No. of Recommendations: 1

I like to go with the simpler explanation if it makes sense.

1.- If the growth rate changed then either something at the company changed or something in the market changed. If the change was in the company like Hewlett-Packard divesting its legacy business and transforming itself into a computer and services company, then the old charts don't apply as the old business is gone.

2.- There are market wide issues like the 2000 tech bubble, the Bernanke put, increased correlation caused by index funds and ETFs which adds a lot of noise to the stock's signal.

3.- There are industry wide effects like the maturation of computing from PCs to mobile smart phones which will create some kind of correlation between the stocks in the industry. Such a maturation can coincides with market bubbles, by 2000 the PC was coming close to the end of its vigorous growth era with focus shifting to the web.

If you can mentally remove the extraneous noise then what is left is the "true" BMWM signal. What remains true always is that the BMWM chart is just the starting point of your due diligence.

Denny Schlesinger
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