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It’s GO TIME! August 14, 2009

Posted by shaferfinancial in Finance.
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Swimming is a sport that is set up with a constant feed-back loop for coaches as well as participants.  Go watch any great swim team and you see multiple clocks set up and constant reference to them.   Everything is based off of the clock from the total time of a work-out to the time of each individual swim to even the warm-up.  Although the clock is a constant presence not all events are given equal attention.  No one is really timing a warm-up and drawing any conclusions from it.  No one gets to excited about certain sets or swims.  But, there are certain sets or swims that everyone pays attention to and allows the swimmer and the coach to get a great idea of how fast a swimmer is.  We call that “go time.”  Back in the day my coach walked into the workout and told us we were going to go 40 X 100 [yards] on 1 minute.  Everyone knew this was “go time.”  And how you did on this set predicted how well your season was going to go for you.  Frankly, it was emotionally and physically grinding.  But you knew this was what you had to do, live through the pain, to get better.

In the investing world there is also constant feedback.  The amount of data available for individual investors is unlimited.  Also, like swimming, much of the data is [should be] ignored.  But there is some data that predicts how profitable an enterprise will be.  Since the first of the year it has been “go-time” at every company.  How it performed in the dark valleys of a steep recession and a credit crisis is telling on future profits.   And it has been painful with massive job losses, cuts to every department, re-evaluations from top to bottom.

If you have your eye’s on a couple of stocks, now is the time to see how they did in “go-time.”  Are they still profitable? [if not then you might want to drop them from your list]  How have revenues held up?  Book value moving up or down?  Dividends?  Cash-Flow?  If a company can get through the last 6 months in a relatively strong position, then you know when the turn around happens they should be able to increase profits significantly.  Take advantage of our ability to see the results of go-time!

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