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Good insight Steve. I'm glad you had the sense to sell some of your Dessauer stocks when you were ahead. I, too, have tried to make sense of his "investment style" in terms of the practical demands of putting out a newsletter, and as you point out, "buy and hold" is simple and straight-forward, makes it easy, uncomplicated, especially for the beginner-- the amateur part-time investor to whom he is trying to appeal. However, nothing sells investment newsletters more effectively than investment success, and it wouldn't complicate the process a whole lot to use stop-losses (for instance) to protect profits and limit losses and to urge caution sometimes instead of always urging people to commit new money to the market. No matter how you look at it, Steve, the way he operates--it is certainly not in his interest either. It wouldn't take that much effort or work to add some protective features, some prudence and caution, to his investment program. I think his investment style arises out of overconfidence and sheer cockiness. It's megalomania at work. He's a victim of his own past successes. I don't think he ever asks himself,"What if I'm wrong?" I think he enjoys defying the market. I think (this is just my opinion) that when he sees one of his favorite stocks falling, he gets on the hotline and tells his subscribers to buy it because he's fighting the short-sellers and taking his stand against what he thinks is wrong. For instance, in the July issue he recommended Bally Total Fitness at 33. It started falling, and he revealed that the short-sellers were trying to push the stock down. So, as it was falling through the 20s he pushed it hard on the hotline. "If you have been waiting to get in, this is your entry point" he said (I think at about 23). Turns out it wasn't your entry point, because the stock fell rapidly, I think, to about 14. In the September issue, he chastised the "shallow thinking" of an analyst who downgraded the stock at 22, but Dessauer admitted that it was 15 at the time he wrote that. Is it necessarily "shallow" to sidestep a quick 33% plunge in a stock? You can always buy it back. Perhaps that analyst did. Dessauer just doesn't get it, that not everyone wants to endure the huge declines that he apparently shrugs off so easily. In all fairness, I believe that BFT is about 18 again, which I'm glad for, especially for those who bought it at 33. I don't own the stock myself. Whether that stock is good or bad is not the point, and whether it eventually reaches and exceeds its old high is not the point. My point, and my opinion is, that Dessauer's advice and style arise to a great extent from his desire to defend and bolster his view of the universe. Again I say it's megalomania. A person rationally committed simply to making money for himself by making money for his subscribers would not, in my opinion, act the way he does. |
