The Motley Fool Discussion Boards
Investment Analysis Clubs / Foolish Collective
|Subject: Re: BMW method||Date: 3/25/2004 2:21 PM|
|Author: BuildMWell||Number: 29700 of 46814|
"Well I have been biting my tongue, because I hate these kind of posts, but what you wrote is (in my opinion) a little dangerous for the less experienced investor.
For some of the “newer eyes”, let's place some of this discussion in context. Here is a post from April 2000 on the Cisco board." - sean1arch
I hope everyone will read my post from April 2000. It is precisely what the BMW Method is all about. Read it and understand it. It told the truth and it said that CISCO could NOT continue growing at 50% per year. I was warning the reader to do his or her own math.
I never try to discourage a person into selling nor will I try to encourage anyone into buying...that is not my job. My job is to help people to think for themselves.
I sold my Cisco several weeks before I wrote that particular post. My intent was to show the reader how to evaluate Cisco using the BMW Method. I still have my curves right here and I can show you precisely why I was selling. But, the fact that I was selling was of no consequence...I could have been wrong. Cisco had been at $82/share just a month before. I knew why I was out of the stock...but it was not for me to discourage someone else. I just tried to state the facts.
However, the BMW Method told me that CISCO was way, way over-priced. The long-term value was there at 2 to 3 Trillion dollars at a CAGR of 21% or even 15%, but was that reasonable? That was what I was asking.
Personally, I did not think that it was at all reasonable and I was trying to show why. A 50% CAGR is not sustainable. But, the stock was priced for that assumption.
I tried to ask the right questions. Read the post again.
Since then, I have decided that asking questions does not work. I have decided that I need to show people the BMW Method so they will have to answer the hard questions for themselves. They can just look at a chart and see what is going on. I use Cisco as one of my examples, by the way. It is a perfect example of how to buy and sell using the BMW Method. By the way, I sold Cisco again last month at $29/share and have an order in right now at $22/share. If I get it, fine, if not fine.
I did not buy my Cisco stock using the BMW method. It had no 30 year track record. I lucked out. I bought it on the recommendation of a friend who recognized what was going on with the internet. I was barely using a computer at the time. I bought my first one in late 1994 about three months after buying my Cisco stock. I bought the computer the month before I retired from work. Investing was going to be my hobby.
The BMW Method evolved from my experience with investing. The computer allowed me to find data that I never had at my disposal before. I used my past experience as an engineer, a project manager and as an inventor to put the whole concept together.
By late 1999, I was using the BMW Method most of the time. However, I still listened to other folks and I rarely applied the BMW Method to those purchases. I figured the experts that I was paying for their newsletters had already done the due diligence...what good would my method do? They were the experts...I was still just learning.
I did keep raising my bar though. Initially, I just hoped to beat my past record which was piss poor. I had worked with brokers. Later, I bought some index funds and they became my competition. After I was beating them consistently, I took on Warren Buffett. I began to use BRK.A as my standard. I performed the BMW Method on BRK.A and found a 22% to 25% CAGR over 30 years! But, if I could not beat Warren, why not just buy BRK.A? I had to beat Buffett or I would give up.
But, soon I found that I was beating the experts including Warren Buffett. Their stock picks were as likely to go up as to go down...they had no "lock" on good picks. But, I did. My stocks always went up. I was picking winners with my method. I still did not believe it. I figured I was just lucky. I had not seen the irrefutable logic of my method. It started as a test...it proved to be 100% successful.
I saw the internet bubble as it formed and I knew it had to burst. I had it plotted on my BMW charts. I wrote about it on TMF often. I talked about nosebleeds and I warned about high valuations. I was laughed at. But, according to my data, the NASDAQ should never have seen 2400 in 1998, 1999, or 2000! IT went over 5100! However, it is 200 points undervalued right now! That is what I see. IT all makes complete sense to me. I can see it all clearly.
Long-term compound growth is what has built America. Why will that not continue? The rest is just a matter of time, proper investment and recognizing what is going on. The BMW Method does just that. I shows us what is going on.
I promise not to be as obscure as I was with Cisco in 2000. I try hard not to be a doom and gloomer...there is no reason for any of that negative stuff. The future is bright for us all and I want folks to see that. There are fortunes to be made right here. The key is to spot the way. The way is pot-holed with all sorts of diversions. But, buying sustainable growth at the lowest possible price is a sure way to get rich. I can prove that fact to anyone who will just listen and wants to learn.
Thanks for the fond memories. I had forgotten that Cisco post from four years back.
|Copyright 1996-2014 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us|