| A number of people have speculated that there are seasonal trends associated
with the stock market. The following is an example of one such speculation.
Although we feel that these seasonal trends are present not only in the stock
market but in business in general, examination of the last 40 years of the
DJIA does not appear to show such trends.
The DJIA average is available at
http://averages.dowjones.com/
and the historical charts are at:
1990-1999
1980-1989
1970-1979
1960-1969
1950-1959
1940-1949
1930-1939
1920-1929
1910-1919
1895-1909
We have a different view of the world. There is a phrase out there "figures
never lie but liers figure". It really is a shame that so few people are
literate in mathematics and able to translate between math and the spoken
word. So rather than trying to apply tea leaf reading techniques based on
numerology, cycles, or the length of the male skirt or lack there of, we
think in terms of balance. There are items that apply to everyday living
and if a balance is present between those items then we have a metric to
reasonably predict some potential future. If the balance is broken, that
is also a predictor.
The following chart plots the DJIA, Corporate Profits, Gross Domestic Product,
Personal Income, and Consumer Price Index for the past few decades. The numbers
are scaled to the DJIA. In other words, a constant value was added or subtracted
from each plot. This moves the curve up or down but does not change its shape.
Source
Data Compliments Of Federal Reserve Bank
This chart shows us that GDP and personal income have been tracking each
other for a very long time. It also shows that there is some relationship
between Inflation (CPI) and the DJIA. When inflation was running rampant
in the 70's the market DJIA (light blue) really took a big hit. I know, we
all know that! It also shows that as inflation has subsided, the market has
really gone up considerably. In fact it has broken through the GDP and personal
income curves. During this time corporate profits have also significantly
increased. Those corporate profits are also coincident with the massive
downsizing of the recent past; cashing in of assets so to speak.
This analysis is available for purchase. Read
on.
What does all this mean?
This means that we are probably in for some changes. A curve not present
on this chart is the cost of new housing. We are looking for balance between
the items that are used in every day living. How much did we make, how much
did corporations make, how much did the government make, how much does it
cost to buy a company, how much does it cost to buy a house, and how fast
is our money devaluated. We think the market in general has caught up with
the inflation of the 70's and the cost of a new home. This leaves us with
picking the winners and losers in the next market. If you did not make your
million in the past few years, you have a problem.
Which companies will survive, grow, prosper, or become insanely huge and
rich? Wow, what a tall order. Looking at the historical data of the DJIA
is not a nice sight. There are years when people lost 80% of their assets
in the market. In other words, companies went out of business. If you were
lucky enough to pick Xerox, life was good for you in the 60's. However, there
were some pre 1930 relics, barely surviving that bit the dust in the 60's
and 70's.
We know, This really stinks. This requires work and luck. It would require
work and luck even if you did not learn this new reality. Let us explain.
Assume the market continued its wild hay ride for the next 30 years. You
put your 401K in the market and rode with the hay ride. You say great! However,
if everyone else puts their money in the market they will be sitting on the
same bundle. If everyone makes a killing in the market in the next 40 years
and they sit on lets say $50 million, what do you think the price of a car
will be? Price of bread? Price of housing? You see the object of investing
is to separate yourself from the pack. The reality is that if you are not
in the top 1% you will never be able to retire unless you already make a
great deal of money.
Enough of this depressing stuff...
OK - So Where Do I Begin?
 You are part of an industry.
That means you know something that most investors in that industry do not
know. Find the companies in that industry, including yours, and start to
compare them. Add these companies to your list and bookmark them. Start reading
the articles associated with those companies and look at the other info the
Internet provides. In addition, find one or two financial pages and bookmark
them. They will change with time, the past Yahoo was the best but things
changed circa 2002. You may need to open an account with etrade or another
online company. yahoo.com
financial page . google
finance . stock analysis.
Also bookmark this page you are reading,
CassBeth Investing Data.
Enter your stock symbols
in yahoo or google and start clicking on the links. Start with the chart,
then check out the news, then the profile. Then enter the message boards
for that stock. Don't ever take any advise from a message board, however
read it. Once in a while there is wonderful information about the company
or a really great link that expands your horizons. Use infoseek to get quarter
by quarter financial information - this is gone as of 2002. Double check
all your important information that drives you into a decision.
After about a month open
an account with an online broker. We recommend
E-Trade. There are other brokers and
you can find them above, but we like E-Trade. Put a small amount of
money in the account. While the money is transferring and you are waiting,
use the learning areas. That will get you familiar with the tools. When you
are ready, make your investment.
HELP !!! What do I Buy
We can't help you with your
final decision, but here are the things that we consider. First of all you
need to decide if you will invest based on fundamental data or technical
data. Fundamentals are things about the company, such as: what does it produce,
where is it located, what is its plan, how are they growing, what are they
investing in, how do they hire people, how big are they, etc. Technicians
ignore all the information. Technical analysts only look at the stock price
over a period of time. They do not care about company strategy, its management
team or anything. They just look at the stock price and use various mathematical
formulas to guess where a stock price is headed.
We primarily focus on the
fundamentals and occasionally look at the technical data before a buy sell
decision is made. The fundamentals that we examine are:
-
Market Cap: This is how much money it would take if you wanted to buy the
entire company now. We like this metric because we know how to comparison
shop for clothes, cars, furniture, houses and other stuff. We know when we
see a good buy. Market cap is a very powerful metric. If a company has
a large market cap, like $100 billion, what do you think the chances are
that the market cap will go to $200 billion? In other words for the stock
price to double, the price of the company needs to go from $100 to $200 billion.
Hum, don't know about you, but by the time a company reaches $100 billion
we think all the money has been made. On the other hand if you start with
a small company that only costs $1 billion and you think it will change the
world, your investment could really grow.
-
The Product: If we love the product, others may love it, but not necessarily.
The product needs to be compared with growth. If growth is 100% per year,
then these guys have a good product.
-
Growth: We measure growth in 2 ways. The first is the number of
new customers and the second is the increase in gross sales (revenue). We
don't care about the PE or earnings (profit). When you are talking about
a few hundred million in sales, anyone can suck out assets and show a great
profit until there is nothing left. The object is to find a company that
is growing and investing to capture the market. Bottom line is we invest
10 cents on the dollar. That is right, we expect to make 10 times on our
money within 5 years. There is an old rule to business. It will be wildly
successful for 5 years or it will flop. In those 5 years the business will
grow 10 times its current size. After that, it becomes a new business again,
with a new strategy, and it again either flies or flops. What you are really
doing is looking for people who are creating something from nothing. They
are creating wealth in its purest form. That is very hard to do, but it can
be done as exemplified by MSFT, CSCO, INTC, DELL, GTW, etc.
-
Stock Price: We look at the stock price and buy low based on the moving averages.
Pointcast has this blue line that is an excellent indicator. All stock prices
cycle. Do not buy at a peak. Click on the moving averages or look at poincast.
We need to confess, that because of this strategy we missed buying AMZN when
we first detected it. We are currently invested in AMZN, but our entry point
is 5 times higher.
-
News: We read the news related to the company on pointcast and on yahoo.
The news gives us insight into the industry and the company strategy. It
also gives us a look at the management.
-
Strategy: We know the company strategy based on news releases and company
annual report. If we can imagine more than the management is executing, then
we avoid the company. The management is brain dead. These guys and gals must
have a vision far beyond what you can comprehend and they must articulate
it so that it is visible to the world.
-
Location: Its sad, but we look for location. Its ok to start in the south,
but if you are going to be #1 or #2 in todays global markets you need to
be in the key centers of the USA.
-
Industry Reaction and Company Resilience: Its sad, but when a company comes
along that starts a revolution, it creates many enemies. The enemies are
the old guard that are incapable of changing with the times. Occasionally
the old guard wins temporarily, and a great company is destroyed using tactics
that are not taught in business schools. But in the end, you can't stop progress
and the on rush of technology. Eventually the new way is reborn in another
new company that survives, prospers, changes everything, and becomes the
dominant player, until they become part of the old guard. Companies like
IBM, AT&T, GE have recognized this and have survived all these decades
because they eventually shed their internal old guards and bring in the new.
We only invest in new companies
that we think will become fortune 500 companies. That means they become #1
or #2 in their market. Our investment must return a minimum of 10 times over
5 years. In other words a:
-
$100 million dollar market cap becomes a $1 billion dollar market cap company
-
$1 billion dollar market cap becomes a $10 billion dollar market cap company
-
$10 billion dollar market cap becomes a $100 billion dollar market cap company
A home run would be to start at the beginning and finish at the end.
Quality is key. We look for anything that does not smack of fortune 500.
Poor press releases, small thinking, asset stripping, fly by night appearance,
poor advertising, and of course flawed products. Just 1 item will throw a
company off the list. That includes a poor web site.
Everyday is the start of
a new day. Don't think it is too late or you missed the boat. Do your research
and make 1-3 small investments of perhaps $1,000 each. Follow them for 6
months. If you want to sell and move on to another company, then do it. If
you did lose money, remember to sell before December 31 so you can get a
tax break. In fact wait till December to sell. The markets tend to rise as
grand parents buy stocks for their grand kids and the big money manipulates
the markets to show good end of year mutual fund returns. What looks like
a mess in the summer or worse in October might be a good return by December.
Never ever buy on margin.
Remember, investing is not about making 10% per year. Investing is about
buying 10 cents on the dollar, or making 10 times on your money over a 5
year period. If you fall into the trap of trying to get 10% per year you
will use margin accounts to convert 5% returns to 10% returns. That is a
flawed strategy. This is not interest on a CD. If you want to get 10% per
year, then buy into a few good mutual funds.
In case you did no get it,
we will repeat the message. We are trying to take $1000 and convert it to
$10,000 dollars in a small time frame, like 5 years. Almost everyone can
spare $1000. Invest a $1000 dollars in each company using your etrade account.
The cost is only $20 dollars. Take a few years to spread that
money across a few very high quality new companies and one or two
of them will execute three 5 year plans that will yield the 10X return. That
means $1000 becomes, $10,000, becomes $100,000. You will know if you have
a winning horse in your first year - within 6 months. At that time you can
increase your investment to perhaps $10,000 or more, but never bet money
that you need on the market. If at the end of the year all your horses are
duds, you are only out a small amount of money. Re-evaluate your strategy.
Claim your losses and try it again, but pick only 2 stocks.
Remember, you are investing,
not gambling, even though we talk about horses. You are a business man or
woman and this is your business. You should be on top of it, love it, and
know why it will grow. When you vote your proxy, take it seriously. It is
your company. But know when it is time to move on. Unlike a small business
owner, you can sell your business when the world changes and you have made
your money.
It is the best of times and
it is the worst of times. Putting money in the market is very dangerous as
shown by the averages on the links above. You are not buying into the market.
You are believing that there is a future for your kids and that new companies
will create a wonderful new future. In the process you will prosper.
The market could go down or sideways for decades, but new companies
will be born and their owners will become rich. For the first time in history,
you have access to information that can help you to identify these new leaders.
The internet is not a fast talking salesperson trying to make a commission.
The internet is not a small collection of magazines with paid advertising.
It is truely a very valuable tool that can help you to gain control of your
financial future. It may indeed be the last step in the evolution of democracy,
where you are in full control of your money.
GOOD Luck and Invest Wisely
Financial Management Links From Around the Planet
Stocks To Watch
Picks |
Fundamentals |
Technicals |
| COMS ADPT ADCT ADLAC ADBE ALTR AMZN APCC AMGN APOL AAPL
AMAT AMCC ATHM ATML BBBY BGEN BMET BMCS BVSN CHIR CIEN CTAS CSCO CTXS CMGI
CNET CMCSK CPWR CMVT CEFT CNXT COST DELL DLTR EBAY DISH ERTS FISV GMST GENZ
GBLX MLHR ITWO IMNX INTC INTU JDSU KLAC LGTO LVLT LLTC ERICY LCOS MXIM WCOM
MCLD MEDI MFNX MCHP MSFT MOLX NTAP NETA NSOL NXTL |
NASDAQ 100 |
NASDAQ 100 |
| ALD AA AXP T BA CAT C KO DD EK XON GE GM HWP HD INTC IBM
IP JPM JNJ MCD MRK MSFT MMM MO PG SBC UTX WMT DIS |
DJIA |
DJIA |
| itxc idtc ntop coms brw etel |
IP Telephony |
IP Telephony |
| ETFC AMTD SCH NITE JBOH NDB | AMZN MSO CDNW CMGI AOL YHOO | NSCP
HLYW BKS COOL BYND | ATHM BNYN EBAY UBID GCTY NSOL | EWBX FRTI INSP XMCM
TGLO CNQR |
Internets |
Internets |
| S KM KSS WMT |
Retailers |
Retailers |
| CPQ GTW DELL INTC MSFT CSCO |
Computers and PC's |
Computers and PC's |
| LLL LOR GMH CSC RTNA RTN BA LMT |
Defense |
Defense |
| MER AGE MWD GS LEH DLJ DIR PWJ RJF SIEB TROW TWE VALU JEF DLJ
CMB C BAC JPM MWD STI KEY BK STT |
Banking and Finance |
Banking and Finance |
| LU DIS GE IBM F GM |
Traditional
Blue Chips |
Traditional Blue Chips |
| BHMC EAGL HD HBI LOW WIKS WLHN | ASD ACK BDK BOC BOW BGG CHA CBE
FJ GP ITW IP JM LPX MMM MTC NWL SHW SNA SWK TTC VCC VSG |
Home
Needs |
Home Needs |
| RAINMCD YUM WEN DRI OSSI EAT PZZA APPB SDH FM CEC BOBE CBRL CAKE
SONC RI SBA BOCB IHOP CKR COP RYAN LUB MHI STAR NPCI CHUX RARE PFCB AVDO
LDRY RAIN DAB VRES DINE TACO UNO PJAM BUCA MRG SHN LTUS RUBO PDIM PIC SZ
PNRA CHT BUNZ FRS |
Restaurants |
Restaurants |
| ETFC USAB NTBK AMTD SCH NITE NDB | ARBA SALN | MSO AMZN CDNW |
S KM KSS WMT | AOL YHOO ATHM BNYN | CSCO LU GE IBM GM F CPQ GTW DELL LMT
LLL |
Big Picture Picks |
Big Picture Picks |
| JHDCX JHNGX SOVIX |
Funds |
Funds |
| ADBE AMTD AMZN AOL BAMM BGP BKS BRCM CSCO CWP CYSP DRIV EBAY EGGS
ET ESRX EXDS FON GBLX IBM INKT INTU LCOS LU MACR MSFT NITE NOVL NT NTBK ORCL
PRGS QWST SCH SUNW T USWB VVTV WCOM YHOO
fund levels
MarketGuide.com |
Internet with Funds investings |
Internet with Funds investing |
| Merrill's new I Fund
Yahoo, ET, Amazon.com Inc., eBay Inc., Priceline.Com Inc., CMGI Inc.,
Inktomi Corp., RealNetworks Inc., Exodus Communications Inc., DoubleClick
Inc., Ameritrade Holding Corp., Lycos Inc., Cnet Inc., PSINet Inc., Network
Associates Inc., EarthLink Network Inc., MindSpring Enterprises Inc. and
Go2Net Inc |
American Online Inc. 20 percent. At Home Corp., Yahoo Inc. and
E*Trade Group Inc. together about 40 percent. |
HHH |
| DTSI ECTL SCON URMD ELON EFCX AFFI PARS ARIA XYBR TALL ULTR SMSI
OSIS SCLN IFNY MZON |
Ideas |
Ideas |
|
|
 |
Dow
36,000 may change your investment view forever |
Free Real Time
Quotes | Technical
Analysis | The
Advisor.com |
Streetadvisor.com
| DATE |
|
FED FUNDS RATE |
|
DISCOUNT RATE |
| January 1, 1990 |
|
8.25% |
|
7.00% |
| July 13, 1990 |
 |
0.25% |
8.00% |
|
| October 29, 1990 |
|
0.25% |
7.75% |
|
| November 14, 1990 |
|
0.25% |
7.50% |
|
| December 7, 1990 |
|
0.25% |
7.25% |
|
| December 19, 1990 |
|
0.25% |
7.00% |
|
0.50% |
6.50% |
| January 8, 1991 |
|
0.25% |
6.75% |
|
| February 1, 1991 |
|
0.50% |
6.25% |
|
0.50% |
6.00% |
| March 8, 1991 |
|
0.25% |
6.00% |
|
| April 30, 1991 |
|
0.25% |
5.75% |
|
0.50% |
5.50% |
| August 6, 1991 |
|
0.25% |
5.50% |
|
| September 13, 1991 |
|
0.25% |
5.25% |
|
0.50% |
5.00% |
| October 10, 1991 |
|
0.25% |
5.00% |
|
| November 6, 1991 |
|
0.25% |
4.75% |
|
0.50% |
4.50% |
| December 11, 1991 |
|
0.25% |
4.50% |
|
| December 20, 1991 |
|
0.50% |
4.00% |
|
1.00% |
3.50% |
| April 9, 1992 |
|
0.25% |
3.75% |
|
| July 2, 1992 |
|
0.50% |
3.25% |
|
0.50% |
3.00% |
| September 4, 1992 |
|
0.25% |
3.00% |
|
| February 4, 1994 |
 |
0.25% |
3.25% |
|
| March 22, 1994 |
|
0.25% |
3.50% |
|
| April 18,1994 |
|
0.25% |
3.75% |
|
| May 17, 1994 |
|
0.50% |
4.25% |
|
0.50% |
3.50% |
| August 16, 1994 |
|
0.50% |
4.75% |
|
0.50% |
4.00% |
| November 15, 1994 |
|
0.75% |
5.50% |
|
0.75% |
4.75% |
| February 1, 1995 |
|
0.50% |
6.00% |
|
0.50% |
5.25% |
| July 6, 1995 |
|
0.25% |
5.75% |
|
| December 19, 1995 |
|
0.25% |
5.50% |
|
| January 31, 1996 |
|
0.25% |
5.25% |
|
0.25% |
5.00% |
| March 25, 1997 |
 |
0.25% |
5.50% |
|
| September 29, 1998 |
|
0.25% |
5.25% |
|
| October 15, 1998 |
|
0.25% |
5.00% |
|
0.25% |
4.75% |
| November 17, 1998 |
|
0.25% |
4.75% |
|
0.25% |
4.50% |
| June 30, 1999 |
|
0.25% |
5.00% |
|
| August 24, 1999 |
|
0.25% |
5.25% |
|
0.25% |
4.75% |
| November 16, 1999 |
|
0.25% |
5.50% |
|
0.25% |
5.00% |
| February 2, 2000 |
|
0.25% |
5.75% |
|
0.25% |
5.25% |
| March 21, 2000 |
|
0.25% |
6.00% |
|
0.25% |
5.50% |
| May 16, 2000 |
|
0.50% |
6.50% |
|
0.50% |
6.00% |
| January 3, 2001 |
|
0.50% |
6.00% |
|
0.25% |
5.75% |
| January 4, 2001 |
- |
- |
- |
|
0.25% |
5.50% |
| January 31, 2001 |
|
0.50% |
5.50% |
|
0.50% |
5.00% |
| March 20 , 2001 |
|
0.50% |
5.00% |
|
0.50% |
4.50% |
| April 18, 2001 |
|
0.50% |
4.50% |
|
0.50% |
4.00% |
| May 2001 |
|
0.50% |
4.00% |
|
0.50% |
3.50% |
| June 27, 2001 |
|
0.25% |
3.75% |
|
0.25% |
3.25% |
|
The Best Financial Management Links On Earth
|
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|
