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Author: BuildMWell Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 41627  
Subject: Re: The BMW Screen...er, Method Date: 12/15/2006 11:17 PM
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Talking about Home Depot, theGreenMartian said, "...does this invalidate the gain that anyone had buying at $33 or $35 with the stock at $40? Nope. Still - you can't argue that there is a convincing change in the fundamentals, and since everything has been happy lately can you really attribute a modest ~15% gain to anything other than fortunate timing? Don't know - but I wouldn't. That doesn't mean I'm right or anything, but it is nice to have an obvious confirmation in the evidence."

I cannot answer your questions, but I will comment on the part about fortunate timing. I tend to think the BMW Method makes that "fortunate timing" work in our favor over and over again. I do not argue with results. Stocks reach their historical low CAGR and they rebound rather consistently...especially the solid, blue chips. We talked about 3M here in the summer and I bought the shares below $70 knowing that a rebound was imminent. Obviously, I would not have bet my life on it, but I knew it well enough to plunk down a load of my cash to buy the shares and to pay $17/share for the $60JAN09 LEAPS. Sure enough, the share price was above $80 several days ago. The stock was up 17% and the LEAPS were at $23.50...a 38% pop. Since then the price has pulled back to under $79/share, but I will be waiting for a higher price based on the historical movement of the stock. 3M is like a well oiled machine and the chart is very well defined. Why would I not rely on it?

I did the same with MSFT, INTC, WAG, CHS, SDD, and several others. If I was getting this wrong 10% of the time, I would tell you. But, it just doesn't stop working.

At the recent BMW Method conference in Ohio, I asked the group to tell us of any stocks that had failed to perform based on the BMW Method. I believe we had enough folks there that at least 100 examples would have been tested. There were no horror stories. I mentioned that Sara Lee had failed to rebound and had grown on it's low CAGR. And, of course we had a good laugh about Doral...our favorite non-BMW Method stock.

I have been doing this since around 1998 on a regular basis. I have used the method on about 80 stocks and have made great returns. During the market correction from 2000 to 2003, I had a personal CAGR of 25% to 40% on every stock I bought. They are all documented here on the boards. Check Haliburton at $11 in 2002, DUK @ $13 in 2003, CAT at $17(post split)in 2000, M0 at $18 and RJR at $8.50 (Post split) in 2000.

Of the DOW 30, MO and CAT were obvious buys in 2000 based on the BMW Method. No other method picked just those two. The Dogs of the Dow and the Foolish Four both included them, but the DOD/FF also included EK, SBC, and DD. Those three went down...my two went up 400% each.

I finally bought DD last year at $38/share...it is now at $49/share and paid a nifty dividend during the last year. I recall mentioning my pick of DuPont at the 2005 BMW Conference at Charleston and I got a lot of confused looks. I do not think anyone else thought DuPont was a good idea. But, in a year it is up 29% plus that 4% dividend. DuPont shares were selling for $52@ in 2000 when it was a DOD/FF pick. Timing is everything...but they say you cannot time the market.

The time to buy is at a stock's low CAGR. At least, that is what works for me.





The story that was sold to drive the price down had to do with lower film sales due to a lower than expected sales of HDTV's for the World Cup. The share price plummeted on that silly story and offered up a huge buying opportunity...if an investor could just see the long-term growth patterns.

You call it fortunate timing...I call it the BMW Method.

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