Woops – blink and you miss an opportunity in this market (see David Fry’s chart).
This is where we (fundamental analysts) have a great advantage over the TA crowd. We don’t need to wait for “confirmation” of some pattern to tell us when to buy. I tell members that waiting for TA signals is like going to a store and seeing your favorite jeans on sale for 30% off but then refusing to buy until you see other people buying them – by which time you often miss your chance as they sell out.
TA people don’t belive stocks have a “value” outside of what the “trend” says the value is. If I say: “Hey, you can buy C for $3.65” they don’t say “How much can I buy?” they say “which way is it heading?” If I say: “BAC is down to $13.50 and you know that includes MER for FREE!” they say “yeah but they are forming a right shoulder.” I’m not a contrarian – really, I’m not. I just believe things have actual long-term values.
I told Members to run out and buy Toyotas on sale (cars, not the stock) when they had the big recall because it was a known issue so the new ones wouldn’t have problems and and meanwhile dealers were giving all kinds of crazy incentives. A Camry that was worth $30,000 on Monday is a good deal at $25,000 on Friday isn’t it? Should you stand at the dealership and say “Well, I like the Camry but the price is forming a right shoulder pattern and I can extrapolate that the price will be $15,000 if it breaks the trendline from 1987.” If you said that, people would think you were an idiot, right? Why should a stock be different?
On Monday I detailed my 9 Favorite Dow Plays(+WFR to make 10) and not only do we look for stocks that are already “on sale” but we have a coupon, in the form of our FABULOUS Buy/Write Strategy, to give ourselves an additional 20% discount off today’s low prices. How can people say no? Yet they do say no to net 50% discounts on Dow components and I do get frustrated as it’s obvious to me that it’s a barage of media negativity that scares people and keeps them on the sidelines, just when a stock sale is reaching it’s peak.
We’ve been very fortunate to be offered another chance to buy some of the greatest companies…
