Post of the Day
April 10, 2000

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Rat's Broadband Bandwagon

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Subject:  TA, FA - Just WATCH Where You Step
Author:  Mgk

This "ol' timer" has just gotta chime in. Am doing so on a different thread from the Woolmeister's, so as not to sully the sentiment there.

And, it's not as though I find anything to argue about in Doc Wooly's analysis thus far, or in that of my esteemed Rat colleague's continued cautionary warnings. In fact, I think these are well-placed reminders from both gentlemen. So I commend their posts to all.

On the other hand, let's not forget the purpose of a more fundamental analysis. Perhaps it's time to pull out the much-maligned Gardners' texts, especially their Investment Guide, or the Rulemakers, Rulebreakers tome. The purpose being to scrutinize companies with a basic set of criteria that reveals historic and current performance, evaluates management effectiveness, debt control, and the capacity to maintain and accelerate profitability. "Gorilla" analysis is fine too, but let's not forget that there are other worthwhile tools. Sometimes the best use of tools comes from knowing WHEN to use them to greatest advantage. Philip Fischer's comments or Wm. O'Neil's wouldn't be bad choices either.

Companies can be examined for long-term viability, aside from and despite short-term price fluctuation. Maybe now is a good time to engage that exercise. Even the brightest make mistakes, and even the most rigorous methods sometimes yield poor results. Remember these "Rulebreakers"? IOM? ATHM? Spoiled by petty squabbles, poor fiscal management, squandering of first-mover advantage. And to think that these same managements were once touted among the best. Hey, [stuff] happens. CNXT has recently given warning signs of severe management lapses - and that is a scary signal, esp. when current valuation is so dependent on everything going right for the next 5-10 years!

I am recently reading two very erudite books about why we are entering an "Age of Prosperity", and great wealth-building. I don't doubt that. But, let's not be glib, either. Many companies will be forced into bankruptcy, or into undesired buy-outs. There is still an evolutionary process to respect. Not all will survive - only the most fit. That is where I want my money to be. At times, the best we can do is guess. But, I'd rather it be an informed guess, anyway.

All this talk of "technical analysis" obscures the fact that this valued tool is, after all, primarily a short-term instrument. Not too long ago, (in fact, about 3-4 weeks ago) Wooly and several others were madly ushering everyone into ELON for the next big pennant break-out.

http://boards.fool.com/Message.asp?id=1100327000972000
http://boards.fool.com/Message.asp?id=1100327000983001
http://boards.fool.com/Message.asp?id=1100327001001000

If people were listening to that advice, and actually buying - they were in at $85-92. In the long run, that may not look too bad eventually, but I suspect that right now, given the recent events - more than a few folks are smarting from jumping in there. Especially when the same shares could be had at under $40 of late. Were there timely warnings for all who were tuned in, as to bailout procedures at the $105 spike? Don't recall seeing any. So this is what concerns me about these boards and others. Because I KNOW for a certainty, that for all the disclaimers, and despite the candid or self-deprecating comments about NOT listening to others for buying decisions - that many people skip the D(ue) D(iligence) part altogether and, instead rely on the supposed expertise of the "community" or the perceived "leaders". A bad combination in my book. It is the antithesis of steering your own course (and knowing WHY), or, as a good friend here has said, "Pack your own chute." That means being responsible for investment decisions. Frankly, I want to puke when I see people swarming these boards asking the perennial question, "Should I buy this stock now? Is it a good company? Who are the competitors?" Gimme a BREAK! And yet, that is exactly what we have so often. And it is exactly why people like Rat, who sticks his neck out, will inevitably be maligned and misquoted when markets turn sour. Hardly any surprise that the same folks who solicited advice, will be the first to blame everyone else for their misfortune.

Wooly, Rat, and others - it is not necessary to make recommendations, to explain why it is a good time to buy - to attempt to hand someone a decision when they haven't yet developed the necessary education or tools to follow up on their own. In fact, I think that sometimes this is a downright dis-service - to yourselves and to the very folks who need to be told what equipment they need first.

There, I've said my piece. And I certainly hope that my friends will understand my concerns. I am not criticizing the intentions of the good folks here who make this board special. I am simply asking them if they really want to stick their private parts into that damn grinding wheel of public misperception - because mis-steps will be punished. And who amongst us has not mis-stepped on occasion. When I mis-step, I hope that I am the ONLY one who suffers the consequences of it. I think my friends here will understand what I mean.

Rabbit regards, -M.

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