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Investment Analysis Clubs / The BMW Method


Subject:  Which BMW chart? Date:  8/27/2012  10:51 AM
Author:  maniladad Number:  40683 of 42233

Thanks to Mike Klein's wonderful collection of CAGR charts I have the option to look at more potential BMW Method companies than I have time to evaluate. One thing that is striking to me is the phenomenon of the different time scales giving very different results. For a number of companies, the pattern on the 30-year history is movement around the mean CAGR up until about 2008, followed by a horizontal path along the logarithmic chart, or down for the standard chart, until it intersects the present time at -2 to -3 RMS, with a Return Factor of maybe 1.5 up to 2.5. That's when my pupils dilate, my heart rate increases and my breathing gets a little faster and shallower. Then I go back to the 20-year history chart and see the stock price tracking close to the mean CAGR or even above it, with fractional return factors or at best very slightly positive ones: Thud. I think BEAM was the first stock that I saw this with but there have been a number of them since.
Two exceptions, TEVA and ETR, have consistent patterns for charts of all durations. Although both have some significant drawbacks I've bought TEVA and have an order in for ETR. Although BMW's original time frame was 30 years, with so many companies to evaluate I haven't been willing to bid for one that doesn't really meet BMW Method criteria for shorter time periods.
Other than, "Due diligence", does anyone want to comment on this observation?
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