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INM Mar '09 - My Answer When They Ask, "How Did You Know?"
Kenneth J. Gruneisen, Founder and Contributing Writer, www.CANSLIM.net
Too many people have been set back considerably by the current Bear Market. We have kept actively managed clients who follow our advice on the sidelines since May of 2008, avoiding any exposure to individual stocks whatsoever. Investors who knew about the investment system, and followed its sell rules, have actually earned a little bit of safe interest. We are all very happy about that, and we only wish that more people knew about the fact-based system we use. Of course, knowing about it is the first step toward believing in it. Belief in the system should lead to implementing it.
Implementing the winning system is not easy, even when you believe in it. It took me years of work in the investment arena before I became skilled at implementing the system, which requires strict discipline. I can understand why investors so often come to me and ask for help, as it is very hard to block out the noise and avoid being influenced by outside forces.
When talking with more than one investor in recent months, sharing the story of how we helped clients avoid big losses while most investors have suffered, I have been asked, “How did you know?” I explained that we knew to be out of the market because we are relying on a fact-based system that has been proven. It was obvious! It turned out that the system helped us avoid big losses, but we didn’t know for sure how ugly those losses might turn out to be. We still don’t know! The recent deterioration under last year’s chart lows has the major averages continuing to erode. It won’t go down forever, but we don’t know how far it will drop or how long it will take. That is why we are out. We don’t know. We only know that it is dangerous to fight the tape. We know it is smart to wait for better odds.
When we finally buy shares in our next winning stock that will rise many fold in price, we won’t even know it. You can only do what has been proven to stack the odds in your favor of that happening, and follow the system’s rules. Nobody knows! Positioning yourself so that your chances are best is the critical part. Following the right procedure is our job – proper implementation! We will know when it is time to get back into stocks, because we will continue relying upon the same fact-based system we have been using. When the right time comes to be buying aggressively, it will be obvious too.
People will say certain things when they hear you talking about a big winner. Some will say, “You’re so lucky”, dismissing the possibility that skill or intelligent trading tactics had anything to do with your success. Some might ask us, “What was it about that stock? How did you know?” It will be fun to explain that we didn’t know, but we relied upon a proven fact-based system.
It will be fun to see the system do what it is supposed to do in an up market, just as it has been fun to see the system do what it is supposed to do in a down market. It has been working out pretty good for us in the bad times. It has worked out amazingly well for us and a long list of others before us in good markets.
Source’s Saving Grace
One of our many saving graces has been the working relationships we have built with institutional clients. Professional money managers have been encouraged to contact us for details on the invaluable research and assistance we can offer you in technical and fundamental analysis. Through a prime brokerage account you can start tapping into the expertise of our qualified team at Source Capital Group, helping your firm be more efficient at maximizing gains, minimizing losses, and increasing your assets under management using this proven systematic approach.
There is only one complaint I can make about the way things have been going. Sitting on the sidelines means that for month after month we have been paying the rent and other office expenses while generating virtually nothing in the way of commissions from our retail clients. But another one of our saving graces is that we do not have the expenses of those fancy financial firms. Those who have visited our Lighthouse Point office definitely know that is true! Thankfully, our clients are not judging us by the worn out carpet and the amazing stacks of old newspapers and magazines. However, I am a bit frustrated that the prolonged downturn has led us to delay the plans mentioned back in my June 2008 column (read here), when we were intent on soon upgrading to a bigger and better location in downtown Boca Raton. The place I had my eye on remains vacant, and now there are many other vacancies in the area. I get the feeling that our patience in this area, like the patience we’ve had in the market, will be very nicely rewarded down the road.
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.