“Could the typical small investor have discovered a year ago that Enron was on the brink of disaster? It’s highly unlikely. Still, if you looked for the right thing, you would have never bought Enron in the first place.”
James Glassman(Washington Post 2/17/2002)
Author of Dow 36,000 (published 1/2000)
Did you read the quote carefully? This was a lead business story in the Washington Post business section. James K. Glassman is the main stock picker for the Washington Post. His columns have appeared in the Post for years except for a period in 1999 when he took time off to write his Dow 36,000 masterpiece. He takes a fundamentals approach and then gives it lots of spin.
In this column Glassman states, I have come to the reluctant conclusion that massive corporate filings rarely illuminate the true state of corporate health…Most large, publicly traded companies are simply too complicated. He goes on to ask an investment buddy about the chances of the general public understanding the Enron mess. His buddy offers this dismal response: The public has no chance.
Glassman, the revered stock picker and fundamental cheerleader, has now become a hedger. Suddenly fundamental analysis works some of the time but not all of the time. It just depends on the company you?re analyzing is the new Glassman approach. It?s about the only approach you can take if you?re taking the stand that the average investor could not have understood there was a problem with Enron as it went from $90 to zero. What arrogance. Worse than his arrogance is his solution which is just plain stupid: Put your money in a mutual fund, he says. We wonder if these are the same mutual funds that lost so heavily on Enron? But then Glassman wouldn’t know, would he?
Enron was a great trend down. Trend followers rode that trend. They did not try to predict Enron’s future. They just followed it. The price was the only variable of importance and trend followers let price dictate all trading decisions. If you did not trade down as Enron went from $90 a share to zero, you deserve the zero.
Dow 36000: Amazon Review
With the title alone causing hysterics, placing this on your coffee table will elicit your guests to share their best .com horror story. How they invested their $100,000 second mortgage in Cisco Systems @$80 after reading about it, waiting for it to become $500 (as predicted in this very book) only to see it dive to $17. How another friend invested all their cash in Etoys after reading about it in Sept 1999 when Etoys was $60 … wishing now that they got their shares in rolls of soft two-ply. Just the thought of this book, gives me the chuckles.
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