I bought JDSU last fall when it was making a nice consistant upwards trend line. You don't always have to look for cup and handles! Yes, I missed the pivot point, but I've still tripled my money.
I've followed Paul Senior's posts with some amusement. I expect that if Paul were living 80 years ago, he would be making the same comments about Charles Dow!
I have been to one of Wm O'Neil's free seminars where in a couple of hours he teaches several hundred readers how to use a current copy of the IBD to pick stocks to watch.
The man is genuine, and he is focused on teaching individual investors how to learn to invest.
Yes, it's frustrating that six months after the fact an article will appear in the Investor's Corner showing the sell signals of QCOM. (Which I still own. But, I did sell my options in January!) The newspaper has to draw a fine line between Journalism and Investment Newsletter. Do I wish they would simply state "Buy XYZ and Sell ZYX"? Sure! But they can't. What they try to do is teach us how to read the signals.
He respects the power of the Mutual Funds. The CANSLIM system is designed to pick up the stocks that the Mutuals will want BEFORE they begin to accumulate them. Is it hard to do? Certainly! Worth the effort? It has been for me.
CANSLIM does promote a certain degree of market timing. Actually, it advocates a disciplined money management techniques called "Don't lose money". That is, if you're wrong, cut your losses short. (The 8% rule.) Let winners run.
Another controversial technique is he advocates 'Averaging up'. That is, if you buy a stock and it goes up, buy more. The theory is that since it's hard to find a really good winner, when you do, place more money on it. (Kinda like betting on Secretariat at the Preakness!)
Enough rambling... I wish I always followed the CANSLIM approach. I do a lot of buy and hold. I try to pick my buys at cup and handle breakouts. (But not always.)
It's the sells that are hard.
If Mr. Senior has made a ton on SUNW, and it has come to dominate his portfolio, he should sell some to diversify. Michael Dell does, every quarter. So does Bill Gates.
So, Paul, what are you buying?
Adairm |
