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From: brett@ucla-cs.UUCP
Newsgroups: net.invest
Subject: Re: NBI and Medtronics
Message-ID: <961@ucla-cs.ARPA>
Date: Sun, 26-Aug-84 08:25:34 EDT
Article-I.D.: ucla-cs.961
Posted: Sun Aug 26 08:25:34 1984
Date-Received: Thu, 30-Aug-84 19:27:57 EDT
References: <1691@burdvax.UUCP> <809@ihuxn.UUCP>
Organization: UCLA CS Dept.
Lines: 68

> Observation:  Any company you "have heard some good things about" is
> probably a poor investment choice.  This is because the company has
> gotten enough interest from investors that the price is no longer at
> the bargain level.  The trick is to find a good company that NO ONE is
> interested in ... yet.  When investors "discover" your stock, then you
> sell to the suckers and find another such company.
>
>					Rich Strebendt
>					...!ihnp4!ihuxn!res

Although that basic form of this statement "buy low, sell high" is
sound, there are problems with this logic.

> Observation:  Any company you "have heard some good things about" is
> probably a poor investment choice.  

is ridiculous.  If this statement were true basically no one would 
buy stocks on the NYSE.   People would see good news go buy on the
DJNews service and would say "oh, I shouldnt buy that stock...I've
now heard good news about it".  But that isn't the way things work.
Even if you are a trader, you may want to buy on good news, or
sell on good news.  There's very little rationale behind the way the
market acts sometimes.  Most money in the stock market is made on
sound stocks, with bright prospects.

> This is because the company has gotten enough interest 
> from investors that the price is no longer at the bargain level.  

Not true.  Interest in a stock may not be correlated to amount
of stock held by investors or traders.  What this means is that
Martin Zweig may be interested in the stock, for example, but may
not recommend its purchase.  He will tell you that at times...
"it's a bit toppy now"...."or wait till it comes down a bit".
What is a bargain for some, may not be a bargain for others.

At other times there may be alot of interest in the stock, but the
price may be depressed because no one is buying it.  Such depressions
are shorted lived (but may be taken advantage of) as technicians/clients
purchase the stock and its price changes.

Oil companies are often undervalued, as the value of their reserves
i.e. liquidation value, may be much more than the current value of
their stock.  These are often at "bargain level" according to 
pure liquidation value.

The fact of the matter, in summary, is that you don't have
to catch the tops or bottoms to get rich.  You DO have to catch
the basic flow (up or down movement).  So buying at the
bargain level isn't as important as catching major swings in
the change of a stock's price.

> The trick is to find a good company that NO ONE is interested in ... yet.  

Don't beleive it.  Most money is made in the stock market on sound
stocks with bright prospects.  This type of buying, called speculating,
can lead one into the depths of financial ruin.


-- 
Brett Fleisch
University of California Los Angeles
3804 Boelter Hall
Los Angeles, CA 90024
Phone: 474-5317 

brett@ucla-cs.ARPA or
...!{cepu, ihnp4, trwspp, ucbvax}!ucla-cs!brett
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