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

To: dennis michael patterson who wrote (12887)	7/22/1998 11:03:00 PM
From: Robert Graham	Read Replies (2) \| Respond to of 42787

I will ask him some specifics. The market has changed on him about 5 years ago, if I remember correctly. It has taken him some time to understand the current market. He does think a correction in in the works. But once again he has no idea when this major market correction will happen. The market he is very familiar with was before the mutuals represented 70% of the market. The market he is most familiar with was when the individual investor played a more prominent role in the market compared to the institutional money. This type of market was not that long ago. Much has changed just over the past 5 years in the market. With the record breaking inflow of money into the mutuals over the past few years, this alone has changed the face of the market and has given him a new market to figure out. He is a very successful long term investor. Every time he has traded short term he has met with losses since as you know this requires a different approach and frame of mind to be successful at. He is not willing to change the approach he has used for so long. So this is why he always meets with losses in his short term trades. But his longer term track record has been very good. I think an average for well over 10 years has been about 25% to 30% per year. He has now placed his money into preferred stock since he needs the interest income to live. What is interesting is that when he played full time in the market in common stock, he demonstrated an uncanny ability to know where the money would go in the market. At one time he placed his money in utilities. Then the problems came up with cost overruns on the building of nuclear power facilities. He then reasoned that money would be moving to those utilities that had a minimal involvement with nuclear power. He was right. He made substantial profits along with a good interest rate when this happened by being ahead of the money by several months. Another play of his was on the South African gold mining stocks. He discovered that most of the free worlds gold reserved were in South African gold mines. After some research, he developed an approach to this type of investment. He managed to make very good profit in the stock appreciation as the profits of the company were keyed to the cost of gold in a specific way which had its surprisingly efficient impact on the price of the stock. He had a good idea of where gold was heading at that time. He also managed to make over 14% interest rate on the stock too. Other people in the market caught on to the position the S. African mining companies had with respect to the rest of the world and the extraordinarily high interest rate the stock was paying which helped generate good profits for him. He sensed something was up so he exited just before the embargo on S. African businesses and managed to retain all of his profits. This is another example where pending doom usually shows up in the stock price first before becoming news. Yet another play over the past few years has been on preferred stocks. Preferred stocks basically have a buy-back clause that is attached to a specified price of the stock. When he started buying into preferred stock, businesses were doing very well and had money that they started to use to buy back their outstanding preferred since this is essentially a form of debt interest. When he saw this happen, he developed a criteria that would identify the next likely candidates to be bought back by companies, and he would choose the preferred that has a buy-back price substantially greater than the present price of the stock which can be 50% or greater. In one year alone I think three to four preferred stocks were repurchased each at substantial profits. Other people caught onto this trend of companies in the market which made it a bit more difficult for him to procure those high profits. I will ask him a few specific questions about the market to see what he has to say. Bob Graham