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Oh boy ... where to start. In your series of posts on the Rule Maker Master List, you have given us so much material in which to respond:


So the information ism't worth a fig!

Hmmm ... evidently your spelling isn't worth a fig either, but I digress. I think you may be missing the point of the whole Rule Maker Master List. One of the common complaints about the Rule Maker criteria to selecting stocks is the lack of any true backtesting that verifies whether the strategy works over long periods of time. Therefore, what we decided to do was provide a link that would list any and all stocks that have been run through the Rule Maker Ranker tool, with the idea being that you track their performance on the Ranker quarter to quarter and determine how it correlated with their stock price. That is it's sole purpose. It isn't there to be used as a recommended stock list, a list of possible value plays, or anything of the sort. So attempting to discredit the list by saying the stocks are overvalued is comparing apples to oranges, in my humble opinion.

Now, as to whether Rule Maker stocks themselves are overvalued as a general rule, that is a good question. This idea is addressed as one of our 11 steps to Rule Maker investing. You can access this topic from the following link:

What's the point of such a list, or The Fool site in general, if it is not designed to help individuals make decisions by providing reliable information? Is not studying the RM List part of DD? Or can we trust nobody and no one?

I wouldn't say that studying the list is part of a typical user's due diligence, nor should it be. My opinion is that a true Fool that is seeking to buy stocks using the Rule Maker approach to investing would create their own Rule Maker Ranker for that company, rather than blindly relying on what I or other posters have done. Besides, we are all human and prone to making mistakes. As a matter of fact, a poster pointed out last night on another board that I had made an error on my last Ranker spreadsheet for Nokia. I guess what I am trying to say is that once you buy a stock, it's your money that is at risk ... not mine, not the Fool's, not the guy at the cocktail party you got the stock tip from. Therefore, it is in our own best interests to gain as much knowledge as possible on the company before making a buy/sell decision. Blindly making a decision based on the contents of a list is truly foolish (with a small F).

We are confronted by contradictory information which we must try and make sense of.It just so happens that some of it can't be trusted!

Well, welcome to life as we know it. Every day we are confronted with "contradictory information". Product A says it removes stains better than Product B, but then Product B says the same thing! Or better yet, Candidate A says that Candidate B wants to take away your right to do something, and Candidate B says that is a complete fabrication. Oh my, what is one to do? That's where we as consumers of information have to be discerning enough to filter out the noise and focus on information that is truly relevant to our buying decisions. I would say that the information we provide here at the Fool may not be 100% perfect, but it compares quite favorably with that produced by the financial media at large. And the best part of it is we don't even charge you for it! Wowsers, what a concept.

I certainly will think twice when using the RM list in future.

I believe that's the whole point. The Fool is designed to help you do your own research, not do the research for you. Maybe this link to one of our Foolish FAQ's will enlighten you a bit on this point of our mission:

Still hold by my comments earlier that the RM companies recommended are now being called overvalued by writers on the fool.(see earlier link to article I pasted in).

Writers employed by TMF (such as myself) are not told what or how to write about given topics. Therefore, I would find it quite reasonable for their to some disagreement among TMF personnel regarding our stock picking strategy. We currently have five real money portfolios (RM, RB, Foolish Four, Boring, and DRIP) that each take different approaches to the same goal: to outperform the market average return. With these different approaches, I'm sure there would be disagreements about how we go about picking stocks. Would the Boring portfolio buy Amazon or Cisco? Heavens no! Would the Rule Maker portfolio buy Costco? Absolutely not! And just why is that? Because those stocks don't match up with their selection criteria.

With the Rule Maker approach to investing, it doesn't tend to focus that heavily on current valuation. Some may have a problem with that (as you have so plainly stated), and that's fine. Our philosophy is that Rule Maker investing is one way to beat the market, and it's not necessarily the only way. It's just what we happen to find the most comfort level in.

Anyway, I hope this helps answer you questions.

the LanceMan

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