THE PROBLEM OF 3iii IS HE HAS TUNNEL VISION IN INVESTMENT (HE CANNOT SEE WHAT OTHERS SEE)

Author: calvintaneng    |    Publish date: 

SEE THE TWO PHOTOS ABOVE

THE ONE ON TOP HAS FULL VISION WHILE THE ONE BELOW HAS TUNNEL VISION

A PERSON WHO HAS TUNNEL VISION CANNOT SEE THE 4 SIDES OF ENCLOSURES WITH RED, GREEN, YELLOW & BLUE

HE SEES ONLY HALF THE IMAGE OF THE BALLS

SO 3iii CAN ONLY SEE SLOW GROWTH STOCKS ALL HIS LIFE

CYCLICALS, TURNAROUNDS & ASSET PLAY STOCKS HE CAN NEVER SEE NOR UNDERSTAND

HE CONDEMNED SIFU RAIDER FOR BUYING ARMADA WHICH IS A TURNAROUND

HE CONDEMNED ALL THE ASSET PLAY STOCKS LIKE PM CORP LAST TIME

NOW HE CONDEMNS THE CYCLICAL STOCK CALLED NETX

WHY LEH?

ANSWER:

3iii HAS TUNNEL VISION

AS SUCH HE IS LIKE A BLIND PERSON TEACHING OTHERS HOW TO SEE

BETTER AVOID 3iii AT ALL COST

IF THE BLIND LEADS THE BLIND BOTH WILL FALL INTO A DITCH

One Up on Wall Street’: Peter Lynch’s 6 Categories of Stocks

As we might expect, finding a great company does not mean you should rush out and buy it. In chapter seven of "One Up on Wall Street," Peter Lynch said buying a stock without research is like playing poker without looking at the cards. Just because Dunkin’ Donuts (NASDAQ:DNKN) is always busy doesn’t flip on an automatic buy signal:

“What you’ve got so far is simply a lead to a story that has to be developed. In fact, you ought to treat the initial information (whatever brought this company to your attention) as if it were an anonymous and intriguing tip, mysteriously shoved into your mailbox.”

A good entry point for getting more details about the story comes from knowing what category of stock you are considering. There are, however, a few things to consider first. 

Watch sizes

Pampers diapers, from Proctor & Gamble (NYSE:PG), was a runaway marketing success in the 1970s. But if you spent literally just a couple of minutes studying the company’s profile, said Lynch, you would discover Pampers’ earnings contributed only a small amount of its overall earnings.

• PG 30-Year Financial Data
• The intrinsic value of PG
• Peter Lynch Chart of PG

Further, he argued, big companies don’t experience big price moves, despite the success of popular products. In his words:

“The size of a company has a great deal to do with what you can expect to get out of the stock.”

If you want 10-baggers, you need to look to smaller companies. Don’t expect big price growth in big companies unless there is a special situation of some sort, such as major corporate turnaround.

Lynch’s categories

With that, Lynch launches into an outline of his well-known stock categories to help investors more quickly identify what they are buying or want to buy.

Slow growers (sluggards)

These are “large and aging” companies that were once fast growers but have since fallen back for any number of reasons. In Lynch’s words, they “pooped out.” Often, they are companies in an industry that has lost momentum, and their charts resemble the topographical map of Delaware: simply flat. Not that these stocks should be overlooked—they often pay generous dividends.

Medium growers (stalwarts)

“These multibillion-dollar hulks are not exactly agile climbers, but they’re faster than slow growers.” Lynch expected stalwarts to deliver gains of 30% to 50%, after which he would sell them and find new, undervalued issues. He also expected annual earnings growth of 10% to 12% and liked to keep some stalwarts in his portfolio because they offer defensive protection during market slumps: “You know they won’t go bankrupt, and soon enough they will be reassessed and their value will be restored.”

Fast growers

These favorites of Lynch are “small, aggressive new enterprises that grow at 20 to 25 percent a year.” This is the category to explore if you want to find 10- to 40-baggers, and perhaps even more. According to Lynch, fast-growing companies may be part of fast-growing industries, but he preferred fast growers in a slow-growth industry. Examples from his time included Marriott International Inc. (NASDAQ:MAR), which had been able to grow 20% annually while the hotel industry grew at just 2%. Among the winning stories were retailers that learned to succeed in one place and then duplicate their formula: Walmart (NYSE:WMT), The Gap (NYSE:GPS) and Yum Brands' (NYSE:YUM) Taco Bell.

Cyclicals (3III CANNOT SEE CYCLICALS) HE CALLS ALL CYCLICALS GRUESOME

“A cyclical is a company whose sales and profits rise and fall in regular if not completely predictable fashion.” In contrast to fast growers, cyclical industries expand and contract, almost continually. Some examples include the auto, airline and steel industries. Cyclical stocks do well as economies come out of recession and begin to expand.You can, however, also lose half your investment if you buy in the wrong part of the cycle. Lynch calls them the “most misunderstood” type of stocks. As large and well-known companies, they are often confused with stalwarts. People who work in cyclical industries have an edge over other investors.

Turnarounds (3III CANNOT UNDERSTAND TURNAROUNDS) HE CALLS ALL TURNAROUNDS GRUESOME

“These aren’t slow growers; these are no growers.” Lynch said turnaround companies are “battered, depressed and often can barely drag themselves into Chapter 11.” If they survive and fix their problems, however, they can rebound very quickly and stock prices are least related to the overall market. One of Lynch’s favorites in this category was Chrysler (now Fiat Chrysler (NYSE:FCAU)); it was also a cyclical stock, although that aspect was not as pronounced. From the time he bought in 1982, it became a five-bagger in two years and 15-bagger in five years. He found many opportunities among these temporary losers.

Asset plays (3III IS TOTALLY BLIND TO ALL ASSET PLAYS) HE CALLS ALL ASSET PLAYS GRUESOME

This could be “any company that’s sitting on something valuable that you know about, but that the Wall Street crowd has overlooked.” Lynch said these are situations in which a local edge provides the greatest advantage. One example was the Pebble Beach golf course, once public but bought out for $72 million. A day after buying it, the new owner sold a gravel pit on the same property for $30 million. There were (and are) many hidden or not-so-hidden assets in many companies and industries; investors should start by looking for cash on the books.

Upward and downward mobility

As well as being able to occupy more than one category at a time, Lynch wanted to remind us that companies move in and out of categories quite readily. For example, high-flying growth stocks often run out of room and become sluggards or stalwarts:

“From Dow Chemical to Tampa Electric, the highfliers of one decade become the groundhogs of the next.”

Also among the category-movers: growth companies that “diworsify” and lose the market’s interest; that makes them potential turnarounds.

Applying this information

Lynch advised against maxims that urge you to sell when you hit certain profit or time markers; these include: “sell when you double your money” and “sell after two years.” Obviously, such maxims make it far harder to score multi-baggers. Yet, in the medium growth category, he said he would sell after gaining 30% to 50%, suggesting different targets for different categories, but not delineated here.

The first step toward using the information in this chapter is to determine which category your stock is in, or in which category you should be looking. As noted, there are slow growth, medium growth, fast growth, cyclicals, turnarounds and asset plays. He ends the chapter with these words:

“Putting stocks in categories is the first step in developing the story. Now at least you know what kind of story it’s supposed to be. The next step is filling in the details that will help you guess how the story is going to turn out.”

Conclusion

Lynch became well known for his categories. For investors, categorization is not an end in itself—it is a way to get started in the right area of the market.

He built his reputation on finding opportunities in several categories, but above all in the fast growth category, where the opportunities for 10-baggers and more are most commonly found. Investors of today can still use these categories to orient themselves and their portfolios.

This is an example of a Peter Lynch chart, showing Apple Inc. (NASDAQ:AAPL); Lynch said that when the stock price (green line) dipped well below the earnings line (blue line) it was time to consider buying (and selling when the price line gets well above the earnings line). This chart has a five-year timeline. For information on creating these charts, see this article.

3iii  THINKS HE IS SO CLEVER REJECTING ALL OTHERS EXCEPT HIS VERY FEW AND NARROW GROUP OF SLOW GROWTH STOCKS & CALL ALL OTHERS GRUESOME

IN ACTUAL FACT HE HAS A GRUESOME DISTORTED OPPINIONATED WORLD VIEW WITH TUNNEL VISION

3iii IS GRUESOME INDEED!!!

STAY AWAY PLEASE.

COMMENT ADDITIONS

SINCE 3iii IS SO OPINIONATED HE HAS DEVELOPED ONLY ONE SET OF SKILL

JUST LIKE THE CRAB IS SKILLED IN WALKING SIDEWAYS AND CAN NO LONGER WALK STRAIGHT

See

https://www.youtube.com/watch?v=CmWZnVXZe4g

And this is what 3iii able to do

https://www.youtube.com/watch?v=YwDTthfbGrA

IF YOU WANT A WHOLESOME INVESTMENT LIFE GO READ UP ON

PETER LYNCH

SETH KLARMAN

HOWARD MARKS

DR.NEOH SOON KEAN

COLDEYE

WALTER SCHLOSS