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Strategies & Market Trends : Stock Attack II - A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Teresa Lo who wrote (14704)	8/12/2001 12:44:45 AM
From: Chris	Read Replies (2) \| Respond to of 52237

no worries, im interested as well.

To: Teresa Lo who wrote (14704)	8/12/2001 10:52:23 AM
From: Skeet Shipman	Read Replies (1) \| Respond to of 52237

You do your OWN analysis to determine a value at which a stock will ultimately trade. Knowing where a stock will trade at some time in the future is helpful in interpreting and anticipating TA movements.

To: Teresa Lo who wrote (14704)	8/12/2001 11:59:05 AM
From: Ramsey Su	Read Replies (1) \| Respond to of 52237

I would be interested in hearing from anyone who might have a good method to use FA Teresa, I think you meant if anyone might have a quick and easy, vs "good method" to use FA. The problem here is a lack of standardized interpretation and understanding of what FA is. As an example, if I ask all the TA investors here to tell me the 200 days MA or 200 days ema of a certain stock as of close last Friday, all of you should be able to give me the EXACT answer, correct to 4 decimal places. However, if I ask what the PE is for the same stock as of close of Friday, how many different answers do you think I will receive? Some of you will give me the trailing, some forward, some the common method of using 2 previous and 2 future quarters, some earnings may be based on GAAP, some earnings based on proforma, many will go to yahoo (or any other financial websites) and give me that random number ........ MOST WOULD HAVE NO CLUE WHAT PE REALLY MEANS!!! I am willing to bet that no one here actually have gone and calculated that PE number themselves, using what ever financial model they deemed appropriate for that specific company in that specific sector. Furthermore, I bet you 99% of investors who claim they are FA investors would not even have their own financial model to perform the most basic of FA. While most badmouth Wall Street analysts (including me for different reasons), most have never bothered to read a full analysts report, just the 1-4 page summary used for promo purposes. In fact, I doubted if most investors have even read that summary but rather, rely on Maria B (who never reads anything other than what is in front of her in the telepromter) to INFORM them on CNBC. One recent analyst report that I read from a major brokerage was about a few wireless telecom stocks. The report is 176 pages long, loaded with facts, data and the methodology for their projections. So to answer your question in my long-winded manner, I think most wall street analysts FULL reports would show you a good method of using FA (most are CFAs), it is just their conclusions and recommenations which are highly suspect. As for a quick and dirty method of using FA, I do have a method which unfortunately, can only tell me not to buy but not what to buy easily. I think the single most important item to look at from a FA perspective is the topline number. CSCO had been mentioned here so I will use that as an example. Chambers had been, and still is, telling the world that CSCO can grow at 30-50% top line per year. Well, at its peak, CSCO's revenue was over $20B per year and still not far from that today. If CSCO is to grow at just his low end of 30% topline, it will double every 2.5 years. So in 5 years, their revenue would be $80 billion????? Man, that is a lot of switches. By understanding topline, you can immediately have a good picture of how many Krispy Creme outlets are needed to bring in a reasonable revenue to justify their market cap. By understanding topline, you can count how many more PCs Dell had to sell to fulfill the famous projection of 70+% growth rate by Michael Dell. Anyway, that was just my 2 cents. Ramsey

To: Teresa Lo who wrote (14704)	8/12/2001 12:13:04 PM
From: BirdDog	Respond to of 52237

...anyone who might have a good method to use FA... May I suggest using both FA with TA for investing. First.. Use FA to obtain a clear view of a company you may consider investing in. This is to obtain a clear view of what you are dealing with. I also use a method of determining a "sustainable competitive advantage" in obtaining my clear view of what I am risking my money on. Once I have a clear view of the companies I wish to risk money on, I can go on to the next step. Second... TA I use in trying to play MrMarket with the companies I like. As I understand MrMarket is 1/2 the effect on stock price. I need some view of what to expect. I know TA isn't a crystal ball...but I think it gives a "blind man" a "walking stick" to get along. We can also proceed to another step... Third... After obtaining a clear view of my company. Then using TA to either buy or sell appropriately. For example: Lets say I have decided to sell when a company I own has increased to a PEG of 5. The company is now there and has shown a steady uptrend in TA. I may decide to set sell stops in different ways depending on how I choose in my TA. I could also watch closely to determine when I have a retrace in reversal of trend. I can use the inverse of above in buying within fair value range. Or even use my TA to determine that there is little chance the stock will come down to fair value. My FA would probably be showing a high growth rate here also. But I consider that only keeping a clear view of what I'm using my TA on. Bear in mind, I am trying to use both, together. Or use TA to determine that there is little chance the stock will go up to a PEG of 5 anytime soon and take the profits. Either way... I love using FA and "determining a sustainable competitive advantage" to know what I am dealing with...Then apply TA accordingly...always keeping in mind, that oger, MrMarket.... BirdDog

To: Teresa Lo who wrote (14704)	8/12/2001 12:21:08 PM
From: Paul Shread	Respond to of 52237

FA is part of this thread, Teresa. Jacks and Jills of All Trades here, and you know the rest of that one... <ggg> There's the basic PEG ratio, of course. Good luck finding anything in techland trading at a PEG of 1. TECD is the only tech stock I've seen trading at a PE equal to its long-term growth rate. I personally like Ken Lee's Trouncing the Dow, which is an interesting mix of FA and TA - he takes a 10-year history of trading data, Value Line data, ROE, and other stuff, and figures out at what price a stock has typically bottomed at in the past, based on current fundamentals. Sometimes a stock will overshoot his target by 20% or so (a good time to buy when that happens), but it's a good measure of when a stock is over- or undervalued based on its current fundamentals. Right now, for example, he has a trading range on CSCO of 6-15; that should be the low and high, based on where the stock has traded for the last decade. FWIW, this is the first time in memory that the system hasn't shown a single undervalued stock in the S&P 100 or the Dow whose growth rate is still holding up (an important part of his system). A few like BA and UTX are fairly valued, but nothing is oversold based on his system.

To: Teresa Lo who wrote (14704)	8/12/2001 11:39:50 PM
From: Berney	Read Replies (4) \| Respond to of 52237

Teresa, I spend an incredible number of hours maintaining a lot of FA information on the companies that I call the Big Boyz; some 77 companies that comprise about 50% of all the equity in this country. I believe that there are periods that it works incredibly well, specifically year end. FA Valuation, according to The Intelligent Investor really only involves three variables: current earnings, a projected growth rate, and an interest rate environment. For example, my month-old numbers reflects a fair value for CSCO of $13, based upon next year's earnings. Am I willing to step up to the plate at these prices? Not with your money, and certainly not with mine. However, there are other examples that show a positive spin, and we will get there. The other side is that I developed a 15 point scoring system with "13" being a perfect score, as there are two negative scores involved (negative cash flow and historic high PE). Very seldom does one of the Big Boyz even get a score above 10, but when they do it is a buy. FWIW none are there now. The problem with FA is, if you have a trader's heart, it is tough to just sit on the sidelines when nothing looks good FA wise. JMHO and A View from the Swamp Edit -- It is hard to even imagine a major world market hitting a new 16-year low!!! Berney

To: Teresa Lo who wrote (14704)	8/13/2001 4:02:06 PM
From: Jibacoa	Read Replies (1) \| Respond to of 52237

Teresa: If I can give my grain of salt about a "short cut" to get some FA, I think one way is to start with S&P’s "Current Market Perspectives". It is somewhat easy to pick companies rated A or A+ or with 4 or 5* and to get companies with no LTD and with a significant increase in revenues year after year. At a glance one can see what the S&P estimated earnings are for the following year and how it compares with the current or previous year, so you can pick companies where the estimated earnings are expected to be much better. Often times you can find companies that on the previous year had a significant increase in revenues, but had lower reported earnings with a corresponding price dip and now are showing significant improvement on earnings for the currently reported 3 or 6 months. I think those are good R/R with 75 to 80% probability of profitable trades. You can look at the companies that have had periodic 2x1 splits, how the price usually dips after the split and pick the ones with increasing sales & earnings that are on an "up-trend". Besides the LTD, it is easy to check the Book Value, the % of institutional holdings as well as what the earnings trend has been for the previous 3 years and last but not least THE PRICE CHART FOR THE PREVIOUS 3 YEARS as well as the YEARLY RANGES FOR THE PREVIOUS TEN. <g> In summary it facilitates to: 1. Pick companies with significantly improving revenues for previous 3 years and projected lower P/E based on better estimated earnings. 2. Pick companies with No LTD (or low LTD) and with small float. Or to go with a High Ranking (B+ or better) and 4* or better. 3. To look at the price action for the previous years, so to give 85 to 90% weight to TA. "It is always better to go with the trend."<g> Disclaimer: Although I have subscribed to S&P's Current Market Perspectives for more than 30 years, my long position on MHP is only for the last 10 days and very small.<g> Good luck to all. Bernard