PDA

View Full Version : Wall Street Gurus


TGoldman
04-11-2005, 03:56 PM
Do you have a favorite Wall Street guru? There are plenty of talking heads out there, but is there anyone whose advice you trust enough to follow through with their specfic portfolio recommendations? What about Wall Street charlatans to avoid?

DesertCat
04-11-2005, 05:46 PM
It's pretty easy to pick out the ones to avoid, namely, all of them. The reason I say this is that why would a true "wall street guru" give you free advice?

If a mutual fund manager can get on CNBC, do you think he's actually going to tell you about the stocks he'd like to own more of? Why, so viewers can drive the price up and cost him money?

In reality he'll tell you about the stock he already owns, without telling you he really wants to unload them if the price would just go up a little higher. Oh it did, thank you suckers.

And then there is the macroeconomic people, who tell you the market will go up, or it will go down. Abby Joseph always thought the market would go up, and she was always right during the bull market, and always wrong during the bear market! They are just flipping quarters, and the one you see on the telly is just the one who's been luckiest lately.

Paluka
04-11-2005, 08:17 PM
DesertCat summed things up nicely, one of the few posts on this forum that made sense.

inishowen
04-12-2005, 01:52 AM
1. Buy and read one days issue of "Investors Business Daily".
2. If what you read stokes any desire to learn how to apply IBD's methods then buy O'neills "How to make money in stocks".
3. Become your own guru.

lastsamurai
04-12-2005, 08:32 AM
or buy how to make money in the stock market. read the 20 rules when to sell...

DesertCat
04-13-2005, 01:23 AM
[ QUOTE ]
1. Buy and read one days issue of "Investors Business Daily".
2. If what you read stokes any desire to learn how to apply IBD's methods then buy O'neills "How to make money in stocks".
3. Become your own guru.

[/ QUOTE ]

[ QUOTE ]

3. Avoid cheap stocks. Buy higher quality stocks selling $15 a share and higher.

4. Learn how to use charts to spot sound buy points. Confine your buys to these points as stocks breakout on big volume increases.

5. Cut every loss when itís 8% below your cost. Make no exceptions so you can always avoid huge, damaging losses. Never average down in price.


[/ QUOTE ]

If you believe stocks have intrinsic values, only some of O'Neils rules make any sense, and many are very bad advice, including these three.

First, just because a stock price is below $15 means little. What if you thought KO's intrinsic value was $30 per share and knew the business was strong enough to handle an executive dying (it is BTW), and the CEO of KO died tomorrow? If it opened at $10, would you say, gee, "I better wait until it goes above $15 before I start loading up"?

Or since KO's chart would look horrible, would you want to wait until it hit $25 on strong volume increases?

Lastly, if you did buy it at $10, and KO went to $9, why would you dump it, and why wouldn't you not buy more if you were confident that it was still worth $30.

Buffett analysed the asbestos liablities of USG, and thought it was way undervalued at $16. He didn't sell when it hit $14, he bought more. When it hit $10, he didn't stop buying. Even when it hit $4, he held on, and bought more. It closed at $43.90 today.

O'Neills advice is kind of like training wheels for investors. He's trying to keep you out of trouble, but he's also incorporating worthless superstitions (charting), and ignoring what really works (fundamental value). If you beat the market following his advice, count yourself lucky. I'm not even sure how you could accumulate any stocks, because you would always be selling as soon as they retrenched a measly 8%. If O'Neill was a poker coach he'd tell you to use pattern mappers and always fold if you have less than 14 outs with two cards to come.

I recognize that it's difficult for many people to analyse companies on a fundamental basis, but I have to believe anyone who understands the theory of poker can do it if they apply the same effort to investing that they did learning poker theory.

inishowen
04-13-2005, 02:32 AM
Good points. I assume that Tgoldman is a novice investor hoping that by following an analyst he'd make money which most often means he'd be the last one in and the last one out. Figured the most important thing he should learn is why stocks go up. ONeill's work covers that, imo. Fundamental analysis is good if you've got deep pockets, time, and can ride a stock from 16 to 4 and then back up again, technical analysis will hopefully put you in the stock during its most dynamic move. Either way he needs to park at least 3 months living expenses in a money market, start with mutual funds, and then move into individual equities. JMHO.