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I'm a newsletter author at my new blog For the past decade I've been instructing groups on how to most successfully employ growth stock techniques, and I'm looking forward to sharing these picks here on Seeking Alpha. I also have a free e-book on my site, "7... More
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Simple Growth Investing
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7 Mistakes Most Investors Make
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  • Is More Than A Kindle Seller

    I admit it. I fell victim to the “opinion” trap.

    One of the most difficult things for an investor to do is to avoid making decisions based on something you’re “sure” of. I put that word in quotes because what we think we know is often very wrong.

    Here’s some backstory: In 2004, 2005 and early 2006, when oil and gas stocks were motoring higher, a friend of mine kept insisting that those stocks were “long in the tooth.” It was a reasonable, intelligent-sounding assumption, since many of those names had been rallying for months, and appeared ready for a breather. Because this guy is an accomplished investor and someone who knows his market rules in and out, I fell prey to his opinions.

    It seemed so wise to avoid stocks that had clearly run too high already. Problem was, they just kept rising – and I missed chance after chance to get in. Here’s just one example, Southwestern Energy (NYSE:SWN), which notched huge run-ups during that time, but as you see, offered obvious entry points on pullbacks.

    But since I was so convinced that my friend was right about oil and gas stocks being past their prime, I missed these chances. In fact, I ignored those stocks completely, leaving a lot of winners on the sidelines.

    So that’s one form of listening to opinion, rather than market facts. It comes about because you think you hold the most intelligent or sophisticated view.

    There are many forms of letting your opinion get in the way of investing results, and I realized that I have been making another mistake recently. But in this case, it’s not too late.

    This latest mistake was relative to (NASDAQ:AMZN). Even before Apple’s (NASDAQ:AAPL) announcement about its iPad, I was already writing the obituary for the Kindle. I had noticed that Amazon’s earnings and sales growth have been growing at good rates. I also saw that its stock price was holding up nicely, even during a general market downturn. Amazon shares have been consolidating gains in an orderly fashion, never falling too far beneath their 10-week average.

    Despite this solid performance, I was convinced that Amazon was toast.

    My mistake? Forgetting that Amazon’s business is more than just the Kindle. In fact, when the company reported its fourth-quarter results in January, it said that revenue from books, DVDs, CDs and other media had risen 29%. Customers are increasingly turning to online retailers in a search for bargains.

    But I had fallen into a mental trap of looking at the entire company as just a Kindle seller. Mistake.

    Now, will iPad – or maybe even some other product – be a Kindle killer? Maybe. But see, obsessing about that now is what’s called “having an opinion.” It’s great to understand a company’s story, and know what’s driving sales and what could be a danger. But right now, Amazon’s business is healthy, and its price is approaching a buy point.

    And that is fact, not opinion.

    Disclosure: AAPL
    Mar 05 11:43 PM | Link | Comment!
  • Nasdaq Follows Through On Rally Attempt
     The Nasdaq finished Monday's session with a gain of 1.6% in heavier volume than Friday. That combination of good price gains plus heavier trading has proven to be a good signal that a market uptrend may have legs. (I say may because the follow through works most of the time, although not every time. Still, every time you see a successful bull rally, you always have that follow-through day. So it's 100% necessary, history shows.)

    There was other good news for the indexes. The S&P 500 and the Dow also finished above their 50-day moving averages.  Ideally, we'll see a pick-up in volume on those indexes in the next few days.

    So what does this mean? It means the environment for buying stocks may be safer, since the uptrend has been confirmed. Sometimes the rally fails quickly, by showing heavy-volume selling soon after the follow-through day. We'll let you know if that occurs!

    Disclosure: None
    Mar 02 9:37 AM | Link | Comment!
  • Let The Market, Not Opinions, Be Your Guide

    What’s with mobile homes? Thor Industries (NYSE:THO) and Drew Industries (NYSE:DW) are both outperforming the S&P 500 technically. Fundamentally, both are growing earnings at a triple-digit pace, and are expected to show profit increases in the next two fiscal years.


    And those fresh profits are not just due to cost cutting: Both those companies increased sales in the most recent quarter, after several quarters of declining revenues.


    So what’s up? Believe it or not, crappy economy and all, more people are plunking down their dollars to hit the road!


    Drew, which makes used by RV manufacturers, rose the past three sessions, after saying last week that fourth-quarter earnings beat Wall Street’s views.


    The lesson here? Ignore what your opinion might be telling you. That opinion could be totally wrong. In this case, most peoples’ opinions would say, “RV sales have to be in the toilet in this economy!” But as the data shows, that would be wrong!


    Let the stock market itself be your guide. Definitely not chatterers on TV telling you what they “like,” and definitely not what you think is happening! 

    Disclosure: None
    Feb 23 11:04 AM | Link | Comment!
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  • $CAAS gets support at 10-week. Trade has been erratic, but 3 big upside days in a row; Wed in heavy volume ahead of Thurs. earnings report.
    Mar 24, 2010
  • Retailers have outperformed, even in the recession. Can you say counterintuitive? Rely on data, not opinions or hunches when investing.
    Mar 23, 2010
  • Check out my new article: Make More Money in the Stock Market - 7 Steps to Simple Stock Investing
    Mar 16, 2010
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