Re: [CANSLIM] New Investors needs help... a short story

From: "joe" <lakbossa@hotmail.com>
Subject: Re: [CANSLIM] New Investors needs help... a short story
Date: Mon, 4 Aug 2003 14:34:31 -0400
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first rule...always use a stop loss! i dont care what people say, the =
main goal is to protect your money.
  ----- Original Message -----=20
  From: Yien T Lung=20
  To: canslim@lists.xmission.com=20
  Sent: Monday, August 04, 2003 12:47 PM
  Subject: [CANSLIM] New Investors needs help... a short story



  Hi all,

  I am quite new to this forum and I was hoping that some of you, more
  experienced canslim users, would kindly offer me some starting tips or
  share your procedure in the search for new potential buys.

  Let me continue by sharing my initial experience with you guys. I =
started
  investing 2 years ago after my friend recommended me to read books =
about
  Value Investing, more specifially, books about Warren Buffett. I read =
and
  summarized almost every single book I could get my hands on about =
Warren
  Buffett...and was almost too eager to start my road to be a =
millionaire.

  So what is value investing? Basically, I intepret it as investing in
  securities that are currently being traded at a value below its true
  "intrinsic value". The idea is that the market has been too harsh and
  pessimist about the prospects of a particular stock,..and you as a
  investor believes that this company has the potential to get back on =
track
  and that the current problems it is facing is only temporary.

  Sounds easy, but I found the hard way that it is not.

  In my impulsive and eagerness to make money? I plunged my hard earned =
cash
  into securities like Qwest (Q), Tyco (TYC),...among others. I bought Q
  when it was trading around 8.50. I thought to myself...this is a =
company
  that has a book value of at least 20 dollars. If only half of that =
book
  value is written off, I will still be safe. So I bought the stock, and =
saw
  it plunge in value to less than 1 dollar. Again, I thought it was ok
  because I am a "value investor"...and I need to hold my buys for the =
"long
  run"... A new management comes in and the stocks starts doing =
better...
  However, the new management finds out that there are a lot of improver
  entries and must restate earnings. That restatement totally wipes out =
the
  book value of the company!!! This taught me never to believe on BS =
alone.
  Now, even after two full years, the stock has not yet recouped to my
  entry level.

  My other experience was TYC. I bought it when it was 26. I read a lot =
of
  news from respected value managers that Tyco is a very sound company =
with
  a lot of small businesses that generate lots of free cash flow. Good =
hein?
  Well, I thought so too. I bought it and it went up all the way to 35. =
I
  thought, I should "stay for the long run" and let it run its way up.. =
But
  the next thing, the stock began to go south. That was the time when =
there
  was a lot of talk about the ex CEO being a crook and stuff like that. =
I
  held the stock for quite some time...and I will be very hopeful if the
  stock trades at around the price I got in....

  So here I am today. After losing a lot of hard earned cash, I decided =
to
  give Mr. O'Neill's methodology a try. If you read some of this value
  investing, a lot of these people dont believe that technical analysis
  works..and my friend (a Buffett believer) doesnt think too highly of =
Mr
  O'Neills methodology. But I am willing to give it a try. Please help =
me
  get started.

  Thanks

  Yien








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<DIV><FONT face=3DGeorgia color=3D#000080>first rule...always use a stop =
loss! i=20
dont care what people say, the main goal is to protect your =
money.</FONT></DIV>
<BLOCKQUOTE=20
style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; =
BORDER-LEFT: #000080 2px solid; MARGIN-RIGHT: 0px">
  <DIV style=3D"FONT: 10pt arial">----- Original Message ----- </DIV>
  <DIV=20
  style=3D"BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: =
black"><B>From:</B>=20
  <A title=3Dylung@engin.umich.edu =
href=3D"mailto:ylung@engin.umich.edu">Yien T=20
  Lung</A> </DIV>
  <DIV style=3D"FONT: 10pt arial"><B>To:</B> <A =
title=3Dcanslim@lists.xmission.com=20
  =
href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>=
 </DIV>
  <DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Monday, August 04, 2003 =
12:47=20
  PM</DIV>
  <DIV style=3D"FONT: 10pt arial"><B>Subject:</B> [CANSLIM] New =
Investors needs=20
  help... a short story</DIV>
  <DIV><BR></DIV><BR>Hi all,<BR><BR>I am quite new to this forum and I =
was=20
  hoping that some of you, more<BR>experienced canslim users, would =
kindly offer=20
  me some starting tips or<BR>share your procedure in the search for new =

  potential buys.<BR><BR>Let me continue by sharing my initial =
experience with=20
  you guys. I started<BR>investing 2 years ago after my friend =
recommended me to=20
  read books about<BR>Value Investing, more specifially, books about =
Warren=20
  Buffett. I read and<BR>summarized almost every single book I could get =
my=20
  hands on about Warren<BR>Buffett...and was almost too eager to start =
my road=20
  to be a millionaire.<BR><BR>So what is value investing? Basically, I =
intepret=20
  it as investing in<BR>securities that are currently being traded at a =
value=20
  below its true<BR>"intrinsic value". The idea is that the market has =
been too=20
  harsh and<BR>pessimist about the prospects of a particular stock,..and =
you as=20
  a<BR>investor believes that this company has the potential to get back =
on=20
  track<BR>and that the current problems it is facing is only=20
  temporary.<BR><BR>Sounds easy, but I found the hard way that it is=20
  not.<BR><BR>In my impulsive and eagerness to make money? I plunged my =
hard=20
  earned cash<BR>into securities like Qwest (Q), Tyco (TYC),...among =
others. I=20
  bought Q<BR>when it was trading around 8.50. I thought to =
myself...this is a=20
  company<BR>that has a book value of at least 20 dollars. If only half =
of that=20
  book<BR>value is written off, I will still be safe. So I bought the =
stock, and=20
  saw<BR>it plunge in value to less than 1 dollar. Again, I thought it =
was=20
  ok<BR>because I am a "value investor"...and I need to hold my buys for =
the=20
  "long<BR>run"... A new management comes in and the stocks starts doing =

  better...<BR>However, the new management finds out that there are a =
lot of=20
  improver<BR>entries and must restate earnings. That restatement =
totally wipes=20
  out the<BR>book value of the company!!! This taught me never to =
believe on BS=20
  alone.<BR>Now, even after two full years, the stock has not yet =
recouped to=20
  my<BR>entry level.<BR><BR>My other experience was TYC. I bought it =
when it was=20
  26. I read a lot of<BR>news from respected value managers that Tyco is =
a very=20
  sound company with<BR>a lot of small businesses that generate lots of =
free=20
  cash flow. Good hein?<BR>Well, I thought so too. I bought it and it =
went up=20
  all the way to 35. I<BR>thought, I should "stay for the long run" and =
let it=20
  run its way up.. But<BR>the next thing, the stock began to go south. =
That was=20
  the time when there<BR>was a lot of talk about the ex CEO being a =
crook and=20
  stuff like that. I<BR>held the stock for quite some time...and I will =
be very=20
  hopeful if the<BR>stock trades at around the price I got =
in....<BR><BR>So here=20
  I am today. After losing a lot of hard earned cash, I decided =
to<BR>give Mr.=20
  O'Neill's methodology a try. If you read some of this =
value<BR>investing, a=20
  lot of these people dont believe that technical analysis<BR>works..and =
my=20
  friend (a Buffett believer) doesnt think too highly of Mr<BR>O'Neills=20
  methodology. But I am willing to give it a try. Please help me<BR>get=20
  =
started.<BR><BR>Thanks<BR><BR>Yien<BR><BR><BR><BR><BR><BR><BR><BR><BR>-<B=
R>-To=20
  subscribe/unsubscribe, email "<A=20
  =
href=3D"mailto:majordomo@xmission.com">majordomo@xmission.com</A>"<BR>-In=
 the=20
  email body, write "subscribe canslim" or<BR>-"unsubscribe =
canslim".&nbsp; Do=20
  not use quotes in your email.<BR></BLOCKQUOTE></BODY></HTML>

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