Market Summary
MARKET
Shares issued 0
1899-12-30 close $0
Friday Feb 16 1990
Daily Market Report
As promised Friday, what follows are exerpts from John Kaiser's often
philosophical discussion about how to pick stocks on the Vancouver stock
exchange. These excerpts are part of a much longer discussion that is distributed
by the research department of Pacific International Securities. Copies may be
obtained by calling Mr Kaiser at (604)-669-2174.
Mr Kaiser calls his stock picks longshots.
Longshots are speculative companies listed on any of the Vancouver, Toronto
and Alberta stock exchanges that are not currently the objects of public
speculation, but show strong signs that at some point a wave of publicity will
replace low volume and low prices with heavy volume and, hopefully, much
higher prices.
Some people characterize attempts at picking winners as no better than throwing
darts at the stock table page of the newspaper. Using such a random method
will, however, include the hundreds of doomed companies that are heavily
indebted, have been abandoned by their management, are delinquent with filings,
including financials, and lack any sort of fundamental assets or even the promise
of acquiring some. Their existence is a fact of life in the high risk business of
speculative ventures. Such companies are destined for consolidation, or worse,
suspension and eventual delisting. In essence, no one, except perhaps the
powerless public shareholder, cares enough to make an effort to breathe life into
these stocks. Eliminating these is the first step in narrowing the field of choices.
Knowing that someone must have reason to care about a stock's future for it to
have any future prospects is to start understanding the longshot list.
In the search for longshots, one theme dominates overwhelmingly. Plain and
simple, we are looking for stocks that are being groomed for a future market
play. Longshots are low-priced and semi-dormant because they are still missing
important pieces. When the last piece falls into place, then the public's attention
will be fucused on the stock, and active speculation will begin. Meanwhile,
longshot players can accumulate cheap stock in the open market and patiently
wait for the day when the promoters are ready to tell the world about their
company's great future. When everyone else is clamouring to buy your longshot
and insisting that it is on its way to the moon you will sell your position to them.
Forget about landing on the moon; take your profits somewhere along the way.
The life cycle of speculative stocks resembles the stages of a plant: seed,
germination, sprouting, growth, blooming, bearing fruit and decay. Some stocks
are annuals, others perennials. Many are stuck in one of the stages. Longshots
are those that are in the first three stages and show signs they may go on to the
next three stages.
The five point method helps us find the winning longshots. These five points are
the company's background, structure, people, story and capital.
Background: Where has the company been?
Structure: Will the company go anywhere in the future?
People: Who will and can make the company go somewhere?
Story: Where will the company go and can it get there?
Capital: How will it get there?
The background of a company reveals when it was first publicly listed and the
corporate changes such as consolidations and name changes it has since
undergone. What you find here is a brief description of the company's previous
lives, if any, and how the company arrived at its present stage. Each life cycle
corresponds to a story, a venture through which the company tried to become a
success. The background also indicates who told the story and tried to enact it. A
price-volume chart covering the stock's previous lives reveals the distribution, or
share ownership turnover, cycles the company has undergone. Look for triangular
volume and price patterns, usually occurring roughly at the same time. they
indicate how effectively the company's story was told to investors. The low
volume, low price sections between the triangles are periods of restructuring. You
will find that most longshots are in such a phase.
Next Monday, we will present the next part of the longshot philosophy. It will deal
with the sections about structure, people, story and capital.
(c) Copyright 1990 Canjex Publishing Ltd.
(c) Copyright 2001 Canjex Publishing Ltd. canada-stockwatch.com |
