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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: TRINDY who wrote (89703)	2/20/2001 10:33:41 PM
From: Knighty Tin	Respond to of 132070

Trindy, I don't think it is an art form. I think contrarianism is an inbred state of mind. I always approach every idea, long stock or long put, with the question "what would make this not work?" Most traditional analysts tend to be blinded by the trend of the fundamentals and the stock price. "If XYZ grew 25% last year, then they are likely to grow 25% this year." That is why we see stocks that are strong buys over $100 and weak holds (they rarely say sell) under $20. Momentum theory is the mainstream and I have always tried to avoid the mainstream. With individual stocks, the risks and opportunities are easy to find. Nearly all of them are listed in the firm's 10K report and are definitely listed in any proxies for deals. Once you are aware of what the risks and opportunities are, then you can start assigning probabilities to their occurence. If you are strong in one industry, that helps, but even in an industry where your technical knowledge is weak, you can check out the competition. So, if I had to leave one idea with you, it would be to pore thoroughly over 10Ks, proxies and prospectuses looking for something that could go counter to the current trend of the fundamentals and the stock price. Then, read the 10Ks of the cos. listed as competitors. Then, make up a list of questions for the target cos. and the competitors and call them. They may get mad after a few questions, but sometimes they really help. Also, beware of hubris. When you see a CEO on CNBS talking about his co's sure thing future, watch how they don't show him below the knees because they don't want you to see the feet of clay. I know this sounds kind of mundane, but you would be surprised how many folks have six and seven figures in issues where they don't read the financials and they don't know the competition well. Hope that helps.