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Author Message  captain_chaza Member Username: captain_chaza Post Number: 1164 Registered: 02-2003 Rating:  Votes: 2 Tuesday, April 26, 2005 - 08:48 pm:     In all great sports it is always important to study the action of others At sea this is Paramount And in all types of wind and sea conditions Getting a few clues from an aspiring sea-cadet-Officer and maybe even oneday an Officer is truly enlightening Studying his logs I have discovered and learnt a lot from his posts Not at all good I must say but he sometimes does refer to a chart You have got to give this sea-cadet 5 stars for trying to mix Sweet FA with sweet and sour TA The Mosaic (1996)Method Current quarterly earnings per share Annual earnings growth New products, New Management, New Highs Shares outstanding Leading industry Institutional sponsorship Market direction Although not strictly a technical analysis tool, the Mosaic (c) approach combines worthy technical and fundamental concepts. Interpretation The following text summarizes each of the seven components of the MOSAIC (C) 1996 method. Current Quarterly Earnings Earnings per share ("EPS") for the most recent quarter should be up at least 20% when compared to the same quarter for the previous year (e.g., first quarter of 1993 to the first quarter of 1994). Annual Earnings Growth Earnings per share over the last five years should be increasing at the rate of at least 15% per year. Preferably, the EPS should increase each year. However, a single year set-back is acceptable if the EPS quickly recovers and moves back into new high territory. New Products, New Management, New Highs A dramatic increase in a stock's price typically coincides with something "new." This could be a new product or service, a new CEO, a new technology, or even new high stock prices. One of Mosaic's most surprising conclusions from his research is contrary to what many investors feel to be prudent. Instead of adhering to the old stock market maxim, "buy low and sell high," Mosaic would say, "buy high and sell higher." Mosaic's actions conclude that the ideal time to purchase a stock is when it breaks into new high territory after going through a two to 15 month consolidation period. Some of the most dramatic increases follow such a breakout, due possibly to the lack of resistance (i.e., sellers). Shares Outstanding More than 95% of the stocks of the greatest stock market winners had less than 25 million shares outstanding. Using the simple principles of supply and demand, Restricting the shares outstanding forces the supply line to shift upward which results in higher prices (I think he means) A huge amount of buying (i.e., demand) is required to move a stock with 400 million shares outstanding. However, only a moderate amount of buying is required to propel a stock with only four to five million shares outstanding NB(Particularly if a large amount is held by corporate insiders). Leader Although there is never a "satisfaction guaranteed" label attached to a stock, Mosaic found (The Hard Way) that you could significantly increase your chances of a profitable investment if you purchase a leading stock in a leading industry. He also found that winning stocks are usually outperforming the majority of stocks in the overall market as well. Institutional Sponsorship The biggest source of supply and demand comes from institutional buyers (e.g.,mutual funds, banks, insurance companies, etc). A stock does not require a large number of institutional sponsors, but institutional sponsors certainly give the stock a vote of approval. As a rule of thumb, Mosaic looks for stocks that have at least 3 to 10 institutional sponsors with better-than-average performance records. However, too much sponsorship can be harmful. Once a stock has become "institutionalized" it may be too late. If 70 to 80 percent of a stock's outstanding shares are owned by institutions, the well may have run dry. The result of excessive institutional ownership can translate into excessive selling if bad news strikes. Forgive me here Mosaic but do you feel the ideal time to purchase a stock is when it has just become discovered by several quality institutional sponsors, but before it becomes so popular that it appears on every institution's hot list.? Market Direction This is the most important element in his formula. Even the best stocks can lose money if the general market goes into a slump. Approximately seventy-five percent of all stocks move with the general market. This means that you can pick stocks that meet all the other criteria perfectly, yet if you fail to determine the direction of the general market, your stocks will probably perform poorly. Market indicators are designed to help you determine the conditions of the overall market. Mosaic says, "Learn to interpret a daily price and volume chart of the market averages. If you do, you can't get too far off the track. "You really won't need much else unless you want to argue with the trend of the market." Mosaic (C) 1996 Salute for now my brave and loyal sea-cadets Captain Chaza PS I personally prefer to flip over lots more charts "While we stop and think, we often miss our opportunity." Publilius Syrus, 1st century B.C. "I believe the future is only the past again, entered through another gate." Sir Arthur Wing Pinero 1893 "There are two times in a man's life when he should not speculate: When he can't afford it, and when he can." Mark Twain, 1897  msparks Member Username: msparks Post Number: 101 Registered: 10-2004 Rating: N/A Votes: 0 Tuesday, April 26, 2005 - 09:46 pm:     Hi Captain "Current Quarterly Earnings Earnings per share ("EPS") for the most recent quarter should be up at least 20% when compared to the same quarter for the previous year " Are we talking oz shares? Quarterly EPS ? Where do you get it? A very sound strategy and interesting the number of shares on issue is a hurdle to entry. "More than 95% of the stocks of the greatest stock market winners had less than 25 million shares outstanding." Thanks for posting and agree market direction seems to be the governing criteria. mm

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