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Strategies & Market Trends : Making Money is Main Objective

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To: LTK007 who wrote (149)	12/28/2000 9:23:29 PM
From: James1000	Read Replies (1) of 2155

If you don't pick a stock based on earnings then you have to pick it on speculation. Although speculation might work for 3 people it doesn't work for the rest of the 4.999999 billion people in the world. Yes, brokers are not always right and are even very far off in certain situations but we do have to rely on them. If you can think of a better way to pick stocks let me know. The only thing I can think of is visiting companies door to door and checking their inventory levels, interviewing customers and employees etc but that is just not going to work. The only thing that really bothers me is that big-name brokers sometimes use phone calls to top executives as so-called "research" into inventory levels, sales estimates, and who knows what else. The current and future earnings estimates of the brokers are more important than broker ratings. If a broker is estimating a very high growth on a stock with a low P/E but not giving a high broker rating then they are probably not very confident in their estimates. I read one article on broker ratings and it said that they were a very good way to pick stocks. Two things that are very good indicators of a stocks performance are the earnings trend and the broker-rating trend. A downwards earnings trend such as the one that NICE had is odd since the earnings estimates were going down but the brokers ratings were not going down. I guess in the future I'll check for such a pattern in my stocks. CCRT would certainly seem like a good target to short as it has both a lowering earnings trend and broker rating. Even if it ends up losing money which the company does not think will happen and a few brokers think might happen, it could lose around 50%. To lose money it would have to get a write-off rate of over 14%. The company did actually beat expectations even with the increase to the 11% rate. To me this is a sign of strength and not of weakness. On the upside if it meets expectations of 30% per year growth, which is what the company and what brokers expect it would easily, reach a new high of $70+. This is a huge price to pay if you are a short-seller. It also means the ascent could be very fast because short-sellers would have to cover. An unlikely risk of -50% vs. a likely return of hundreds of percent is all I can see. I think all of my picks already are priced for bad performance yet have very high earnings growth predicted. On its first day 6 of the 7 were up though I doubt it will perform like that very often. I just remembered one of my old picks was Polymedica(PLMD). It was near the top of my didn't-quite-make-it list yesterday. I also remember the one that did really bad: Hirsh(HRSH). I'm still missing one tech stock but it will come to me eventually.

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