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The BMW Method
Take charts, fundamental analysis, and patience; mix well.

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By freethinkerkeywe
October 7, 2005

Posts selected for this feature rarely stand alone. They are usually a part of an ongoing thread, and are out of context when presented here. The material should be read in that light. How are these posts selected? Click here to find out and nominate a post yourself!

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...Could you explain one of these charts to me, and then I'll understand better what you mean from now on...Basically, can you provide me with a Dummies guide to your charts...

I'll try to write this in a Dummies version as mikeklein9 and Jim BMW have done with their explanations for The BMW Method. But I got a feeling I'll drive off the side of the road a few times to get to our destination of an explanation.

I've told the following story elsewhere in Fooldom, but I forgot where. By posting this reply on BMW, I'll remember and use it in the future whenever anyone asks me about charting.

I've read the original posts on how Jim BMW came to his BMW catharsis. Let me share my charting and BMW catharsis and how I got there . . . and here.

Once, in another millennia, I worked for a top-notch copywriter up in Miami Beach. He was the first person on Ocean Boulevard (so the installer told us) to install a cable modem. DSL wasn't even available back then. Anyway, back in 96, 97 or maybe it was 98 he discovers how news on prnewswire.com and businesswire.com was actually moving stocks.

Now this fellow always had tons of cash coming in from his direct mail copy writing and he started trading stocks. He used me as the guy to punch in trades in his Etrade account as fast as he read news items he liked on another. So, he and I started trading tens of thousands of dollars using this knowledge that news was moving stocks. We had an edge too. We were getting the stories "faster" as we had a cable modem and refreshes were much quicker for us.

Soon enough, faster modems became available to everyone else so we lost that edge. We signed up for DOW News, which refreshed itself on his computer. Finally, he somehow scammed one of these Bloomberg Boxes and had it installed in his penthouse, which continuously fed him news that we saw CNBC anchors bring up seconds later.

I'd sit in the office, he'd be back in his penthouse with an always open phone line on speaker phone, barking this trade order or that. We had a lot of fun, even though this guy is a absolute tortured genius with mood swings which chased off many another assistant. We were both vets, so we got along pretty well and understood one another. I never took his tantrums personally. Only once did I have to threaten I would kill him. And that was 20 miles off shore on jetski saucerboats, which he hadn't filled up like he said. (We laugh about that one every time we see one another.)

Back then, late 90s, we had no charts. And we were doing very well. But then everybody started using the "trade off the news strategy" and we jumped the shark. So we were forced to change strategies. During this time we kept running into charts on CNBC and on yahoo, so we decided to see if technical analysis could give us even more of an edge than the news readers. So he enrolled me at this daytrading academy in Boca.

To this day, I've never seen a roomful of more immature male adults than I saw at this place. Wait. Yes. A Democratic Caucus back in 1980 down in Williamsburg, VA topped this. But I only suffered that for one day. This was everyday hell. This place was absolute mayhem, nuts, completely off the scale crazy.

(I don't condone violence, but I can see how several traders lost it and came back with weapons to take it out on more successful people at other trading academies. Successful traders liked to crow about their trades in the faces of less successful traders and new traders. There were a couple of guys at my place who I caught outside on a smoke break the very first week I was in this Academy. I made it clear if they ever disturbed me again with back slaps and "Who's your daddy?" yelling I was going to break their computer fingers. That cleared up taunting this "newf" and I had as much peace as could be inspected in an asylum of guys I grew to despise.)

Here is the best description of that Trading Academy: The place was like a locker room shower where pudgy white guys compared stock "killings" instead of penises. Think of a room full of Jim Cramers on amphetamines, coffee and Twinkies. That kind of crazy.

The trading room was a set up with two giant TV screens up front facing the "class" always tuned to CNBC. There were 60 computer terminals, all in nice rows lined up on four tables, an aisle, and four tables. About 5 tables deep. These banks of computers were free to use as long as you were a member of this trading academy.

The deal was you had to open an account with this trading academy for a minimum of $100k. In return, you were tutored in post-market classes on every study imaginable, MACDs, RSIs, Stochastics, and so on. The owner of this academy was a nice enough guy. He was patient with me. But you could tell he wished physical harm to about 90% of his crowing students.

The software used was RealTickIII, which changed second by second on the charts. You could actually see candlesticks grow before your eyes. But most of the guys there were using bar charts and line charts. And Level II quotes. Always the damn Level II quotes.  Still, it was Japanese candlestick charting which clicked with me more than anything. The reason, mostly, was another quiet guy in my class who had already had his "Let's get things straight" talk outside with a couple of the jackasses who brayed all the time about their successes.

I befriended this guy. He was a multi-millionaire trader who once worked for the current owner of the Boston Red Sox . . . who also once owned the Marlins. This man thought Mr. Henry was a god, but the toll of working for Mr. Henry had done a number on his health. He was late 30s, looked like a man of mid 60. Hair all white. But like I said, he was a decent chap, quiet, reserved, and had some cojones. I teamed with him.

Now my boss stopped in for an hour or so every day. All my boss and I could ever get this guy to talk about [from] his time with Mr. Henry was that the guy (Henry) was obsessive with secrecy and possibly the best short/middle term trader on the planet. That's it. No talk about program trading, studies, proprietary knowledge, nothing.

Anyway, while the rest of the class was busy making 200 to 300 trades a day, this guy was coming into his own as a swing trader with Japanese candlesticks. Sure, he traded intraday, just not as often as the daytraders. This guy would buy something at the bell, hold for a couple of hours, sell right before lunch, and buy after lunch something which looked promising.

He was way more successful than anyone in the room, and he wasn't an idiot to shout out his accomplishments. I remember watching him buy 10,000 shares of something or another one morning, selling right before noon, and pocketing $50,000. (But keep in mind, that was also in a different time when volatility ruled the stock market and stocks had hi/low ranges of $10 or more.) I sat there with my mouth open thinking, "Man, that's the way to do it."

This guy never used the Level II quotes. Never. That was unheard of in this place. He saw things in candlesticks that only he understood. I tried to pick this guy's brain. I bought him lunch. I bought him beers. This guy knew more than anyone I'd ever met and he wasn't going to give up that hard earned hard won knowledge. But he did spot me some wisdom. He lent me a book by Steve Nison "Japanese Candlestick Charting Techniques". This trader, who has disappeared from the USA, told me the last time I saw him, "It all starts here." And he pointed to a chart built on Japanese candlesticks.

To this day, I don't know if Mr. Henry ever used a Japanese Candlestick chart. But I do know one of his ex-traders built a small fortune right before my eyes swing trading circles around a room full of baboons who clicked their mouses more in a day than this guy did in a month.

Well, my boss was making more money in direct sales, direct advertising, plus he had the money I was trading and a short attention span for stock trading. I went back to the office, but that one trader bit me with the Japanese Candlesticks. I started reading "Japanese Candlestick Charting Techniques" and realized the Japanese were way ahead of simple bar and line chartists in the USA.

Now. Know that all this self-training was going on during the heyday of the Internet Bubble and Mania. Back then, everyone was in the stock market as everyone today seems to be in real estate. Back then everybody was an authority on what stock to buy.

Cab drivers, waiters, bus drivers, everybody had gone online to buy and trade these incredible hyper-valued stocks which would launch an IPO on Tuesday and be up 200% by Friday. And if you knew how to really read candlestick charts and knew some basic proprietary setups for studies (or so I thought) you could or should be able to out trade any of these fanciers of stock picking. As I said, my boss tired of making money off short term trading . . . it really was detrimental to our mental and physical health

Before long, we closed out his account, he wrote a stock trading system which he sold for $3,000 and was based on short term daytrading off news, he and I parted, and I came back to Key West with this new fascination for charting via candlesticks. Realizing this short term daytrading couldn't go on forever, I decided to focus on just one stock, maybe two, which I would chart over and over and learn like the back of my hand.

Those two stocks were XMSR and SIRI.


I learned their stories, I knew everything about them. I knew more than the damn analysts trying to cover them before these two even launched their first satellites. I switched from minute charts to daily charts. I didn't want to stay glued to a computer monitor, but as it developed, I fell in love with both companies and became one of the most prolific posters early on Yahoo message boards for SIRI and XMSR.

Meanwhile, the stocks started going down with the rest of the insanely priced stock market back in 2000. I would hold, sell for a tiny loss, re-buy again on trumped up promising news, sell at a tinier loss, repeat the cycle, down, down, down, while one trendline after another broke down.

Using daily charts, I was usually charting just a few months of action, sometimes a whole year's look, but I never went back any further. Eventually, as my losses mounted, I realized something wasn't working. Then I bumped into a very slim volume of work by John Murphy. It came with a CD Rom, which allowed me to work along with the charting supplied in the book.

Murphy . . . although he's not real big on Japanese candlesticks which show high/low/open/close points in just one picture . . . taught me how to use trendlines and horizontal "support" and "resistance" lines.

That's when my trading turned around. But I wasn't home yet because I was still "in love" with two stocks and trying to make my weekly charts fit an unrealistic future I had envisioned. I knew sat radio would one day be as it is already. But I simply wouldn't know a Free Cashflow Positive if it bit me on the ass. Didn't matter. My weekly charts with about two years of input were showing a shaping up of SIRI.

I should point out too that most of Murphy's sample charts were in weekly increments, not daily, so Murphy was pushing me along the path to think longer term investing.

Somewhere along this path, a writer from Motley Fool called for an actual "short" of SIRI. I hated that guy. I denounced him. I had a nice trendline under a certain $7 and change price for SIRI that I knew, absolutely knew, would not give in. Now this Motley Fool fellow was attacking this from the Fundamental Analysis point of view. I thought he was talking through his bong. Anyway, my supposed unbreachable trendline gave in as SIRI marched down to, what was it, a .39 cents low? Something like that.

Needless to say, I was in a state of shock when the weekly trendline broke down. I almost died after watching SIRI drop like an Anvil off the continental shelf. I had purchased many shares long with margin. Talk about painful, and a lesson which is indelibly stamped on my brain. Wow. Within two days of Motley Fool's call to short SIRI, I joined Motley Fool to "lurk" on the enemy. In those days, I was like a George Bush of investing. You are either "with me" or "against me". Anyway, here I was the great know it all on everything SDARs (a digital satellite radio acronym).

I lost a small fortune, and I passed from denial to anger to licking my wounds and looking myself in the mirror and asking, "Where did I go wrong?" So, I turned inward. I quit posting everywhere, especially on Yahoo, and started lurking. Now the more I read Motley Fool and lurked, the more I realized I wanted to be like many of their investors who had lives. The guys and gals at Motley Fool whose investing I was following greatly inspired me to adjust my charting once again: to monthly charts.

Monthly charting is where I came into my own as an investor. It is my last arbiter of a decision to BUY or sell, although I have bought 2 or 3 times in the last year on newer issues with but a few monthly candlesticks to show. Those were "gut" buys.

But back to these monthly charts. I used them on my own stocks. One of them got me out of XMSR several times and got me back in an incredible moments of perfect timing. XMSR turned into a 10 bagger for me . . . swing trading weekly charts . . . but I was still not happy at all the time I spent, plus, I could see XMSR was losing its "Great Leap Forward" (sorry Mao).

I wanted a life. I wanted to be sociable on the boards again, without losing any money to panic, bashing, pumping etc. I wanted rock solid trades which I could literally pay maybe end of the week viewing and sometimes, just follow month to month.

But I needed new ideas built on this F/A stuff, which I didn't know. So, I turned to the professionals. I signed up for a Motley Fool newsletter. I started with the Rule Breakers newsletter. I was a buyer of NILE, AKAM and PDLI on "dips" to a monthly trendline. Mind you that plenty of Nervous Nellies on Rule Breakers were dissing all three stocks when they dipped down big, but I was seeing STRONG BUY reconfirmations on my monthly charts. (All 3 buys have rewarded me with way above average returns thus far this year.)

Those "dips" to the longterm trendline (in NILE's case, I'll fess to using a weekly chart's trendline as NILE was a recent IPO) all "reconfirmed" a long term trend of marching up the imaginary long term trendline which I learned to draw on charts I rent from stockcharts.com. Here, let me try to be more specific.

A trendline is formed by straight line drawn and stretched between lows on two Japanese candlesticks . . . going left to right on your chart . . .as long as no other candlesticks dip below the trendline formed by the two points chosen.

(In line charts you are connecting closing prices to form the lines, which look like mountains, waves, etc. That is anathema to the Japanese method. Western chartists only see the closing prices as important on line charts. On the other hand, candlestick formations tell stories in themselves, each showing you investor psychology in a beautiful easy to read picture, something the Western line charts cannot tell.)

Back to our trendline drawn with two points. A two point trendline is not as good as a three point trendline. A three point trendline is not as good as a four point trendline. In many cases, you will have a third, fourth, fifth, sixth, seventh, and so on up the line candlestick come down, touch the original two point trendline and bounce up and away from what I call a "kiss" of the trendline. John Murphy calls any of these third through seventh (ad infinitum) kisses by another word: "Reconfirmations"

I never buy off a two point trendline on a longterm chart. And that's one of the newest rules I've added to my aresenal this year. I always want a third "reconfirmation" somewhere down the line. Murphy teaches that the older a trendline, the more reliable the trend, and the more and later reconfirmations of this trendline, the better.

Using this info just on monthly charts, I've increased my ability to "win" more often than not. My few "losers" aren't even under their original purchase price by more than a single digit percentile. So things are going very well for me at this point in my trading. I'm not going to tell you the blow-by-blow specifics, as I would never end this post. But this year is the year where I've become a real long term trader who sleeps like a baby at night, who doesn't freak when a stock loses 5 or 10% of its value in a week or month, who doesn't follow the market day to day, and so on.

I buy stocks for the long term now. And I usually time my buys like this:

1) I'll read something from the Financial Analysis community of the four Motley Fool newsletters which strikes my fancy...or Barrons...or a post from one of you...or from some other source...or from some observation I've made in real life.

2) Then I'll chart the stock pick on a monthly chart

3) If the pick is in a descending pattern where it might be coming down for a "reonfirmation" of a long existing trendline, I wait to BUY. If this kiss of the trendline takes place and it bounces up and away from the line, I'm buying . . . usually.

4) There is also one more element that most of my charts lack but which I use when I'm close to pulling the trigger . . . a horizontal line drawn left to right under months of stock activity which hasn't been breached in at least 3 years.

The three-year horizontal is not a rock hard decision of Murphy's, but mine. Certain candlesticks, which form the "base" of this horizontal line will take on different "caricatures" in Japanese methodology. I also will use the horizontal to draw "channels" of sideways trading patterns, which are marching ever closer to where my up trendline cuts through the vertical axis.

I do use certain candlestick patters at the bottom of a horizontal line support. My favorite, in forming a support line, is one called a "hanging man".

A hanging man is a picture of a candle with a small head, a long shadow below it (in Nison's book this shadow should be 2/3rds longer than the head) and NO or very little shadow or "wick" above the head (preferably called a body in Japanese candlestick methodology). A hanging man is a psychological picture of panic sellers giving way to panic buyers. The buyers win the day at the end. From there, it's up and away.

Okay, this is confusing without me being able to draw these things one at a time. But the gist of all this is I survived a near total wipeout in 2000, put my mind to conquering charting, found out 99% of all the gizmos, doo dad studies, pretty colorful waves and all were not for me and affecting my ability to pull the trigger on a buy or sell. Plus 99% of technical analysis was slowing me down by making me focus too much.

I did not want to become one of those yammering Chihuahuas back at the trading academy.

I became a supplicant at Motley Fool's Church of the Long Term Buy and Hold.

I quit using weekly charts and quit swing trading.

I changed to all monthly charts built on a linear chart.

I started to teach myself fundamental analysis.

I found BMW.

I discovered my charts and BMW's (Mike Klein as I can view his work) were uncannily synching the longer the look.

I changed these monthly charts from linear to logarithmic charts at the suggestion of several posters here: what resulted is I can now find promising charts which are 10 years or older and when those charts post new "reconfirmations" I throw them out here and things continue to eerily develop between mklein's charts and mine.

Again, I am looking to only buy from one of my long term charts after 3 points have "reconfirmed" the trend. A reconfirmation in real time . . . such as the one for Lexmark two days ago . . . shoots off a green flare gun in my mind. I can see where my line cuts through the vertical axis . . . which is the axis of price range . . . to get the price range where I feel I can get the most "juice" out of a buy. What I am looking for on these monthly charts is a stock trading near its long term trendline. The closer the better.

I want to buy undervalued stocks for the long term. As Warren Buffet says, I want to buy dollar bills for .40 cents. I'm not trying to daytrade or swing trade for pennies. I'm holding for dollars compounding dollars. I'm like Mike Klein and Jim BMW. These guys realize to get the most return, you cannot moan the fact that BUD hasn't gone anywhere this year.

Hell, Warren Buffet and Charlie Munger bought BUD before my man Philip Durell at Inside Value knew those guys had been big buyers at the $50 area (best I can tell). Now, when I first bought BUD this year, I was using a linear chart. I bought off that chart because the trendline on it had just been reconfirmed for the first time since 1994.

I bought BUD.

A month or so later Philip came out with his rec.

Sometime during that month . . . or maybe the month after . . . we learned that Buffet and Munger had been snapping up shares of BUD earlier this year.

Also, I work in the busiest bar - per employee - in Key West. We just rake in the gold with mixed drinks and beer. And since buying BUD, I've been watching how the marketplace is changing back to one where beer has stopped giving away market share to wine and liquor drinks. Especially since Katrina and $3.00 gas.

Anyway, about two months ago, maybe three, I recharted all my monthly charts in logarithmic fashion per the suggestion of several posters on this board. Lo and behold, the logarthmic chart for BUD showed BUD had to fall much farther for a "reconfirmation" kiss of the logarithmic line. In fact, my old linear chart with trendline was "breached". That is, BUD actually has dropped below the old linear trendline. And were I still using that chart, I would be resetting the trendline, sort of like dropping it by one or two second marks on a watches face to a newer, less rate of rise.

But with the logarithmic chart, I'm still right there with BUD hoping (last month) for it to drop to $38.00 or thereabouts for a back up the truck buy. Look at my logarithmic chart for BUD. I'm already in from a linear chart buy. My logarithmic chart says, "Dummy, you should have waited for a "reconfirmation."

But now we've progressed forth one month . . . to October. That trendline . . . where it cuts through the vertical axis . . . is now a little higher. And the candlesticks for the past 6 or 7 months since my initial purchase are marching downward closer to the trendline. Eyeballing the logarithmic chart, I'd say I want BUD to hit near $38.50-$39.00 before I do one big load up the truck buy.

To be honest . . . I've been happily buying BUD every month since my initial purchase. Nothing major. $1,000 here. $500 there. Averaging down and smiling all the way as I know this company's wares and how well they sell in my bar and how well they are picking up steam.

That said, I think it very interesting that the BMW method for a 15 year look at BUD is almost exactly the same advice as mine: look for BUD at $38 to $40 for a back up the truck BUY. That's what we were discussing last month. Yeah its a BUY now, but at $38 to $40, its going to return way bigger returns than Buffet and Monger's initial buy at or about $50 right? Bud at $80 is a double for a $40 buy. Bud at $80 is a 60% winner for Buffet and Munger's first buy at $50. The lower you are to the CAGR low side, the closer you get to the long term trendline on my charts, the more good info coming out of my bar, the more Philip Durell learns about Bud's buyback of stock and its increase of advertising to increase market share, the more I feel like buying on the way down is a smart move on all of our parts.

As Mike and Jim point out, the best time to buy a BMW candidate is when it has approached that low CAGR range. It's a damn good time to buy when one of the BMW stock picks drop down, kisses a logarithmic chart's long term trendline and bounces up.

BMW method reconfirms my reconfirmations. And as we are seeing weekly, vice versa. I see something on a longterm chart like Lexmark, I toss it to mikeklein. He and I did this the other day and came up with the same view that LXK . . . after proper DD . . . was showing a fine time to buy. We haven't done the DD, or run the financial analysis. (But here's a clue about LXK. Back a few months ago, Berkshire Hathaway started buying Lexmark. Why? What did Buffet and Munger see? And now that their initial purchase is more than 25% under water, was their original thesis badly thought out? Or is the story they believed in only a much better story to load up the truck?)

But there is still something which all buyers of BMW/Inside Value/Visual Analytic picks lack. The number one thing that new investors don't have a lot of around here when we discuss deep BMW methods + Fundamental Analysis + Visual Analytics (Charting or T/A) is patience. It can all sound like voodoo if you aren't schooled in any of it. You got to be patient to read through all this. And you got to have patience to be a successful investor.

I've seen numerous people mock Philip Durell and BMW and myself for picking a stock at such and such a price . . . and the stock is down after say 3 or 5 months. Wow. BUD is down 2 to 8% from where you bought it. Meanwhile, over the months, dividends are paid, they are reinvested, and you own more shares of BUD stock while the company is buying back more shares . . . . like they've been doing for the past ten years straight.

This is the thing which makes me smile. Antsy "traders" posing as investors.

Those are the people I used to be. These are the people whose psychological weakness for instant gratification I use to buy shares on the cheap and soundly sleep. I call them whiners. I was one. It took me being one to realize what a whiner trades like and how a whiner never stays ahead of the market and never has a life.

I wanted instant gratification back then. I wanted instant results. I wanted to be part of a "winning" stock. I wanted a big bank account like my boss. But I didn't want to be like those silly people at the trading academy. That one calm guy at the trading academy was the guy I wanted to be.

Then I came to Motley Fool and under the prodding of pointy sharp sticks from Philip Durell, Tom and Dave Gardner, and Matt at Income Investor, I started reading these books about men who made their fortunes in the stock market.

I read an incredible book about Charlie Munger just recently. I read the book about Shelby Davis. I re-read the book about Peter Lynch. And I keep reading great posts about this type of investing (LTBH) all over the internet from Jim Rogers, Professor Siegler, H. Heissermann (a Motley Fool poster) and so on. These guys abound in patience. They realize this is a marathon, not a 100-yard dash.

Were we picking 100-yard dash "winners" day after day, these guys should be expected to tell us things like the year cancer is conquered, the day we make contact with the first alien, and the moment the Chicago Cubs finally win a World Series.

I have a background in direct mail copywriting. I bumped into too many stock picking charlatans during the 90s to know how they use the law of averages and the law of forgotten losses to swindle people into thinking they are the new Kreskin of Investin'.

Instead of believing the b.s. you hear on Bubble TV or in direct mail pieces or junk emails, stop for a minute and look deep into your heart. Where can you find real winners with accountability? How did Warren Buffet and Charlie Munger get to where they were? Model yourself closely on their precepts. How did Peter Lynch get to where he is? Model yourself on his teaching. How did Jim Rogers call the current great commodity Bull Run while touring the world in a jazzed up Mercedes 4x4 with his new wife and not being anywhere near a Bloomberg box? Model your thinking on him. How does Sir John Templeton find value? Find out, model your thinking on him.

Dave and Tom and Philip and Matt and mikeklein9 and BMW and now myself and many others are putting their portfolios out there. Motley Fool newsletters have scorecards. They have discussion rooms where whiners can become winners by listening to and modeling themselves on people who understand how to milk the most juice out of a stock pick.

There is accountability here. You don't get this type of action elsewhere as I was trying to make a point to someone here about Jim Cramer's website. The guy thinks Jim Cramer is on the same level as Motley Fool. He is not. Look at his website. He's got the daily swing trade. He's got no accountability, no discussion boards, no scorecards.

The greats have accountability. And they have one more thing which their stories have driven home . . .

What these learned men have beaten into my head with a gold railroad spike is PATIENCE.

I'll put it like this.

Many hot button jockeys might mock my portfolio, many BMW picks are in it, but I'm up this year almost 20%. I will take that return every year and be happy. And I did it without subjecting myself to mood swings and the daily ball and chain of swing trading, daytrading, constant computer monitoring for alerts.

I suspect when some of my high-fliers (PDLI and NILE) settle down somewhat, my slow gainers will take over and kick in. And there will be a few Rule Breakers, which may go 40 bagger and make that 20% portfolio average a constant in my life. I think so.

Patience and one more thing are needed. Diversification. But patience is the big key with these types of undervalued stocks, these out of favor stocks.

BUD, for instance (and I hope), will probably take another year before it really ramps up. We will see some kind of staircase increase in earnings. We will see them taking back market share. We will see them continue to buy back more shares. And somewhere down the line it will be leaked that Buffet and Munger have been silent about their purchase of BUD because they . . . like me and BMW posters . . . have been accumulating shares on the dips down.

When all this knowledge comes to be known, BUD will rise like a phoenix from the ashes. History has shown us thousands of similar stock turnarounds like this. Buffet and Munger have turned these types of purchases into art forms. So, I feel that the one most important missing element in the FA/BMW/Visual Analytic work done here is PATIENCE.

I think Jim BMW and mikeklein9 and several other posters who do all the heavy lifting here will one day have their own newsletter. But they will not be able to sell themselves until a pattern of success is established in public. And the fact Motley Fool allows such accountability in a, for the most part, board of civil decorum, means we can become better investors without the headaches and paranoid FUD of Yahoo or Raging Bull or street.com. Well, street.com doesn't even have a community of posters. But you know what I mean. What we are building here is a community of mini-Buffets and mini-Lynchs. Not a community of BooYah Brotherhood which has the attention span of a 6 year old eating Pixie Sticks.

I love the fact that the portfolio somebody keeps posting here doesn't show stellar results . . . yet. To me, this is an absolute case study of patience. If I were mike and Jim, I wouldn't swap one stock for another. I'd keep adding. Add every recommended stock ever . . . which passes the F/A test and DD, put it on a list with a fake 100 share buy, post the date of the rec, and let it ride. Come back in 5 years to an expanded list, but notice where all the 2005 picks have gone . . . with dividends reinvested . . . and I'll bet anyone these undervalued stocks are all beating the market over those 5 years.

Okay, so this was a rambling post. Two points make a line. Three points are a line I start trading off. Gotta be logarithmic. Should be backed up by F/A, BMW and my own DD.

Buy.

Hold.

Let it go for a long time.

Reinvest the dividends.

Repeat.


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