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Strategies & Market Trends : Point and Figure Charting -- Ignore unavailable to you. Want to Upgrade?

To: Al Serrao who wrote (2209)	4/4/1998 2:17:00 PM
From: Ms. X	Read Replies (1) \| Respond to of 34811

To Al and All..Answer from Tom. Jan , another question for Tom. Since we are living in the world of the big cap and since the small caps continue to remain small caps, we must fish in the pond where the big caps swim. It seems to me, it is more important to find the big cap that at least pays you a dividend while you wait. Does D&W target such companies for recommendation? Is there a list of such companies, your firm believes are attractive? Just look at what the Utilities and in particular the phones have done in 12-18 months. 40% plus dividends is not a bad way to go without the glitters of the techs. So who needs glamor? "You mention the Telephone stocks as a good play for the last 12 to 18 months. You are dead right. In your search for dividend paying stocks one must still take into consideration the overall market (offense/defense) and then the individual sector risk level. In the case of the telephone stocks, the Relative strength chart on the PHLX Phone index divided by the S&P 500 gave a nice buy signal in September of 1997. The sector had just reversed up from a low level (buy low) and the Baby Bell's were giving very nice buy signals off the bottom. All this combined for us to make a major push on them November 7 in our daily report and I mean major. What I am trying to say is that if the same thing happened with the Food's one could have bought KO, HSY or CPB or any other quality stock that paid a decent dividend. Searching for dividends begins with the market, next the sector, next the inventory of fundamentally sound stocks and then from those stocks, one's that pay dividends acceptable to you and finally a Point & Figure chart that suggests demand is in control. There is no magic to this. If the sector in play was Biotechs you might not find any that pay acceptable dividends so the sector would be out for you. Conversely sectors that are high (risky) when the market is on defense will more than result in lack luster performance or losses no matter what quality or dividend you buy. I want you to think of this for a moment. Ask yourself a question. Are you investing to have fun and an adrenaline rush or are you investing for financial freedom and security down the road. If you are trying to build wealth then you need to sit back and think of what can get you at least the average 70 year return of 12% in equities and then try to beat that if possible without taking inordinate risk. If you placed 1 million dollars in the Templeton Growth fund 30 years ago and wanted to live on 6% of the portfolio each year, here is what would have happened. Consider the Templeton Growth fund is basically a market fund. After the first year you would have taken out $61,000 in income. At year 30 you would be taking out in excess of $1 million a year and the portfolio would have grown to, at end of 1997, $18 million. This is the magic of compounding. It points out that the only place to be is in equities. It also considers no transactions from year one. I think you can do better than Templeton fund by yourself as long as you drive a straight line. You need to begin figuring out where you want to be at X point in your life. A sensible portfolio where you remain involved would be as follows. 1-3 in Dogs of the dow or our Relative Strength Dogs of the Dow restructured once a year. 1-3 in SPDR'S Standard & Poors depository receipts trading on the AMEX or 1-3 in Vanguard S&P 500 fund with dividends reinvested. 1-3 used for sector rotation. When a sector declines below 30% and reverses up, buy a high quality stock, preferably a Dow or close to it stock, that has a good chart pattern and dividend if possible. If you will do this for the next 20 years you will undoubtedly be ready to start a 6% withdrawal plan while your portfolio continues to grow for the rest of your life. To screw this all up, all you need to do is chase the high tech/ high wreck stocks and have a few that crater on you each year. You will find yourself voting Democrat so the Social Security payment you have to live on, continues to come. Depend on no one but yourself for the future." Tom