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Greetings, fellow Pro-fundity team members -
7-30-99 Page
- The three most important success factors in real estate are said to be location, location, and location. We can turn that phrase a bit for traders in the market and say the three most important factors are timing, timing, and timing. We all know the market will go up and the market will go down. When provides the ammunition for the battle in which we are engaged. Timing both the purchase and sale of a stock will help us maximize potential profits.
- The Value Line Investment Survey publishes a timeliness ranking that measures a stock's predicted price performance over the next year. That is, a stock ranked high is more likely to increase in price during the coming 12 months. The idea is that high rated stocks are better buys now than those of lower rank. This measure is widely used by value investors, telling us even the buy-and-hold gang understand the importance of timing.
- Timing is much more important to us, however, dealing with short-term price patterns on rolling stocks. In our effort to help members gain educational excellence in this trading arena we have added a tutorial this week on Timing, one view of what it means as we try to maximize our returns on rolling stocks. Click on the Timing link on Member tutorials at your leisure to help your understanding of this important issue.
- In the tutorial on NEWS (added last week), we showed where a news item caused the price of a stock to drop 25% on a report of increased earnings, "Why? It missed estimates by 2-cents!" We wondered how a 2-cent miss in earnings estimates could cause such a dramatic change in the price of a stock.
- A recent article in Fortune business magazine shed some possible light on this question. The article, titled "Lies, Damned Lies, and Managed Earnings," discussed how the SEC Chairman, Arthur Levitt, is attempting to curb the practice of managing earnings by falsifying financial information. The article explained how it has become custom in the market to meet analysts estimates to the very penny and accounting tricks and slight of hand can play some role. The point: If managers cannot find a meager cent or two, with opportunities to cook the books, this may be a sign of incompetence and a reason to bail out. The good news is how intense Levitt is in moving to stop the practice.
- Our addition of the Timing tutorial this week is our continued response to member requests to post the educational guideposts where they can be reviewed at any time. This also makes past guideposts available to new members.
This week's Editorial Guidepost:
It is our intent to help our subscribers understand market strategies well enough to make informed decisions and understand the risks.
We provide TC-2000 tutorials to members. See the Member Login page.
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