Excellent analysis!
I've held WM for about a two years, and am glad to have your confirm that it's still a good buy. Saves me having to do my own update!
BTW, do you follow the SSG thread on Motley Fool?
I posted a rant there about the Quicken NAIC screen. Thought I would post it here to get it a wider audience (of two! <g>)
I have tried the one click scorecard. I find it less than satisfactory. Far less.
I won't get into the specific reasons, other than to mention briefly a few -- such as the
absence of outliers (which can make a huge difference), not mention (or if there is, I haven't
found it) of whether they're using data as reported, normalized, or adjusted; there is NO
indication what they are using for a low price, which has a huge impact on the buy/hold/sell
zones and really has to be carefully determined (if I ever get time, I intend to write an article
for BI on this).
But the biggest problem is trying to reduce the SSG process to a simple pass/fail without
adding any judgment.
Now, I realize this is just supposed to be a quick look. But I think, frankly, it's a disservice to
the NAIC principles. People will go there, click the scorecard, get either a pass or fail, and if
they buy the stock because it passes and lose money, they will say the NAIC system is junk
and doesn't work. I have no idea why NAIC ever allowed Quicken to use their name.
(Anybody know a board member who can explain the rationale of the decision?)
But, here's the bottom line for me.
Just to see what would happen, a year or so ago when this first came out I got the list of
"strong interest" NAIC stocks from the Quicken site. What a bunch of junk!
Just for fun I did it again just now. What does it show?
Number one position: Wesco Financial Corp (WSC). Projected five year earnings growth
66.22. Yeah, right. Notice that their earnings went DOWN from 978 to 98 and from 98 to
99, but took a huge leap in 2000. Which is apparently what's responsible for its great
prospects per Quicken/NAIC. And check out the Yahoo data on this company. Oops,
almost nothing there! Not a single analysts covers this company. Not one. Look at the
trading volume. Today it traded 120 shares. That's right. 120 shares. Do you really want to
be in a stock that trades 120 shares in a day? (Oh,it's okay -- the average daily volume is
1,363. Plenty of liquidity there, right?) This is a number one recommendation per
NAIC????????????? Why on earth is NAIC letting their name be attached to
recommending this stock????? (I know, NAIC will say they don't recommend stocks, but
believe me, when Quicken site users go to this screen which purports to show stocks
showing strong interest according to NAIC criteria, and when the Scorecard shows it
passing all seven tests, that's going to look to most of the world like a recommendation.)
Or number 6 slot, Cymer Inc. 5 year earnings growth, 100%. Whee!!! Which is the right
feeling for this roller coaster stock which went from about 50 in late 97 to about 6 in late 98,
rebounded to 60+, recently was down around 15, and is now at 35. Very close to its 52
week high -- truly a great time to buy a stock, right? CANSLIM would say so, sure, but not
NAIC. And yes, its pretax profit margin is up. Up to 25%. But that's from 0% in 1998 and
5% in 1999. That's really great management, right? And oh, yes, it's in the buy zone. Why?
Well, the current price ($35) is below the projected LOW of -- get this -- $61.60. In the past
five years, the highest price the stock has ever reached is about 61, and that's the LOW
according to Quicken?
Somebody give me an aspirin. Or two. Or maybe even three.
Sorry to get so passionate here, but this Quicken thing really frosts me. I think it's doing a
major disservice to NAIC to have their name connected with this.
End of rant. |
