Thursday, October 17, 1996

How to Read Stock Market Letters
by [email protected]

Let's turn our attention to one of the fastest growing segments of the booming mail-order business -- stock market letters. For those plungers among you who are on the receiving end of one (or one hundred) of them, this guide provides you a "Handy Lexicon of Market Words and Phrases." The phrase you're likely to see is followed by an English translation.

1. This undervalued special situation is a vehicle for dynamic capital gains, has explosive potential, and is poised for action. (Stock looks okay.)

2. The stock, while suitable for long term investors, may be considered to have reached its intermediate objective. (We're out.)

3. This stock has growth characteristics. (This year may be better than last year.)

4. Intermediate. (It's going to take longer than we thought.)

5. Long term. (100 years.)

6. Management is young and aggressive. (Sales are under $20 million.)

7. Management is sober and mature. (Sales are leveling off.)

8. This stock has long been one of our favorites. (We recommended it two years ago and it hasn't gone down too much and we still play golf with the management.)

9. A recent field check with the management. (Our brother-in-law was riding on the train with this fellow who knows a director.)

10. We feel ourselves to be realists. Trees do not grow to the sky. Let us take a hard look at the so-called facts. (You lads didn't live through '29 so therefore you can't be as smart as we are.)

11. The chart action shows the stock to be building a base. (The damn thing just hasn't moved.)

12. The shake-out merely moved the stock from weak hands to strong. (Caught us completely by surprise.)

13. Penetration of the recent intermediate upside resistance point on some volume would augur well unless followed or perhaps even preceded by a move on volume to a support level. (It'll go up if it doesn't go down.)

14. The market looks to be in a broad trading range. (Our chartist didn't show up this morning.).

---Mike Lorenzen

Transmitted: 10/17/96