01 August 2010

Strong Companies and the Crisis

During the crisis I made a list of companies which I delineated by the amount I might be interested in investing (in 11/08). I was looking for stable companies which could withstand what was happening. Weathering the storm but for future interest as well. The market risk at the time was hard to define, I made the (correct) assumption high quality companies would survive.

The only 'issue' with this category with JOSB was in terms of the returns, which were spectacular. The price at the time in my notes was 19, it is now at 58.68. It is a company like AAPL which was constrained only, by the crisis. BKE was at 18 it is now at 27.55. GYMB in my notes was at 26. It is now at 43.30. EME was at 16, it is now at 26. SAI was at 17 it is now at 16.63.

The thing about this is SAI was the only one not to perform, but at the same time, it did what the category said it would do, it did not destroy the invested capital. All these companies are lessons about not buying at market tops (generally shown by overbought long term technical indications). JOSB is above, EME is below as is GYMB, BKE and SAI.

SAI is a bit like YGE, it is being buffeted. But of them, right now it is the one which interests me. They all still interest me as the recovery has not even properly begun, but SAI is technically interested. It is caught in a range and is beyond the bottom of it, but it is sound.

I look particularly at 1 year data, because that is highly sensitive to share movement now, and its revenue is not growing much, but it is stable. It is worth keeping an eye on.

BTW I chose these companies solely on the methods I developed to analyze financial statements, there was no reference to anything except their comparative financial structure (with the exception to this of EME, I had seen a very positive analysis of it and this weighed its inclusion).

It was computational, like a coarse grained concurrent qualitative constraint satisfaction problem, for risk minimization and return maximization. This evidence suggests to me the market is computationally sound, despite conduits, if constrained by them. But when these constraints are removed, it suggests positive possibilities for quality shares.

© 2010 Guy Barry - All Rights Reserved.