies having small supplies of outstanding shares.  There are still too many historic examples of great winners that had very small supplies of outstanding shares, and not as many examples of great winners with large supplies of shares.  When 95% of the investment system’s great winners had less than 30 million shares outstanding, every time I see a stock that looks great based on all criteria, but it has a huge supply of outstanding shares, I get skeptical.  Could it be one of the 5% of great winners that had a larger supply of shares?  Maybe, but are those good odds? 

 

The last thing that any of my readers wants is to be the owner of a stock than ends up sinking all the way to the ocean floor.  But even a “good company” like Citigroup’s shares can end up sunk.  It really wouldn’t make any difference if you were cut in half, or worse, in Citigroup Inc (C) or Ebix Inc (EBIX).  Either way, you’d be cut in half, and that is simply not acceptable.  That is why the sell rules should always be followed, limiting losses while they are tolerable.  After you are down more than 7-8% in any stock, it is time to rush for the life boats!

 

 

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.

Related Content :

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.

Copyright © 1996-2014 Gruneisen Growth Corp. d/b/a www.canslim.net  All rights reserved. Protected by the copyright laws of the United States and Canada and by international treaties.  The names "CANSLIM" and "CAN SLIM®" are service marks and trade names of Investor's Business Daily, Inc., a California corporation, and are used by Gruneisen Growth Corp., a Florida corporation, under license. GGC is solely responsible for the operation of and opinions expressed in this Website. Daily Graphs® and Daily Graphs Online® are registered trademarks of William O'Neil + Co. Incorporated and are used with permission.

Privacy Policy | Terms of Use | Contact Us